Italy

Security interest law in Italy

1. Can an intercompany guarantee be granted?

1.1 Upstream?	Yes, subject to restrictions.
1.2 Downstream?	Yes, subject to restrictions.
1.3 Lateral?	Yes, subject to restrictions.
2. Can a guarantee be given under foreign law (e.g. English law)?	Yes, provided that mandatory provisions of Italian law are complied with.
3. Any special arrangements (e.g. to deal with transfer pricing/corporate benefit)?	Corporate benefit must be respected. Corporate purpose must expressly provide the possibility to grant securities to third parties.

4. Can a security interest be granted in the following type of asset?

4.1 Real property	Yes
4.2 Shares (privately held)	Yes
4.3 Shares (marketable securities)	Yes, with peculiarity for listed companies’ shares.
4.4 Receivables	Yes
4.5 Bank account	Yes
4.6 IP/Trademark	Yes
4.7 Equipment/Plant/Machinery	Yes
4.8 Inventory	Yes
4.9 Insurance	Yes
4.10 Rights under a contract	Yes
5. Can security interests be granted to a foreign lender?	Yes
6. Can multiple security interests be granted over the same asset?	Yes, especially for mortgages with consequences on the ranking of creditors. However, it is disputed whether a pledge may be given with a different ranking.
7. Can a security interest be granted to secure liabilities of a holding company, a subsidiary or any other affiliate?	Yes, see section 1 above.

8. In order to be enforceable against third parties, must a security interest be?

8.1 Notarised?	Yes, normally only for pledges over quotas, mortgages and special privileges over the Company’s assets pursuant to Italian Banking Law.
8.2 Registered?	Yes
8.3 Other?	Even if not notarised, most Italian securities need to be date certain at law.
9. Does registration in most cases protect the secured creditor against the debtor’s subsequent dealings with the secured asset?	Yes
10. Is there any stamp or similar tax or duty payable on the security document?	Yes, especially for registration of same.

11. For a security interest to be legally enforceable which items must be filed as part of the registration or notarisation process?

11.1 Entire security agreement?	Yes
11.2 Names of pledgor and pledgee?	Yes
11.3 Description of secured asset in general terms?	No
11.4 Description of each individual secured asset?	Yes
11.5 Documents concerning ownership of secured asset?	No
11.6 Documents concerning debt in respect of which the asset is being secured?	In some cases (except first demand guarantees).

12. Can a right to enforce security arise:

12.1 When the secured debt is unpaid and due?	Yes, in general.
12.2 When there is some other breach of the pledge/security agreement?	No, unless provided for in the security agreement.
12.3 When the debtor becomes insolvent?	Yes, unless the debtor is subject to bankruptcy proceedings, any enforcement is “stopped” (exceptions).
13. Can the creditor enforce its security interest by taking possession of the asset and selling it without court assistance?	No, due to express prohibitions except for minor cases.
14. Is an instrument for direct enforcement necessary/available/market practice?	Not as a general practice, however it is possible to enforce the security if several breaches occur without the need to obtain legal title for enforcement.
15. Are powers of attorney to the secured party used to facilitate a sale of secured assets in an enforcement situation?	Yes, but not for direct enforcement.
16. If a sale is permitted without court assistance does it have to be made by public auction?	Not as a general rule.
17. Can a transfer of all or part of the debt be made without affecting the security over the assets?	Not for mortgages.
18. Is there anything else of which a lender should be aware as unusual or particularly difficult?	Loans and mortgages granted at least ten days before the bankruptcy of the grantor are valid and could be enforced by the creditor (hardening period).