24 March 2015 The Senate of the Republic approved the Investment Compact definitively. The ong-awaited Decree is a package of measures aimed at reorganising the banking system and stimulating investment, especially for Italian SMEs.

1. How to understand the
Investment Compact
banks, internationalisation,
SMEs and much more
March 2015

2. 20 January 2015
The Council of Ministers approved the Government Bill
n. 3/2015 “Urgent measures for the banking system and
investments” – the so-called Investment Compact.
A long-awaited Decree: several drafts and advance news leaked
by the press, then the “surprise” approval (it was not on the
agenda of the Council of Ministers).
Renzi comments:
“This is an important day…”
yet more proof that this Government has the
“courage to change and innovate”
Investment Compact: approval of the Decree

3. Cooperative banks: a unique Italian model
An access to the credit system focusing on developing the
territory, local economies and Made in Italy. A privileged
relationship with Small Medium Enterprises (SMEs) granted
credit without the involvement of big banks. But the European
Banking Union is imminent… Italy has to adjust and rationalise
the banking system.
Renzi
“We have too many bankers
and grant too little credit”
Padoan
We needed to “shock” the credit system “but nevertheless
maintain a system of governance that’s been extremely
advantageous” for Italy.
Why use a Government Bill? “To show it’s an urgent issue”.

4. 24 March 2015
The Senate of the Republic approved the Bill definitively.
Critics from the opposition
Carlo Martelli (M5S):
“We are going to destroy
a money lending sector:
the cooperative banks”
Government’s defence
Pierpaolo Baretta:
“It was not only necessary,
but very urgent (…) it is such
a strategic sector for our Country”

5. The new measures apply only to cooperative banks with assets
exceeding 8 billion euro.
“The others, if they so wish, can remain as they are” and
continue to serve local communities.
The law affects ten cooperative banks: Banco Popolare, Ubi,
Bper, Bpm, Popolare di Vicenza, Veneto Banca, Popolare di
Sondrio, Creval, Popolare dell’Etruria and Popolare di Bari.
The reform aims
to make cooperative banks similar
to commercial banks with a financial structure.
Cooperative bank reform:
“An important piece of the puzzle”

6. “We won’t touch cooperative banks”
Renzi on Twitter
reassured MP Gabriella
Giammanco (FI) who
had drawn attention
to this danger.
The reform of cooperative credit had initially been envisaged
but was later deducted.
No! We can’t involve cooperative banks

7. Conversion into a joint-stock company within 18 months
of the implementing rules of the Bank of Italy.
Opportunity to emit participative financial instruments
(administrative + economic rights), and thereby acquire
the right to hold up to a third of the votes in shareholder’s
meeting and the possibility to name up to a third of the
members of the Board of Directors and Supervisory Board.
Abolition of the one share/one vote governance rule.
The Government hopes this
will attract investments.
Cooperative banks: what’s new?

8. The client no longer has to pay portability expenses or to
transfer his/her account from one bank to another.
The transfer must be completed within 12 days; the bank
is obliged to compensate the client for any delay or other
disservices.
Renzi comments:
“It’s a small gesture,
but it points in the right direction”
The Bill includes new measures to facilitate the opening,
within European Countries, of a current account or of cross
border payments.
I can change banks whenever
I want! (even abroad)

9. Cassa Depositi e Prestiti (CDP) will promote the internation-
alisation of the Italian economy by offering direct credit to
exporter businesses, directely or through SACE or other
subsidiary (with approval of the Bank of Italy).
Minister Guidi envisages that this reform will input 12 billion
euro into the credit circuit for businesses, strengthen exports,
and compete on a level playing field with foreign competitors
who already have national exim banks.
Will this regulation
be compatible with European law?
Cassa Depositi e Prestiti, SACE and
direct credit to businesses

10. They have to be on the market for less than 7 years.
They are not listed on the stock exchange but have
audited accounts and fulfil at least two of the following
requirements:
minimum 3% difference between cost and total value
of production in Research, Development and Innovation;
at least 1/5 of their employees have to be highly
specialised;
own a patent or a software registered with SIAE.
They will be listed in an ad hoc register at the Chambers
of Commerce and will be able to access the same facilities
as the innovative start-ups, including the possibility to
fundraise using equity crowdfunding.
According to data provided by the Ministry for Economic
Development, Italy has roughly 7,000 innovative SMEs.
A new category: innovative SMEs

11. What about SMEs older then 7 years?
SMEs could benefit from incentives as long as they a
Development Plan of products, services or new
processes in their sector, evaluated and approved by an
independent organism or a public subject (not yet identified!).

12. Already specified in the Stability Law, from January 2015
Ires, Irap and direct and indirect revenue from intellectual
property (patents, brands, processes, formulas) are no longer
included in the calculation.
The approach is an innovative measure in itself: partial
exemption from taxation of revenue rather than business
incentives.
A dual rationale:
limit delocalisation of Italian businesses in countries with
low taxation;
stimulate foreign businesses to invest in Italy.
Patent Box: the new patent box will be
extended to include intangible assets

13. A joint stock company will be created to restructure
companies going through a bad patch but showing signs of
being able to become profitable again.
Minister Guidi clarified:
“This is not intended to save insolvent companies (..) but help
the turnaround of companies that have the potential to quickly
return to a good economic-financial balance in the future”
The capital of the new joint stock company will be underwritten
within 3 years by both private and institutional investors; they
can benefit from a State guarantee, but in exchange must
pay back a quota of their profits into the system. Those who
invest without a guarantee will have more votes in the
general shareholder’s meeting. Within 7 years the Joint Stock
Company created to save businesses will have to transfer
its assets and reports referring to the investment.
Critics have said: it’s a regulation to save the Ilva company.
A joint-stock company
to save companies in crisis

14. SME’s businesses special control?
The State guarantees
The State guarantees up to 550 millions of euro (it used to
be 500 millions in the previous version) for debts for businesses
under special control, both for ordinary management and for
reactivation of industrial plant.
Guarantee fund for SMEs
It will be possible to guarantee indirectly financial procedures
already decided by investors at the date of the guarantee
request. Apriorityinobtainingtheguarantee will be granted
to businesses supplying goods or services to companies with
“at least an industrial plant of national strategic interest under
special control (ILVA)”.
It could’t be more explicit!

15. The so called “Decreto del Fare” and the Stability Law
2015 have allotted up to to the Cassa Depositi e Prestiti (CDP)
5 billion euro
The sum is to be distributed to the banks who have signed
the MiSE-ABI-CDP conventions regarding financial packages
for SMEs to invest in machinery, industrial plants and capital
goods.
State contributions can now be acknowledged as regards
financial packages granted by banks using their own funds,
without having to exploit the plafond of the Cassa Depositi
e Prestiti (CDP).
A new boost for the Sabatini bis

16. L’IIT could initiate or participate in innovative start-up, in accord
with MIUR and MISE, investing up to 10% of their resources.
The Government, in its initial proposal, defined IIT as the
Agency responsible for managing the intellectual property of
all the public research institutes and universities.
A risky regulation?
Maybe
The IIT is very concerned. Minister Giannini added that “the
regulation about patents is incompatible with the independence
of universities and public research institutes”.
A new role for the
Italian Institute of Technology (IIT)