Italy introduced a new form of security: a non-possessory pledge which could be created without delivering the collateral to the creditor, to facilitate the taking of security on moveable goods and the access of Italian business to credit and supply chain finance. Instead of delivery possession, this new form of pledge is perfected with filing in a newly established digital registry held by the Italian tax authority. In August 2021 Government issued the secondary legislation required to make this security available for use, and the tax authority is expected to implement the IT system and technical specifications of that digital registry in the coming weeks.
The potential impact of this development is very significant, as this security can be coupled with the traditional forms of Italian law collateral. It does afford new options in the management of the charged assets, which can be leased out, sold, exchanged or supplemented during the life of the security. All this flexibility is generally welcome, although there are implications and concerns to be taken into account for due diligence and credit analysis processes. The new security is also designed to allow enforcement without much involvement of the judicial system, to allow a recovery of the secured claims without the delays and costs ensuing from the involvement of a court.
As its availability for use is drawing near, we have considered the rules governing such new form of security and the operation of the registry, as well as the main practical implications for Italian business and their lenders, suppliers and clients.
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Authored by Carlo Massini, Marco Gasparrini, and Laura Leonelli.
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