Introduction section Prescription of government bonds
Prescription of government bonds
Italy dematerialized Government Bonds when it adopted the euro in 19991).This solved problems inherent in paper form Government Bonds such as, among others, the expiry of the prescription period. Nowadays, payments are automatically credited to a current account held at a bank or a post office. Investors no longer need to exhibit the bond or the coupons to cash them in.
The law in force on prescription of Government Bonds is article 21 of the Public Debt Consolidated Act – D.P.R.. no. 398 of 30 December 2003. This mainly concerns the outstanding amount of circulating non-dematerialized (paper form) bonds. The law provides for the prescription of capital represented by Government Bonds and interest payments not claimed within five years of the repayment date. Later events, such as the accidental recovery of the bonds themselves, which occurs often, are not relevant to calculate the prescription period. Interest or revaluation cannot accrue on Government Bonds after their repayment date.
The oldest law (19102) on the prescription of Government Bonds considered different terms for its completion - thirty years for capital and five years for interest payments. The next law (19573) shortened the term to ten years (twenty for registered securities with encumbrance entries) for the capital, leaving the five-year term for interest payments unchanged. Current legislation (since 19934 for bearer securities and 19985 for registered securities), provides a five-year prescription term (both for capital and interest payments). Both current and previous laws consider the same starting date for the prescription period: the repayment/maturity date for the capital and the interest payment dates.
Prescription of interest bearing postal bonds transferred to the State
Interest bearing postal bonds were issued from 18 November 1953 until 13 April 2001. They were transferred to the State as per the Ministerial Decree of 5 December 2003 (enacting Law no. 269 of 24 November 2003 which transformed “Cassa Depositi e Prestiti” into a joint-stock company). They are prescribed 10 years after their maturity as per paragraph 1, of article 8 of the Ministerial Decree of 19 December 2000.
Prescriptions can be interrupted and/or suspended for the reasons expressly listed in articles 2941 and following of the Civil Code. Interest bearing Postal bonds do not accrue interest and cannot be revalued after their redemption date.
1 L.D. no. 213 of 24 June 1998.
2 R.D. no. 536 of 17 July 1910.
3 L. no. 752 of 12 August 1957, and subsequent D.P.R. no.1343 of 14 February 1963.
4 L. no. 313 of 12 August 1993.
5 L. no. 449 of 27 December 1997