At the end of 2012 Italy has intervened to facilitate the debt instruments’ issuance for Small and Medium Enterprises-SMEs (Mini-bonds, commercial papers, project bonds). In fact, with the "Decreto Sviluppo" (decr. Legge no. 83/2012) and "Decreto Destinazione Italia" (decr. Legge no. 145/2013), it has been eliminated fiscal constraints that hindered the debt capital issuance by companies not listed on a stock exchange. The lawmaker's goal was to diversify the sources of financing for SMEs in order to reduce the credit crunch and their financial dependence from the banking system. These laws have removed the unequal treatment present in the Italian market, between listed and not listed companies on the stock exchange. Thanks to the new legislation is allowed for SMEs, but not for “micro-companies”, to issue debt instruments with short-term (Commercial paper), medium and long-term (Mini-Bond and Project bond).

Banking Loans and Credit Crunch. Access to Credit Before and During the Crisis

In Italy, banks are the main contact for companies looking for capital to finance their projects. This function has allowed banks to play a dominant role in the domestic economic system. According to the Centrale dei Rischi data, in 2010 about 78% of micro-companies and 32% of small and medium-sized enterprises had relationships with at least three banks. Currently, however, the recent decrease in banking loans has been evident for all companies, but especially for SMEs. This trend reflects the decrease in productivity of enterprises and the more restrictive criteria for the granting of banks credit. Therefore, the current economic system has changed the role of banks. In fact, since the beginning of the financial crisis in 2007, the demand for business loans has clashed with the unwillingness of bank lending. The decrease in Italian business loans reflects the European trend as shown in Table 1:

In a situation of strong credit rationing, the creation of new tools such as mini-bonds, Commercial papers, Project bond is closely linked to the need of new channels of financing, alternatives to traditional banking credit. These tools, however, are complementary to the banking system. In fact, for example, for the creation of mini-bonds are needed financial operators, so-called sponsors, including banks.

Bonds Regulations Before the New Guidelines

The Italian legislation, following the Decreto Legge n. 6 of 17 January 2003, allowed for the use of debt instruments by listed enterprises, thus limiting their effective use and expansion. The "Decreto Sviluppo" and the "Decreto Destinazione Italia", then does not introduce "new" kinds of financing but, actually, they change the legal status and fiscal treatment of those instruments already in force. These reform measures have modified the previous rules and in particular:

- Articolo 32 del Decreto Legge 22 giugno 2012, n. 83 (“Decreto Sviluppo”), subsequently amended in (Legge 7 agosto 2012, n. 134)

- Articolo 36, comma 3, del Decreto Legge 18 ottobre 2012, n. 179 (“Decreto Sviluppo Bis” with “Decreto Sviluppo” the “Decreti Sviluppo”), subsequently amended in (Legge 17 dicembre 2012, n. 221)

- Articolo 12 del Decreto Legge 23 dicembre 2013, n. 145 (“Decreto Destinazione Italia”), which amended Legge 30 aprile 1999, n. 130, articolo 46 del Testo Unico Bancario (T.U.B.) and articolo 32 del Decreto Sviluppo Bis.

Before these laws, the bonds issuance by not listed companies on the stock exchange, clashed with art. 2412 of the Civil Code, which granted to corporations to issue bonds according to some requirements:

- The total amount of the loans can not be more than twice of share capital, legal reserve and reserves resulting from the approved budget;

- Without this limit, thanks the condition that the excess amount was allocated to institutional investors and that, in case of following transfer of the bonds, the last transferor would guarantee following purchasers (non-professional investors) of the issuer creditworthiness.

Instead, according to the new rules of the "Decreto Sviluppo" and "Decreto Destinazione Italia", the bonds issuance may exceed the above limits if:

- The bonds are intended to be listed on regulated markets or Multilateral Trading Facility (MTFs), or give the right to acquire or subscribe new shares.

If in the previous regulatory system the companies met many procedural difficulties in gaining access to the bond market, with the new provisions such difficulties are smaller. Therefore, the reference to listed or not listed companies on the stock exchange disappeared, and it has been replaced by the condition that the bond is listed on a regulated market, or an MTF.

New Legislation. Decr. Legge n. 83/2012 (Decreto Sviluppo) and Decr. Legge n. 145/2013 (Destinazione Italia)

In general, the main changes introduced by the new regulatory framework include:

- The change and exceeding Article 2412 (Restriction of the issue) of the Civil Code which sets the quantitative limits to the bonds issuance;

- Deleting the different fiscal treatment of bonds issued by listed companies and not listed companies and the elimination of punitive treatment in terms of deductibility of interest expense;

- The change in the duration of Commercial paper, which will have a time not less than one month and not more than 36 months;

- The chance to de-materialize these bonds, promoting their circulation on the market;

- Extension to Commercial paper of more favorable fiscal regime applicable to the bonds.

In addition, the recent regulations require new funding sources available to SMEs and specifically, three different instruments:

1) Mini-Bond;

2) Commercial paper;

3) Project bond.

Those who can issue them are:

- Not listed companies (corporations, cooperative companies and mutual insurance companies different from banks and micro-companies);

- Small and Medium Enterprises SMEs. According to the European classification medium-sized companies are those that have a workforce of less than 250 employees and an annual turnover not exceeding EUR 50 million or balance sheet total not exceeding EUR 43 million. Small-sized companies, those with fewer staff to 50 employees and turnover or balance sheet total not exceeding EUR 10 million.

- Are excluded from the application of new rules the micro-comapanies or enterprises with a workforce of less than 10 units and turnover or balance sheet total not exceeding EUR 2 million.


The Mini-Bond is a self-financing tool for companies not listed on the stock exchange. With Mini-Bond companies can obtain funds from investors providing negotiable documents. This form of financing allows companies, in particular small and medium-sized enterprises (SMEs), to diversify the funding sources and reduces the dependence from the banking system. The regulation for Mini-Bond is directly applicable to SMEs as defined in the European Recommendation 2003/361/EC (companies with fewer than 250 employees and an annual turnover not exceeding EUR 50 million, or with a total budget not exceeding EUR 43 million)

Mini-Bond when issued must be accepted to trading on a regulated market (in Italy is the ExtraMOT PRO). The requirements for admission to trading on ExtraMOT PRO provide that:

- The issuer must have published balance sheets of at least two previous financial years;

- At least the last balance sheet must have been audited;

- The issuer must prepare and make available on its website an admission document drawn up in accordance with the guidelines set by the Borsa Italiana.

The main steps towards the issuance of Mini-Bond:

- Mini-Bond Issue after the fulfillment of the legal and regulatory requirements;

- Admission of the Mini-Bonds to trading on ExtraMOT PRO;

- Entering Mini-Bond in the Monte Titoli management system.

The regulation provides that the issuer is assisted by his sponsor that is a financial party that supports the company in the process of issuing and placement of the bonds.

In addition, the subscription of these bonds is reserved for institutional investors and other qualified entities, is not expected the spread for small investors. According to the CRIF Rating Agency estimates, over 10 000 companies are the potential market interested in these tools.

Commercial Paper

The commercial papers are debt instruments whose function is to guarantee the possibility, for companies that can not issue directly bonds, to raise funds alternative from bank credit. The commercial papers have a duration of not less than one month and not more than thirty-six months from the date of issuance. They can be issued by all corporations as well as cooperatives and mutual insurance companies (but not banks and micro-enterprises). However, companies and agencies that do not have bonds traded on regulated or unregulated market, can issue commercial papers if they fulfill a set of requirements:

- The issue should be assisted by a sponsor, including a bank

- The last balance sheet of the issuer (not listed on the stock exchange ) must be certified by an auditor or an auditing company.

In addition, it is expected that the commercial paper should be issued only in favor of professional investors who are not, directly or indirectly, shareholders of the issuing company. The commercial papers may be issued in de-materialized form (securitization? Vedi se esiste voce e linka).

Project Bond

The innovation introduced by the recent law gives the possibility for non-listed companies to issuing bonds under the clause of profits sharing, if the duration is not less than thirty-six months, similarly to ordinary bonds. The project bonds are "hybrid" instruments. The participation clause regulates the amount payable to the holder of the bond, comparing it to the performance of the enterprise issuer. The interest rate granted to the holder of bond cannot be lower than the Tasso Ufficiale di Riferimento.

The project bonds were introduced in order to finance start-ups and technology or corporate turnarounds.


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Editor: Giovanni AVERSA

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