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Special Moratorium Credit Institutions In Italy Requirements: The Definition Of SME

Francesco Cacciavillan's picture
Published: 02/04/20 - Country: Italy

The Decree Law No.18 of 17 March 2020 has introduced an extraordinary moratorium on loans and credit lines granted by banks and financial intermediaries to "micro, small and medium-sized enterprises" (so-called SMEs).

In order to have access to the moratorium, it is therefore necessary to be an SME in accordance with the Recommendation of the European Communication No. 2003/361/CE of 6 May 2003, or possess the requirements provided for by this provision.

The first requirement is dimensional

The enterprise must employ fewer than 250 people and invoice less than € 50 million.

As an alternative to turnover, the balance sheet total must be less than € 43 million.

In other words, one of the thresholds relating to turnover and the balance sheet total can be exceeded.

The second requirement is subjective

The enterprise must be "autonomous". It must not own or be owned by another enterprise for 25% of its capital or voting rights. The dimensional thresholds as per above, refer to and must be respected by the single legal entity, independently considered.

The recommendation identifies “linked” and “partner” enterprises, which must comply to the dimensional thresholds with their aggregated data (people, turnover and balance sheet total).

“Linked enterprises" are enterprises which have any of the following relationships with each other:

  • one holds the majority of the voting rights in the other;
  • one has the right to appoint or remove the majority of the directors of the other;
  • one exercises a dominant influence over the other pursuant to a contract or a statutory clause;
  • one controls alone or pursuant to agreements the majority of the voting rights in the other.

"Partner enterprises" are those which hold, either solely or jointly with others, 25 % or more of the capital or voting rights of the other enterprise.

The dimensional thresholds for linked and partner enterprises

For these companies, staff number, turnover or balance sheet assets are determined on the basis of:

  • the consolidated accounts, if available;
  • aggregating the data of any partner enterprises, proportional to the percentage of participation in the capital or the voting rights held (the higher percentage is chosen between the two and is also applied, for cross-holdings);
  • consolidating 100% of the data relating to any companies directly or indirectly linked.

The totals obtained must respect the aforementioned dimensional thresholds.

Enterprises which are linked through a natural person or group of natural persons

Enterprises connected through a natural person, or a group of natural persons acting in concert, are also considered linked companies, provided they engage in their activity or in part of their activity in the same relevant market or in adjacent markets. An "adjacent market" is the market for a product or service situated directly upstream or downstream of the relevant market.

It is compulsory also in this situation, to verify the compliance of the dimensional thresholds cumulatively for all companies.

Investor members

Special provisions are envisaged if shareholders are the following investors:

  • public investment corporations, venture capital companies, individuals or groups of individuals with a regular venture capital investment activity who invest equity capital in unquoted businesses ("business angels"),
  • universities or non-profit research centres;
  • institutional investors, including regional development funds;
  • autonomous local authorities;
  • public bodies.

The Decree of the Ministry of Productive Activities of 18 April 2005

In order to adapt the internal regulations to the EU Recommendation, the Ministry of Productive Activities has adopted a special decree containing clarifications and practical examples.

In particular, the following are provided:

  • data calculation schedules for linked enterprises;
  • the following criterion for identifying companies that operate on the same market or on contiguous markets and are owned by natural persons: ”an enterprise may be deemed to be linked to another one through a person or group of natural persons acting in concert, provided that they carry on their business or a part of their business on the same market in question or on adjacent markets. An "adjacent market" is considered to be the market for a product or service situated directly upstream or downstream of the relevant market. In this regard, it should be noted that, in order for the link between these companies to be determined, the following conditions must occur simultaneously:
    • a) the person or group of natural persons acting in concert must possess in both companies, jointly in the case of more than one person, equity investments to an extent such as to control the companies, on the basis of current national legislation;
    • b) the activities carried out by the enterprises must be included in the same division of the classification of the economic activities ISTAT 2002, or one enterprise has invoiced to the other at least 25% of the total annual turnover referring to the last approved accounting year, before the signed date of the concession application."

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Francesco Cacciavillan's picture

Final Thesis in banking. Chartered Accountant and Tax Consultant enrolled in the Chamber “Ordine dei Dottori Commercialisti ed Esperti Contabili di Vicenza”, n. 350 A

Auditor with legal approval (D.M. 12.04.1995 published on G.U. n. 31 bis, IV of  21.04.1995), n. 9143