International rolling stock financing in Italy

Under Italian Law, security over rolling stock would be granted by way of a “special privilege” (privilegio speciale) in rolling stock financings from banks to businesses. The special privilege is a security which is equivalent to a pledge but which does not require the dispossession (spossesamento) of the asset and hence the special privilege allows the assets to be freely used by the owner in the ordinary course of business. The “special privilege” security does not need to registered with any public register, however, trains are registered in the National Vehicle Registers (the “NVR” or Registro di Immatricolazione Nazionale).

A special privilege security is validly created by way of a deed. In particular, the deed must describe the assets, the secured obligations, the secured creditors, the security grantor and the terms and conditions of the financing.

The enforceability of the privilege against third parties is subject to the registration of the deed at the competent offices (Court transcription) of the place where the company is based and financed, and of the place where the security grantor has its registered office. 

Security over receivables can be taken by way of pledge (Pegno di Crediti) or security assignment (Cessione di Crediti a Scopo di Garanzia).

In order to perfect the security interest, a notice of the pledge or of the assignment must be served on the debtor to be able to establish the date certain at law (data certa). This notice protects the priority of the security.

Generally, if it is not clearly specified in the underlying lease agreement, the assignment of the receivables is not prohibited. 

Under Italian law, it is not possible in typical financings from banks to corporate borrowers to take floating charge over business assets. 

Under Italian law the form of security over shares depends on the form of the shares (in paper form or held in a clearing system) and the form of participation in the equity of a company, which can be of shares (for companies incorporated as S.p.A.) or quotas (for companies incorporated as S.r.l.). In any case, security over shares/quotas can only be by way of pledge. 

A valid pledge over shares is created by specific pledge deed.

Regarding perfection of the pledge, the following applies depending on the form of the shares (in paper form or held in a clearing system) and the form of participation in the equity of a company:

The pledge over shares, represented by share certificates, has to be registered in the share certificate by a public notary and the share certificate must be delivered to the secured creditor or to an authorised custodian and registered in the shareholders’ books of the SPV. 

The notary fees are calculated on a sliding scale depending on the amount of the secured obligations.

Notice to the company and annotation in the shareholders’ ledger must be obtained in order for the pledge to be valid against the company. Dividend and voting rights are for the benefit of the secured creditor but this can be excluded by the parties in the pledge agreement. Italian practice usually provides that the debtor keeps rights to dividend and voting until an event of default occurs. 

As for the pledge over shares held in the national clearing system in dematerialised form, the security, pursuant to Article 34 of the Legislative Decree No. 24 June 1998 (the “Euro Decree”), must be created by way of registration in a specific account held by an intermediary member of the clearing system. No registration with a public notary or registry is required. 

In relation to the pledge over quotas, the agreement creating the pledge must be filed with the Companies’ Register and notified to the company. As for the dividend and voting rights, see above with reference to the pledge over shares represented by share certificates. In general, stamp duty will apply. 

General enforcement is by:

• sale to a third party via relevant Italian Civil Code public procedure, or
• assignment of the pledged shares to the lender via a competent Court.

Enforcement costs of the pledge over the shares may vary. Normally, enforcement procedure lasts from 3 to 6 months, and longer if the debtor challenges the procedure.

However, a private sale procedure can be provided by the pledge deed, as long as auction rules and sufficient transparency is guaranteed.

According to international private law, and specifically pursuant to Article 51 of Law No. 218 of 31 May 1995 (the “Italian Private Law”), the applicable law for the transfer of ownership and the creation of security in respect of rolling stock is the law of the jurisdiction where the asset is located (i.e. lex rei sitae).

In principle Italian law does not recognise foreign law security.

In principle it is not possible under Italian law to enforce foreign law security.

According to Italian Private Law, the applicable law for the creation of security over receivables is the law of the domicile of the creditor.

In principle it is not possible under Italian law to enforce foreign law security.

We would expect an assignment for security purposes. Under Italian law, such assignment needs to comply with the applicable principles of substantiation. In particular, if the lease agreements also relate to rolling stock of third parties, such assignment would not be enforceable due to the principle of substantiation. 

Yes, it is allowed. 

Secured creditors need to wait until the expiration of the applicable claw back period (being between 6 and 24 months depending on the type of transactions) before the security is deemed “insolvency proof”. The expiration is normally proved by the issuance of a “certain date” confirmation which is acquired by certified email or by public notary deed.