International Law Office - Legal Newsletters, Law Firm Directory and Legal News

Company & Commercial

Italy

Including: Corporate Forms; Incorporation; Company Names; Amendment of Bylaws; Shares and Shareholders; Corporate Governance; Auditors; Dissolution and Winding Up.

A new decree-law has substantially simplified the process of filing for the incorporation, modification or dissolution of a company by reducing the number of filings required with different authorities and transferring much of the responsibility for obtaining tax codes and social security registration to the Register of Enterprises.

Corporate Finance/M&A

International

The road to a successful deal holds a wide variety of challenges for both acquirer and target. Bridging the gap between different estimates of the target's value is a fundamental step towards a successful outcome. Various types of earn-out provision can help, but careful drafting is required to prevent future disputes.

Italy

When professional investors are entering into an investment agreement and can predict when the investment will reach maturity, a key consideration will be when and how to exit. A drag-along clause is one of the more interesting contractual clauses that may be included in agreements and bylaws to deal with exit issues.

Deal makers are generally quick to see the positives in asset deals, and are often right to do so. However, crucial issues may arise from the fragmentary and ambiguous Italian legislation in this area. Advisers to acquirers and vendors must be aware of the divergent opinions in case law that may jeopardise the will of the parties.

The impact of data protection law on due diligence activities is an increasingly significant issue. Vendors must take a cautious approach, regardless of whether the potential deal is domestic or international. Similarly, potential acquirers should adopt ad hoc measures to ensure that the processing of data relating to the target's employees, clients and suppliers does not break the law.

Civil Code changes have removed the prohibition against financial assistance in the case of joint stock companies, but make the provision of loans and guarantees subject to safeguards and set requirements to protect shareholders and third parties. For some commentators, it would be reasonable to extend the regime to limited liability companies, which have the same need to protect their corporate capital.

The government's legislative response to the financial crisis has included measures on M&A activity. Among other things, it has removed certain thresholds on the acquisition by industrial corporations of equity interests in banks' corporate capital, and has sought to shield Italian companies from hostile takeovers by downgrading the passivity and neutralization rules. Although widely welcomed, some changes have attracted criticism.

Representations and warranties are the cornerstone of an acquisition. Under Italian law, a seller has no specific obligation to provide minimum representations and warranties, but both buyer and seller are bound by good-faith principles. However, parties must carefully consider the nature of the information provided and the controversial remedies available in the event of infringement.