Prepared by John Shehata, Elisa Geraci, Marta Gallio, Isabelle Roccazzella, Rosario Pace and Claudia Cioffi
Law Decree no. 23 of 8 April 2020 was published in the Official Gazette on 8 April 2020 (into force on 9 April 2020) containing urgent provisions on access to credit and tax obligations for companies, special governative powers in strategic sectors, as well as measures in the field of health and work, and extension of administrative and procedural deadlines (“Liquidità Decree“).
Link to other sections
A) Measures on access to credit for companies
C) Tax and accounting measures
D) Provisions on judicial deadlines, administrative and labour acts and proceedings
A) Measures in matter of access to credit for companies
Temporary measures in support of companies’ liquidity – Article 1
In order to ensure the necessary liquidity to companies affected by the COVID-19 epidemic, art. 1 of the Liquidità Decree sets out as first measure the enabling of disbursements of credit facilities under any form to businesses through the granting of guarantees by SACE (a subsidiary belonging to the Cassa Depositi e Prestiti group), in favor of banks.
SACE could grant, up to 31 December 2020, guarantees up to Eur 200 billion, allocating Eur 30 billion to SMEs, including self-employed workers and professionals VAT holders, to the extent that they already have reached the maximum credit issued by the Central Guarantee Fund for SMEs.
The guarantees could be delivered:
- in connection with loans of tenor not exceeding 6 years (plus an initial possible grace period of up to 24 months);
- to businesses which, as at 31 December 2019, did not qualify as non-solvent, and, as at 29 February 2020, did not have defaulted payments classified as impaired exposures as per the applicable European legislation;
- for guaranteed amounts not exceeding the 25% of the turnover accounted in 2019 by the beneficiary or not doubling the personnel costs incurred during the year 2019.
The Liquidità Decree sets forth three guarantee thresholds based on the beneficiary company size:
- 90% of the loan amount for companies with less than 5,000 employees in Italy and turnover up to Eur 1.5 billion;
- 80% of the loan amount for companies with more than 5,000 employees in Italy or turnover between Eur 1.5 and 5 billion;
- 70% of the loan amount for companies with a turnover of over Eur 5 billion.
The Liquidità Decree specifies that the guarantees are: (i) granted to cover new financing after the coming into force of the Liquidità Decree; (ii) on a first demand, unconditional and irrevocable and (iii) joint and several with regard the repayment obligation.
The loan shall be allocated to support personnel costs, investment activities or to increase the working capital aiming to support the production facilities and the business activities located in Italy.
The beneficiary company shall undertake: (i) not to directly or indirectly approve the distribution of dividends or the repurchase of shares during 2020 and (ii) to manage the employment levels through agreements union.
If the same company, or group, is beneficiary of more than one financing covered by this guarantee, the relevant amounts shall be calculated in aggregate.
Lastly, the Liquidità Decree also provides for the State to issue a guarantee on exposures assumed or to be assumed by Cassa Depositi e Prestiti within 31 December 2020 and arising from guarantees on loan portfolios granted by credit institutions.
The effectiveness of the above provisions is subject to the approval of the European Commission.
Incentives to export, internationalization and investments – Articles 2 and 3
With the Liquidità Decree, articles 2 and 3, the Italian Government addresses the issue of supporting export and internationalization of enterprises, with the aim of providing concrete answers to one of the sectors most affected by the Covid-19 outbreak.
In this context, the key role is played by SACE by way of an amendment of article 6 of Law Decree 2003 no. 269 (passed into Law 2003 no. 326, which regulates SACE operating modes).
The public nature of SACE’s operating modes in the field of internationalization has been enhanced, as it is expressly provided that SACE’s effort shall be preferentially focused on “sectors that are strategic for the Italian economy”, as well as on transactions involving “countries that are strategic for Italy” (new article 6, Law Decree 2003 no. 269).
In particular:
- New allocation among SACE (10%) and the Government (90%) of the undertakings of insurance and guarantee coverage of non-market related risks (starting from 1 January 2021)
Non-market related risks pursuant to the EU regulations, deriving from insurance and guarantee coverage undertakings, are allocated among SACE, in the measure of 10%, and the Government, in the measure of 90 % (not as a joint obligation). Such provision, however, will be effective starting from 1 January 2021 (new article 6, paragraph 9-bis, Law Decree 2003 no. 269).
- Prior Mise authorization for transactions involving concentration risks
Granting of guarantees and insurance coverage implying high concentration risks for SACE towards individual counterparties, groups of related counterparties or countries of destination, is subject to the prior authorization of Mise (new article 6, paragraph 9-ter, Law Decree 2003 no. 269).
- Creation of a coverage fund for the obligations directly undertaken by the Government to support internationalization
An ad hoc fund for the financial coverage of the obligations directly undertaken by the Government pursuant to the new regulation has been created, and it will be supplied by the insurance premiums received by SACE on the account of Mise (new article 6, paragraph 9-quater, Law Decree 2003 no. 269).
- Ten- year agreement between SACE and Mise for regulating the granting and management of guarantee and insurance coverage undertakings
Mise and SACE will stipulate a ten-year agreement for regulating specific operational aspects related to the granting of guarantee and insurance coverage by SACE; the steps subsequent to the payment of the indemnification (e.g. the exercise of the right of recourse and the activity of credit recovery); the payment of the indemnification by the Mise and the realization of the Government’s guarantees for the insurance coverage obligations undertaken by SACE; the obligations (including disclosure) undertaken by SACE towards Mise and Ministry of Foreign Affairs; transfer of insurance premiums to Mise and management of the fund created under paragraph 9-quarter above (new article 6, paragraph 9-quinquies, Law Decree 2003 no. 269).
- Committee for public financial support to export
The Committee for public financial support to export, instituted within the Mise, will be in charge of determining the annual plan of SACE and Mise undertakings on the account of the State, which will provide for the amount of transactions to be guaranteed, and the risk limits deriving from transactions that might imply high concentration risks towards individual counterparties, groups of related counterparties or countries of destination (paragraph 9-septies), as well as advisory functions in relation to the authorization given by Mise pursuant to paragraph 9-ter (paragraph 9-octies) (new article 6, paragraph 9-sexies, Law Decree 2003 no. 269).
- Guarantees for the granting of loans to Italian enterprises up to a total amount of Euro 200 billion
Besides internationalization, SACE will be in charge of providing guarantees, in any form, in favor of banking institutions entitled to provide loans in Italy, aimed at facilitating the granting of financing to enterprises located in Italy, up until Euro 200 billion. Such guarantees will be automatically provided with the Government guarantee on first demand in favor of SACE (a direct governmental guarantee in favor of the financing parties is excluded) (new article 6, paragraph 14-bis, Law Decree 2003 no. 269).
- Interim regulation: the current regulation will continue to apply to the guarantee and insurance coverage undertakings granted until 31 December 2020
Undertakings and transactions resolved upon by SACE, as well as the guarantee granted by the Government between the date of entry into force of the Liquidità Decree and 31 December 2020 will continue to be regulated by the rules and arrangements currently in force (article 2, paragraph 3, Liquidità Decree).
- Interim period: granting of ex lege governmental guarantees in favor of specific transactions in the cruise sector
An ex lege governmental guarantee is granted in favor of specific transactions in the cruise sector that are duly identified in the table annexed to the Liquidità Decree (with simultaneous abrogation of article 53, Law Decree 2020 no.18) (article 2, paragraph 4, Liquidità Decree).
- Interim period: possibility for Mise of granting governmental guarantees in favor of SACE in relation to transactions in the cruise and defense sectors
In the interim period Mise will have the possibility to grant a governmental guarantee in favor of SACE, within set limits, for the cruise (save for the hypothesis provided for under paragraph 4) and defense sectors (article 2, paragraph 5, Liquidità Decree).
- Reassurance of 90% of SACE undertakings at the date of entry into force of the Liquidità Decree
The Government will reassure 90% of the obligations undertaken by SACE at the date of entry into force of the Liquidità Decree in relation to the insurance coverage and guarantee of non-market related risks as well as 90% of the obligation undertaken by SACE in the period between the date of entry into force of the Liquidità Decree and 31 December 2020 (article 2, paragraphs 6 and 7, Liquidità Decree).
SACE governance – Article 3
Article 3 of the Liquidità Decree regulates the relationship and coordination among SACE, CDP S.p.A., Mise and Ministry of Foreign Affairs, with the aim of defining industrial and commercial strategies to enhance the efficacy of the incentives to export and internationalization of the enterprises and boosting the economy.
The measures through the Guarantee Fund for SMEs – Article 13
The Liquidità Decree lays down new measures of support to SMEs through the Central Guarantee Fund, valid up to 31 December 2020, temporarily derogating the rules applying to the Fund pursuant to L. 662/1996. The set of measures is extremely detailed; here are provided major highlights.
The measures set out by the Cura Italia Decree (art. 49) are superseded and replaced.
First of all, SMEs and entrepreneurs impacted by the COVID-19 emergency (even stated by self-declaration pursuant to art. 47 of DPR 445/2000) shall have access to the guarantee of the Fund up to 100%, both in direct as well as in indirect form, for facilities newly disbursed up to Eur 25,000, possible 2 years initial grace period, and 72 months tenor, and provided that the disbursed amount shall not exceed 25% of the earnings of the beneficiary, as resulting per the last financial statement filed or the last tax declaration submitted, or, for entities of new incorporation following to the date of 1st January 2019, as per appropriate documentation (also per self-declaration pursuant to art. 47 of DPR 445/2000).
The guarantees of the Fund shall be granted to all businesses having not more than 499 employees which have been impacted by the Covid-19 spread (even stated by self-declaration pursuant to art. 47 of DPR 445/2000):
- at no costs;
- up to a maximum guaranteed amount of Eur 5 Million per every single business;
- without formalities relating to the eligibility requirements set out in the statutory provisions applying to the Fund (Decree of the Ministry for the economic development 12 February 2019);
- also in respect of facilities already disbursed (not longer than 3 months since the application and, in any case, on a date following the 31 of January 2020);
- also in addition to other forms of guarantee, provided that the total earnings of the business do not exceed the amount of 3,200,000 Euro;
- with direct coverage up to 90% and indirect coverage up to 100% (subject to the prior clearance of the European Commission pursuant to art. 108 TFEU) for financing operations of a tenor of up to 72 months and in amounts not exceeding (alternatively) (i) two times of the overall salary costs for the year 2019 (or the last available financial year) of the beneficiary, or (ii) one quarter of the total turnover 2019 of the beneficiary, or (iii) the need (also represented by self-declaration pursuant to art. 47 of DPR 445/2000) for working capital costs and investment costs in the following 18 months, in the case of SMEs, or 12 months, in the case of other businesses with a number of employees not higher than 499;
- with direct coverage up to 80% and indirect coverage up to 90% (provided that the guarantees previously delivered by Confidi or other guarantee public entities do not exceed the threshold of 80% of the amount already made available) for refinancing facilities, provided that the disbursement in refinancing made available an additional credit of 10% (or more) than the original debt and to the same beneficiary. In such a case, the Fund guarantee could be delivered in direct form up to 80% of the facility made available, and in indirect form up to 90% of the amount guaranteed by Confidi or other guarantee public entities, provided that the guarantees delivered by these latter shall not exceed the maximum guarantee coverage of 80%.
For SMEs and entrepreneurs, the guarantee may be made available pending the due diligence for mafia crimes; in such a case, the grant shall be made upon condition precedent of termination of the guarantee.
The guarantee shall be made available also for insolvent businesses; the scope is limited only to businesses which, after 31 December 2019: (i) have been admitted to procedures pursuant to art. 186-bis of Italian Bankruptcy Law, or (ii) have entered into restructuring agreements pursuant to art. 182-bis of Italian Bankruptcy Law, or (iii) submitted a testified plan pursuant to art. 67 of Italian Bankruptcy Law, and provided that, at the date of effectiveness of the Liquidità Decree: (a) the relevant defaults have not been classified as bad debts, (b) did not default payments following the date of the granting of the guarantee, and (c) the bank has evaluated as probable the reimbursement in full at maturity.
The Fund could deliver the guarantee in indirect form also in favor of new microcredit institutions (registered within the list pursuant to art. 111 of the Italian Banking Law or having started the business in the 3 years preceding the application) having entered into financings, up to the maximum threshold of 80% of the amount disbursed.
The Fund shall grant guarantee in direct form, up to the amount of 85% of the available provisioning, for baskets of facilities disbursed to SMEs and baskets of minibonds.
In addition, the guarantees already delivered by the Fund shall be extended in time, consistently with the agreed-upon interruption of the payments, or the extension of the maturity of the facilities, requested by businesses in connection with the impacts of the spread of COVID-19 infection.
The Solidarity Fund on loan for “first home”– Article 12
The measure adopted by the Cura Italia Decree providing for the suspension of loans of physical persons remains unchanged: it will be permissible to be granted with a suspension of the payments up to a maximum of 18 months.
Article 13 of the Liquidità Decree aims at clarifying the definition of self-employed workers having access to such Fund, in which the following are included (i) professionals holding a VAT number as at the date of 23 February 2020 and (ii) workers in charge of a coordinated and continuing collaboration on the same date, registered with the Gestione Separata, not benefiting of a retirement pension fund or other mandatory forms of social security contributions. Therefore, even single entrepreneurs and craftsmen – as well as any self-employed worker or professional – are not requested to submit the ISEE form.
Finally, for a period of 9 months from the entry into force of the Liquidità Decree, the benefits of the Solidarity Fund are extended to the amortizing loans entered into since less than one year.
Simplification of communications and signing procedures with banks – Article 4
In the matter of contracts stipulated by banks with retailers through IT and electronic systems, the Liquidità Decree lays down, for the entire period of duration of the COVID-19 epidemic emergency, forms of simplification to ensure continuity in the supply of services and products to customers by banks and financial intermediaries.
This measure is addressed to retail customers, providing validity to the consent given by the customer through non-certified e-mail, or any other suitable means, both from the point of view of the requirement of the written form for the validity of the contracts, as well as from the point of view of the evidence pursuant to art. 2702 of the Italian Civil Code.
The simplified procedure of conclusion of contracts introduces some conditions aimed at ensuring the validity of the consent given by the customer in addition to those already provided for by the applicable legislation: (i) the consent shall be accompanied by a copy of a valid identification document; (ii) the contract shall be clearly identified, and (iii) copies of the identification document as well as of the contract must be kept together with a copy of the communication of consent given by the customer, in a manner which ensures the security, integrity, and unchangeability of such copies.
The customer shall have the right to exercise its right of withdrawal through the same means used to express its consent.
It should be noted that this rule is applicable only to contracts concluded from the date of entry into force of the Liquidità Decree and the end of the state of emergency due to COVID-19.
The suspension of the expiry terms of the notes and debt securities – Article 11
The Liquidità Decree extends to all State territory – from 9 March 2020 to 30 April 2020 – the provision of article 10, paragraph 5, of the Cura Italia Decree, that is therefore repealed.
The suspension of the expiry terms is set out, including terms falling on or starting to accrue from 9 March 2020 to 30 April 2020, (i) of the debt securities issued before the entry into force of the Liquidità Decree and (ii) of any other act enforceable on that same date. Such expiration dates are suspended for the same period.
Debtors and obligors, even by virtue of a guarantee or any right of recourse, can expressly waive to the aforementioned suspension.
This article expressly refers to bank checks and postal checks, extending to all of the following the benefits of the suspension: banks, Post Offices, public officers in charge of protesting the checks, the signatories and the beneficiaries of such checks.
In this view, the suspension will concern:
- terms for the payment of the check, without prejudice to the right of the beneficiary to ask for the payment of the check notwithstanding the suspension. The drawee shall not reject the request, where sufficient funds are available on the bank account of the signatory;
- terms of the procedure for checks’ protest or equivalents: if the signatory cannot meet the request of payment of the beneficiary due to lack of funds of the signatory, the latter is granted with the right to call for the suspension of the deadlines and, thus, to benefit of the temporary non-viability of the procedure for checks’ protest as well as of the unenforceability of the sanctions;
- terms as of Law 386/1990 and, in particular, with reference to the registration of the name of the drawer by the drawee in a specific archive in case of non-performance of the payment (as a whole or partially) due to lack of authorization or funds;
- term of 60 days from the expiration date for the submission for the late payment of the check as provided by Law 386/1990 and, in particular, with regard to the enforcement of administrative sanctions.
The checks’ protest or equivalents occurred from 9 March 2020 up to the date of entry into force of the Liquidità Decree, as well as notices to the Prefect, are not submitted by public officers to the Chambers of Commerce and, if already published, the Chambers of Commerce shall cancel them. For the same reason, any possible alert already transmitted to the Interbank AlarmPanel shall be canceled by the intermediary who made it.
At the end of the suspension period, the banks will resume the procedure aimed at the payment of the debt security.
Specific measures in support of Sports Facilities – Article 14
The Liquidità Decree sets out, besides the measures of the Guarantee Fund for SMEs, specific measures in support of sports facilities.
The Guarantee Fund for loans relating to the construction, implementation, equipment, refurbishing or purchase of sports facilities could deliver guarantees, up to 31 December 2020, out of overall provisioning of Eur 30 Million, for facilities disbursed by the Istituto per il Credito Sportivo or other financial institutions to the National Sports Federations, Associations of Sports Disciplines, Organizations for Sports Promotions, and sports associations and amateur sports companies. For the management of this measure, it is authorized the opening of a current account of central treasury in the name of the Istituto per il Credito Sportivo.
In addition, the special fund provisioned by the contributions of 1% of revenues of the C.O.N.I. from the soccer betting prizes could disburse amounts in payment of interest due to the Istituto per il Credito Sportivo or other financial institutions which have made available loans to National Sports Federations, Associations of Sports Disciplines, Organizations for Sports Promotions, and sports associations and amateur sports companies. For such a measure, overall specific provisioning of 5 Million Eur for the year 2020 has been allocated.
The addressees of these measures are very extensive. From data collected in the 20218 reports of the C.O.N.I. on Numbers of sport, the sports associations registered with the C.O.N.I. register are 110,449, and the amateur sports companies are 139,917, all prevented from access to the Guarantee Fund for SMEs, which is reserved for companies registered with the Chambers of Commerce only.
Let’s talk
For a deeper discussion, please contact:
PwC TLS Avvocati e Commercialisti
Partner
PwC TLS Avvocati e Commercialisti
Of Counsel
PwC TLS Avvocati e Commercialisti
Director
PwC TLS Avvocati e Commercialisti
Of Counsel
Link to other sections
A) Measures on access to credit for companies
C) Tax and accounting measures
D) Provisions on judicial deadlines, administrative and labour acts and proceedings