Riassunto esame Italian and european company law, Prof. Serafin Giulia, libro consigliato Italian company law, Davide mascagni

AMENDMENTS TO THE SHARE CAPITAL

Increase of the share capital:

1. material increase (paid increase)

2. nominal increase (free increase)

reduction of the share capital

1. material reduction

2. nominal reduction (reduction for losses)

MATERIAL INCREASE

new financial resources = new contributions

 issuance of new shares

 contribution yet paid, no losses increase by the profit

 competence

 non divisible and divisible increases

 increase in subscribed

Shares issued for consideration, in the course of an

capital, shall be paid up to at least 25 % of their nominal value or, in the

absence of a nominal value, of their accountable par

provision is made for an issue premium, it shall be paid in full.

Where

RIGHT OF PRE-EMPTION art 2441

only persons entitled

 ratio legis

 term of exercise

 shares on which pre-emption rights have not been exercised

 Circumstances in which the right of pre-emption can be excluded

 Indirect exercise of the pre-emption right

 Have to record in business register



NOMINAL (OR FREE) SHARE CAPITAL INCREASEart2442

that can be used for the free share capital increase

assets that can be used for the free share capital increase

methods

REDUCTION OF SHARE CAPITAL

Material share capital reductionart 2445

→causes and conditions

→the shareholders’ meeting notice of call

→recording, execution and creditors' opposition

→ways of execution

Nominal share capital reduction (due to losses)

1. optional reduction (decrease of less than 1/3 of the share capital)

2. mandatory reduction:

2.1 Decrease of more than 1/3 of the share capital that does not affect

the legal minimum capital

2.2. Decrease of more than 1/3 of the share capital affecting the legal

minimum capital

Decrease of more than 1/3 doesn’t affect the legal minimumart 2446

1. calling of the shareholders’ meeting

2. up-to-date balance sheet, directors' report and observations of the board

of statutory auditors

3. appropriate measures of the shareholders' meeting compulsory

reduction: within a financial year the loss has not decreased to less than

1/3

Decrease of more than 1/3 of the share capital affecting the legal minimum

capital art 2447

1. calling the stakeholders meeting

2. measures that must be taken

BONDS

To raise funding, companies limited by shares may issue bonds

Bonds: debt securities that represent equal value fractions of a unit operation

in the form of a loan

BONDSSHARES

1. equal nominal value

2. grant equal rights not administrative

BONDS SHARES

≠

1. bonds grant the status of creditor

2. funds provided to the company are not contribution loan capital =

ASSET

3. bondholder the right to receive fix remuneration and receive back their

loan at the end

KIND OF BONDS

1. index-linked bonds

2. convertible bonds

3. warrant bonds

4. subordinate bonds

5. participant bonds

BOND ISSUANCE LIMIT

bonds may be issued for an amount that in the aggregate does not exceed

twice the share capital (subscribed capital, not just paid-up capital), plus the

legal reserve and the available reserves resulting from the latest approved

financial statements

financial instruments that contain an obligation to repay the capital,

those

including conditional repayment, should be calculated

cannot change during the life of the bond:



/(

bond issued capital+ reserve)

company can’t reduce voluntary capital because the ratio will change

The reduction are allowed, but profits can’t be distributed until the

Compulsory

company has restored the range

SPECIAL SITUATIONS

1. subscription by istituional investors

2. bonds are guaranteed by a first priority mortgage

3. reasons that involves national economy

4. bonds listed in the trading market

5. convertible and warrant bonds

ISSUANCE PRUDENCE

competence: the issuance of bonds is approved by the

 the minute must be drawn up by a notary, so it is subject to a legality

 check

the minute must be recorded in the Business register

 the resolution shall only take effect and may only be implemented after

 its recording

bonds content

 bond register



CONVERTIBLE BONDS

Convertible bonds are bonds that give the right to subscribe shares of the same

company, based on a predetermined exchange ratio (conversion rate), using

the amounts paid when the bonds are purchased as contributions.

one who exercises the conversion right ceases to be a bondholder and

The

becomes a shareholder.

issuance of convertible bonds implies the need to also pass a resolution

The

for a share capital increase (against contributions, i.e. material increase) that

will be subscribed when the bondholders exercise their right to subscribe the

new shares (right of conversion).

REGULATION

persons eligible to subscribe to the convertible bonds: shareholders and

bondholders of convertible bonds already issued

bis:

conditions for issuance 2420-

share capital must have been fully paid up

 convertible bonds cannot be issued for an amount lower than their

 nominal value 2420-bis):

Competence (art extraordinary shareholders’ meeting

 delegation of competence to directors in the instrument of incorporation:

 2420-ter c.c.

delegation must determine a specified amount and a maximum period,

(The

which may not exceed five years)

Content of the issuance resolution: conversion rate, period and procedure

RULES THAT PREVENT THE RIGHT OF CONVERSION FROM BEING

AFFECTED:

1. in the event of a paid capital increase and of new issues of convertible

bonds, pre-emptive rights also accrue to existing convertible bond

holders

2. in the case of a free capital increase and a reduction for losses, the

conversion rate is automatically adjusted to the amount of the increase

or reduction

3. the company may not pass a resolution to materially reduce the share

capital, to merge, to divide, or to change the criteria for the distribution

of profits until the deadline set for conversion has expired

ORGANIZATION OF BONDHOLDERS art 2415-2418

1. bondholders meeting

2. bondholder’s common representative

BONDHOLDERS MEETING

legis

ratio

competences

of the extraordinary shareholder’s meeting → call

rule to the bond terms and conditions: higher majority

changes in Business register

recording

BONDHOLDERS COMMON REPRESENTATIVE

and removal

Appointment

of office

Termination

competences

LIMITED PARYNERSHIP (S.P.A.) AND LIMITED PARTNERSHIP BY SHARES (S.A.P.A.)

DIFFERENCES

PARTNERSHIP LIMITED BY SHARES S.A.P.A.

liability to the company = legal personality 2462

2 types of partners art 2452

1. general partners: jointly and unlimitedly liable for the corporate

obligations

2. limited partners: liable limited to the share conferred

instrument of incorporation must state who are the general partners. It is

The

not necessary the appointment of the directors

The name of the limited partnership by shares must include the name of at

least one of the general partners and must indicate that it is a SAPA

THE SHARES

Shares held by general partners are not a special class

if you buy that shares you won’t become the manager

 general partners’ shares are freely transferable (except if denied from the



bylaws)

In order to pass a resolution:

majority of extraordinal shareholders’ meeting (competences for direct

 appointment or removal) art 2457

consent of general partners ( the have right to VETO)



DIRECTORS

Directors must be chosen from among the shareholders, and they acquire the

status of general partner in this moment

RESOLUTION

be removed, also without a just causa, but the removal must be

can

approved with an extraordinary shareholders’ meeting resolution

directors can’t be forced to work with partners they do not approve



Strengthening the independence of the control body:

Limited partners may not vote in resolutions concerning the appointment and

removal of statutory auditors and the exercise of the liability action against

them

LIMITED LIABILITY COMPANY (company limited by quotas) S.R.L.

Art 2462 liability for company obligation

Art 2468 quota holders’ stakes cannot be represented by shares (not a

financial product)

partners quotas are represented by shares 2468



BENEFITS:

1. lower capital requirement

2. lower operating and incorporation costs

3. greater organizational flexibility

INCORPORATION

Not allowed public subscription

name freely determinable (compulsory the “.srl”)

Company

Can be incorporated with a time limit

instrument of incorporation must be drawn up in the form of a public

The

deed and it can have the form of an agreement or of a unilateral act 2463

art

In the last case we will have a single-member company, but some specific rules

will apply with regard to:

1. contributionsart 2464

2. publicationart 2470

unlimited liability of the sole quota holder if he/she fails to fulfill his/her

obligations under the previous rules

CONTRIBUTION

“Any asset item which can be valued may be contributed”

1. cash

2. asset in kind of receivables

3. work and services

general rule: the total value of contribution cannot be lower than the total

amount of the company’s capital

CONTRIBUTION IN CASH

1. unless other indications contribution must be in cash

2. at the time of incorporation is required to pay at least 25%

3. payment can be replaced by an insurance policy or bank guarantee of, at

least, the same amount

the non-cash contribution must be checked by the auditors (chosen by the



expert)

auditors expert appointed by the court

 ≠

Expert experts that evaluate by the person selected by the court

Auditor the shareholder that contribute select an expert that has to estimate

the asset

CONTRIBUTION OF WORK AND SERVICES

1. a quota holder obligates himself to work for the company or to give his

services

2. this type of contribution must be guaranteed by an insurance or a bank

guarantee

3. if not provided, this type of contribution is subject to estimation

CONTRIBUTION OF ASSETS IN KIND OF RECEIVABLES 2465

1. Sworn report by an auditor or an audit firm

2. Content and purpose

3. Director check

POTENTIALLY RISKY ACQUISITION

members sell to the business into 2 years from the registration of the



business

1. Procedure of evaluation

2. Need