The Italian government has adopted, in March 2020, the Cure Italy Decree and, in April 2020, the Liquidity Decree to provide support to liquidity and financing for Italian businesses and households who suffered losses as a result of the COVID 19 pandemic.

In particular, the Cure Italy Decree, in force since 18 March 2020, provides for:

> the strengthening of the system of economic shock absorbers (i.e. the wage guarantee funds – Cassa Integrazione Guadagni and wage integration funds Fondo Integrazione Salariale) to finance unemployment;

> support to the liquidity of small and medium-sized businesses (“SMEs”) through a legal moratorium of loans and new state-guaranteed loans granted by the banking system and the SME Guarantee Fund; and

> deferral of certain tax and social contribution payments.

These measures were further strengthened under the Liquidity Decree, in force since 9 April 2020, which provides for:

> temporary measures to strengthen the liquidity of businesses (Article 1): SACE, the Italian Export Agency, will guarantee bank loans made available to large businesses, and, to the extent they have fully absorbed the access to the SME Guarantee Fund reserved to them, also to SMEs, contract workers and professionals.

> measures to support export, internationalization and investment by businesses (Article 2): a co-insurance system has been introduced. The state will assume up to 90 % of the non-market risks (as defined in EU legislation) under the guarantees issued by SACE. The remaining 10 percent will be assumed by the beneficiary of the SACE-guaranteed loan.

> SME Central Guarantee Fund (Article 13): the SME Guarantee Fund has been strengthened. Until 31 December 2020 the SME Guarantee Fund will issue guarantees – free of charge and securing amounts of up to EUR 5 million – to businesses with no more than 499 employees.

> Temporary capital reduction measures (Article 6): during any financial years ending on or before 31 December 2020, companies are not obliged to reduce and/or increase their share capital as required by the Italian civil code in the event of losses which (i) reduce the company’s share capital by more than one third  or (ii) cause the share capital to fall below the minimum capital required by law. During the same period, the duty to liquidate the company in case of capital erosion set out in the Italian civil code does not apply. Therefore, companies are not obliged to vote on their voluntary liquidation in this case. As a result, the directors may continue to operate the company notwithstanding significant losses, without being exposed to liability for not having managed the company for the sole purpose of preserving the value of its assets, as is normally required under Italian civil code.

> Temporary measures regarding shareholder loans and intragroup loans (Article 8): the automatic subordination of shareholder loans to claims of other creditors if the company finds itself in a financially unbalanced situation and/or would have reasonably required an equity injection, does not apply to shareholder and intragroup loans granted between 9 April and 31 December 2020.

A new law decree is expected to be issued in May, with further support measures.