Concessional loans for joint ventures
Article 7 of Law 49 of 1987 allows to grant concessional loans, financing through venture capital, to Italian companies creating joint ventures in the Developing countries or increasing the capital of existing joint ventures. The goal is the creation of employment and local added value. The Resolution CIPE 56 of 2 August 2013 and the Resolution of the Steering Committee for Development Cooperation of 66 May 30, 2014 establish the conditions and the procedure for granting these loans. Resolution 108 of 18 October 2012 Steering Committee for Development Cooperation indicates the eligible countries.
Beneficiaries are Italian companies acquiring shares of venture capital in joint ventures to be realized in certain developing countries, with the participation of public or private investors of the destination country. Regarding the type of investment, the participation of Italian companies in the capital of the joint venture for not less than 20% and not more than 75% can be financed. The participation of the local partner must not however be less than 25%.
Such regulations, resulting from a series of regulatory changes and newly introduced rules, have been adopted by Law August 11, 2014, n. 125 Art. 27. Art. 27, paragraph 3, letter a) provides for the granting of concessional loans to Italian companies to ensure financing of the share of venture capital, also as advance capital, for the establishment of joint ventures in the partner countries identified by a resolution of Inter-ministerial Committee for Development Cooperation (CICS), with particular reference to small and medium-sized enterprises; letter b) provides for the granting of soft loans to public or private investors or international organizations, in order to finance joint ventures to be realized in the partner countries or to deliver other forms of support identified by CICS to promote the development of the partner countries; letter c) provides for the establishment of a guarantee fund for loans. Such a guarantee fund can cover 60% of the financing (in the case of large enterprise), or 80% (in the case of SMEs). The remaining part of the loan not covered by the guarantee fund will be adequately ensured. The Rules of the Guarantee Fund have been approved by a resolution of the CIPE, of February 20, 2015.
According to that Law 125 (art. 27) the CICS determines: the share of the revolving fund that can be used annually for the purposes referred to in paragraph 3 above; the criteria for selection of the initiatives: these must take into account the purposes and geographical or sectoral priorities of the Italian Cooperation as well as the guarantees offered by the partner countries to protect foreign investment. These criteria aim to prioritize job creation, in compliance with the international labor conventions, and local added value for sustainable development. Finally, the CICS sets out the conditions for the concession of loans.