Italian Finance Market is governed by the main figure of Banks who are still the most relevant party on the Italian financial market. However, Italian finance scenario can be considered relatively developed. Then, in recent years, the Italian Government passed new laws in order to raise competition of the whole system. In fact, even non-listed companies may access to bond financings and then accessing capital markets.
Recently, Council of Minister Decree n. 59/2016 introduced:
The following are the main methods used for acquiring business entities:
Generally, financing party – normally a loans vendor – has most of the responsibilities in drafting the first finance set of documents. Therefore, buyers usually commit to an acquisition in order to arrange appropriate financing. At this stage, a commitment letter is also required to proceed with the binding offer.
In the event the acquisition finance is local and both acquiring companies and lenders are Italian, the documentation must comply with Italian regulation. On the contrary, in case the transaction involves international purchaser, finance documentation should comply with English law.
Acquisition finance usually involves the incorporation of a newco used as a vehicle of acquisition of the company or assets. The two main categories of companies used for acquisition finances purposes are:
When a newco carries out an acquisition, standard security practice for lenders involve:
In the event of a finance acquisition, security interests are granted when the merger of the newco and the target company is carried out under the art. 2501bis ICC. In such circumstances, the merger plan should identify the financial resources to be used by the merged company in order to pay its debt.
Under this circumstance, security measures can be taken over:
According to Italian Jurisdiction, the lender is liable to the borrower for:
ACQUISITION FINANCE REFORMS
With the purpose of creating new alternatives to the traditional bank financing model, Italian Legislation has introduced several changes and created new financing options available to Italian companies. For instance, the Competitiveness Decree of 2014 made possible for both Italian insurance and securitisation vehicles companies to engage lending to Italian borrowers. One more example is given by the implementation of Directive 2011/61/EU that made possible for Italian alternative investment fund managers to invest in credit by granting facilities.
Moreover, the Competitiveness Decree amended fiscal rules applicable to medium/long-term loans through the following measures: a) Withholding tax exemption b) Exemption of substitute tax regime.
The withholding tax exemption applies to medium/long-term loans granted by:
Financial entities established within in an EU Member State;
Loan agreements may be subject to the substitute tax regime if parties opt for the regime and if the loans is granted by:
In particular, if the substitute tax regime applies, the loan agreement is exempt from:
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