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Law: Corporate Guarantee in Italy




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1) ​A corporate guarantee is an official letter where a guarantor becomes responsible for handling debt payments or takes overall responsibility for debt repayment in case the debtor (tenant) defaults on the execution of a contracts or a lease agreement.


2) ​The parent corporate guarante (pcg) represents the guarantee released by the parent company in favour of third parties to guarantee the commitments of a subsidiary, and It is a legal agreement between a borrower/debtor, lender/guaranteed, and guarantor (parent company), whereby a corporation (e.g., parent company) takes responsibility for the debt repayment of the borrower/debtor provided it faced bankruptcy or doesn't comply with the main agreement terms.


3) ​The following parties are involved in a corporate guarantee:


▪ Lessor: who has to be guaranteed for the execution of the contract by the other entity;

▪ Tenant: debtor or who has the obligation to pay monthly.


▪ Guarantor: the parent company who agrees to be liable for the repayment if the Tenant fails to pay.



4)​ Corporate guaranteed became parent company guaranteed when the guarantor ​is the parent company pursuant to article 2359 of italian civil code.


As ​above mentioned, there is a legal presumption (unless proved otherwise) that ​the direction and coordination of companies is exercised, inter alia, by those ​companies which control them pursuant to Article 2359 CC. It is therefore ​important to briefly describe the contents of this and its related provisions.


5) ​Article 2359 CC contains a definition of controlled companies, which are: (i) those ​companies where another company has the majority of the votes exercisable in ​the ordinary shareholders' meeting; (ii) those companies where another company ​has votes sufficient to exercise a dominant influence in the ordinary shareholders' ​meeting; (iii) those companies which are under a dominant influence of another ​company due to particular contractual links with the same.

For purposes of items ​(i) and (ii) above, the votes exercisable by controlled companies, fiduciary ​companies and intermediaries are also computed, while votes exercised on ​behalf of third parties are not.


6)​ For the guaranteed the following data should be clearly stated in a corporate ​guarantee:


1. The debtor’s name.

2. Details of the guarantor (e.g., name, contact info, address, etc.)

3. The lessor’s information (e.g., name, address)

4. Statement of any limits to the guarantee (e.g., a maximum amount of being repaid by the guarantor)

5. Time-Duration;

6. Statement: at first call and without exception.





​It is important to always check the legal names of the guarantor, the lessor, and ​the tenant in the document.

​7) ​Types of Corporate Guarantees: Corporate guarantees can be limited and ​unlimited. A limited guarantee means that a guarantor will be liable for the debt ​of the ​debtor only to a certain extent.

​In Italy in accordance with article 1938 of the civil code only limited guarantee are ​legal.

Unlimited guarantee, where the guarantor is not limited by a particular ​amount, are not permitted by Italian law.


​For such reason it's important to focus:

1. type of obligations to be guaranteed

2. total amount of such obligations

3. time of the obligations, monthly/yearly.

4. documents.

​8)​ We can identified many kind of Guarantee, but we focus on:

​A) Performance Guarantee (Performance Bond) – Requested by the creditor, in ​lieu of a cash deposit, to promptly retaliate in the event of a declaration of default ​of the ​contractual obligations of the supplier of goods or services

​B) Payment guarantee (Payment guarantee) – It has the function of guaranteeing ​the execution of a payment, to be executed directly in favour of the creditor.


​9) ​It's also very important to specify if the parental guaranteed will be for the “same ​obligation” of the part of the contract or will be for the amount without reference to ​the original contract obligations.

In few words, The parent company will guarantee the obligation arising from the main contract or only the money value.


​10) ​In order to have the above mentioned effect, it's important to specify in the ​guarantee text that article 1945 and 1957 Italian civil code will have or not effect.

​11)​ Time and effectiveness:

​In order to put in action the guaranteed it's important to carry out a injunction in ​Tribunal. Such actions, ruled by article 633 and 634 of the Italian procedural civil ​code, normally require 15/30 days but could be opposed the guarantor that will not ​be in accordance with the request.

​Normally the creditor – if use the rights documents such as invoices and contract ​documents in which is clearly focus the tenant/debtor's obligations – will have the ​declar​ation of inforceability in accordance with the article 648 of the procedural ​civil code within two weeks.

​The tribunal will be indicated in the text of the guaranteed, normally it's his city ​tribunal ( city in Italy).

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