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Italy: New Regulations Granting Government Funds to Companies During the Coronavirus Pandemic Enter into Effect

(Apr. 6, 2020) On March 23, 2020, the Ordinance of March 23, 2020, Benefits for Companies During the COVID-19 Emergency issued by the Presidency of the Council of Ministers (Prime Minister’s Office) and the Extraordinary Commissioner for the Implementation of Measures to Contain and Fight the Epidemiological Emergency Caused by COVID-19 (Ordinance No. 4) entered into effect in Italy. (Ordinanza 23 marzo 2020 Agevolazioni alle imprese Emergenza COVID-19.)

Incentives for the Production of Medical Devices

The purpose of the ordinance is to provide aid to Italian companies that manufacture and supply medical devices and personal protective equipment and that are currently facing a liquidity shortage due to the COVID-19 epidemic. (Art. 2(1).) The ordinance appropriates an initial amount of 50 million euros (€) (about US$54.3 million) for these purposes. (Art. 3(1).) The incentives referred to in this ordinance may be granted to partnerships or stock corporations, including cooperative companies and consortium companies of any size located in the whole national territory. (Art. 4(1).)

Excluded from the benefits are companies legally barred from receiving public funds. (Art. 4(3).) Admissible investment programs are those aimed at increasing the availability of medical devices and personal protective equipment throughout the national territory. (Art. 5(1).) Such programs must be completed within the deadline indicated in the respective application for the grant and, in any case, within 180 days from the date of notification of the grant approval. (Art. 5(2)(b).) Each grant covers expenses between €200,000 and €2 million (US$217,000 and $2.1 million). (Art. 5(2)(c).) Specific items encompassed by the subsidized loans include masonry work strictly necessary for the installation or operation of machinery or plants for production use (art. 6(1)(a)); machinery, plants, and other equipment appropriate to the respective production cycle (art. 6(1)(b)); and IT programs adequate to the production and management needs of the company (art. 6(1)(c)).

Other Coverage Included in the Financial Benefits

Also covered as working capital needs, up to a maximum of 20% of the total expenses, is an amount used to pay for items such as raw materials, consumer goods and merchandise, rental fees of the property used for production, and personnel costs and utilities. (Art. 6(2).)

Repayment Conditions for the Subsidized Loans

Loan beneficiaries must guarantee the financial coverage of their investment programs through their own resources or through external financing equivalent at least to 25% of the total eligible expenses. (Art. 7(6).)

The subsidized loan must be repaid by the beneficiary without interest from the date of the last disbursement, according to an amortization plan through biannual installments expiring on May 31 and November 30 of each year, in a period of maximum duration of eight years, including one year of preamortization. (Art. 7(2).)

Eligibility and Procedure for Obtaining Benefits

Applications must be submitted exclusively via an electronic format. (Art. 8(3).) The agency reviews the applications on the basis of the documentation submitted by the applicant. (Art. 9(1).) The subsidized loans are disbursed in two installments, the first equal to 60% of the overall amount granted, delivered upon the acceptance of the application (art. 10(2)), and the second upon the completion of the investment program as determined by the last expenditure related to the subsidized program (art. 10(3)).

At the end of the program, the beneficiary company must submit a special declaration certifying the entry into production of the subsidized investments and make the manufactured devices available to the respective authorities. (Art. 10(5).)

Any changes in the beneficiary company resulting from corporate operations or sales, or in the investment program concerning the objectives or the construction schedule must be promptly communicated to the agency for verification. (Art. 11(1).)

Grounds for the Revocation of Benefits

Grounds for the termination of the loans by the agency include (a) supervening noncompliance with any of the requirements for the concession of the benefits, (b) bankruptcy of the benefitted company, (c) lack of implementation of the respective investment plan, (d) lack of maintenance of the concerned goods for at least two years from the date of completion of the investments, (e) nonpayment of the installment, and (f) any other grounds established by the subsidized loan agreement. (Art. 13(1)(a)–(f).)