Italian Non-possessory Pledge Now Available to Italian Businesses
On 23 January 2023, the technical standards issued by the Italian Tax Authority relating to the form and the procedure to be adopted for the statutory registration of the Italian non-possessory pledge were published in the Italian Official Gazette (the "Technical Standards").
In 2016, the Italian Parliament introduced the "non-possessory" pledge (i.e., floating charge) with the aim of offering Italian businesses the possibility to secure payment obligations arising from their business activity through a security over all movable assets, albeit allowing them to maintain full possession of, and power of disposal over, such movable assets.
However, the actual possibility to take this new kind of security was subject to the enactment of certain level-two regulations and the Technical Standards by different authorities.
The last step required for the full implementation of the non-possessory pledge now has been completed as a result of the publication of the Technical Standards.
Indeed, although the non-possessory pledge is created through the execution of a written deed of pledge bearing a date certain at law (data certa), enforceability against third parties (including in the context of insolvency proceedings) is possible only upon registration of the security with the electronic register (the "Registry") managed by the Italian Tax Authority. The Registry's activation date will be disclosed by the Italian Tax Authority on its institutional website; and from the following day, it will be possible to file the registration requests.
The registration of the security in the Registry can be made only (i) through the IT platform managed by the Italian Tax Authority; and (ii) if finalized upon receipt of all the required information and documents by the Italian Tax Authority.
The completion of the registration process is confirmed through a digitally signed receipt which is returned to the applicant through the IT platform. In case of rejection, the applicant is informed by the Italian Tax Authority of the rejection together with the details thereof.
Upon registration, the non-possessory pledge has a validity of 10 years, but it can be extended upon request before expiry.
As of today, the non-possessory pledge constitutes one of the few examples of floating charge in the Italian market, and it could lead to the development of new financing instruments in several types of transactions, such as inventory financing, acquisition financing and restructuring transactions involving new finance/debtor-in-possession.
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