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The revolving pledge agreement - new measures introduced by the Decree-Law 'Cura Italia' (D.L. no. 18/2020)

2020-05-30 07:03

Maria Songül Akin

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The revolving pledge agreement - new measures introduced by the Decree-Law 'Cura Italia' (D.L. no. 18/2020)

The Decree-Law 'Cura Italia' extended the possibility to enter into a revolving pledge agreement for all the Agri-Food products marked PGO and PGI



On  April 29th 2020, the Decree Law no. 18 of 17th March 2020 (known as 'Decreto Cura Italia'), coordinated with the enacting Law no. 27 of 24th April 2020, was published on the Italian Official Gazzette.

Among the various amendments made to the Decreto Cura Italia by the  abovementioned enacting Law, the legislator extended the possibility to enter into revolving pledge agreements for all PGO and PGI Agri-Food products (so far these type of pledge agreements were encountered only in regard to Agri-Food products such as Italian Prosciutto PGO and seasoned dairy products).

It is of clear relevance that, considering the historical moment of crisis that companies are facing, there is an increasing difficulty in gaining access to credit and a considerable reduction in investments.

The Agri-Food sector (with estimated revenues of 7.26 billions for 300 PGO, PGI and TSG products) demanded on several occasions legislative measures, in order to facilitate credit access and stimulate investments by means of security instruments such as the revolving non-possessory pledge agreement.

Before receiving due attention by the Law, the revolving pledge agreement was created by the Italian case law and legal theory and was widely used within the Agri-Food sector and the banking practice.

The banking sector used the revolving pledge as a solution for the credit instruments which had an earlier expiry date than the duration of the underlying security agreement.

Thanks to a so called 'revolving' clause, the revolving pledge agreement provides the possibility to replace the pledged goods without any novation of the initial security agreement while safeguarding the continuity of the latter. 

The revolving pledge agreement

Its fundamental feature regards the fact that the original agreement is replaced by a new one during the execution of the former without replacing the underlying guarantee document.

Initially, the revolving pledge agreement was extended to the Agro-Food Sector for the hams and dairy seasoned products protected under the designation of origin (introduced, respectively, by means of Law no. 401 of 24th July 1985 and no. 122 of 27th March 2001). By overcoming the limits of the necessary dispossession, provided for the traditional pledge form, the farmers have been able to successfully seize an adequate flow of funding. 

Later on, the revolving pledge agreement was used for financial collateral arrangements (Legislative Decree no. 170 of 21st May 2004 for the implementation of the European directive no. 2002/47/CEE). In this case, it is considered valid and effective the clause according to which the pledgee may dispose of the financial assets, including through sale.

Further after (thanks to the Law Decree no. 59 of 2016 converted into Law no. 119 of 2016), it was possible for the entrepreneurs, enrolled in the Companies’ Register, to enter into pledge agreements regarding mobile assets used for the business, with the exception of registered mobile assets.

The new Law Decree no. 15/2020 converted in Law no. 27/2020


The amendments to the Law Decree no. 18/2020 during its conversion in Law interested also the introduction of two new commas duo-decies and duo-terdecies, by means of which all agricultural and food products protected under the designation and indication of origin are now subject to revolving pledge agreements and consequently, as far as compatible, with articles 2786 et seq. of the Italian Civil Code applicable to pledges.

How does the revolving pledge agreement work?

Compared to the traditional pledge agreement, by means of the so called "revolving pledge agreement", the essential element of the traditio (meaning the debtor's dispossession of the goods and their delivery  in the hands of the creditor) is no longer required in these cases.  

The revolving pledge agreement allows in fact the agri-food producers of IGP and DOP goods to sell the products subject to revolving pledge and to replace them with new products leaving the guarantee unaltered.

Similarly to the traditional pledge agreement, the revolving pledge offers to the creditor-funds provider, a special pre-emption right upon the products expressly specified in a register that is kept and updated by the debtor company which will also be in posession of the goods in its own establishments, in compliance with the terms established with the creditor.

The benefits of such mechanism are far from indifferent due to the fact that it allows agrifood companies to be competitive even in case of production cycles which imply long maturation periods. In fact, the companies may gain access to funds without being forced to wait the end of the production cycle and they can market the products subject to revolving pledge prior reconstitution of the guarantee with other identical goods. 

Subject of the revolving pledge agreement

The revolving pledge agreement applies to:

-       agrofood goods ( as laid down in EU Regulation no. 1151/2012);

-       wines (as laid down in EU Regulation no. 1308/2013);

-       spirit drinks (as laid down in EU Regulation no. 1308/2013).

How will the goods subject to revolving pledge agreement be identified?

Article 79, commas duo-decies and duo-terdecies of the Italian Law Decree no. 18/2020 provides that the goods subject to revolving pledge are to be identified by means of specific documents and specific registers.

The Ministerial Decree of 23rd July 2020 identifies the registers differentiated by the type of good, the provisions regarding register keeping and the registration and constitution procedure of the revolving pledge agreement. le modalità di tenuta degli stessi nonché la procedura di registrazione della costituzione ed estinzione del pegno. 

For grapevine products such Per i prodotti vitivinicoli such requirements will be fulfilled with the annotation in the telematic registers of the National Agricultural Information System.

The essential requirements of the revolving pledge agreement 

The revolving pledge agreements is formally valid if:

-       it is formed, under pain of nullity, by means of a written agreement between the creditor, debtor and eventually a revolving pledge grantor third party;

-       the written agreement provides the description of the goods subject to pledge, the guaranteed amount and the maximum amount guaranteed;

-       the replacing goods' value is not higher then the replaced goods' value.

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