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Investing in Italy

Società per Azioni S.p.A. Joint Stock Company in Italy

The Società per Azioni (equal to Joint Stock Company, JSC) is the main form of company for investments requiring significant capital.

In fact, the S.p.A. share capital may not be less than € 120,000.00, it is divided into “shares”.
The share capital amount of a S.p.A. is stated when the S.p.A. is incorporated and it is subscribed by founders member. In case there is a single founder, there will be only one subscription; when there are multiple founders members, they all shall subscribe parts of share capital since subscription of whole capital.

By the subscription of the share capital the shareholders state to pay the share of capital they subscribed or by:

  • transfer of an amount of money to the S.p.A. to a bank account in the company’s name or to the cashier, or
  • payment in kind only if it is expressly set in the Memorandum of Association, or
  • transfer of receivables whose value shall be equal to the amount of capital subscribed.

When there are multiple founding shareholders, they can pay the capital subscription in cash without paying the entire amount of their shares, in fact, they can deposit soon only 25% and agree to pay the remaining 75% subsequently upon request of the board of directors.

In the event of payment in kind or by transfer of receivables, the share capital must be totally paid.

 When there is a single founder, he must pay the entire share capital subscription in advance, regardless of whether payment is made in cash or by goods or receivables (in kind).

The founding shareholders shall pay the premium shares in its entirety after S.p.A. establishment.
Shares representing the share capital will be issued after the Memorandum of Association has been registered at the Business Register and the S.p.A. company has thereby been listed.
The types of Shares can be:

  • Material Shares, such as the physical securities issued by the company, they shall be registered and bear the name of the holder; or
  • Immaterial Shares, they shall be registered and the methods of validation and circulation will be defined by the Articles of Association of the issuing company.

The par value of each single share is equal to a fraction of the share capital and in case shares have not a specified par value, it will be determined by dividing the share capital by the number of shares issued.

Each shareholder shall possess a number of shares in proportion to the amount of subscribed share capital; the value of shares can not be greater than the amount contributed, unless different provisions of the  Articles of Association which fix for a different amount of shares.

Usually the shares are all of equal value and give holders the same rights, anyway, the S.p.A. can create different types of shares with different rights attached, this is possible also when company has been just incorporated or afterwards; the S.p.A. may freely settle the features of the types of shares, the different types of share can be like:

  • preferred shares with priority in earnings distribution
  • preferred shares in postponement of losses
  • preferred shares in the event of company liquidation
  • shares with limited voting rights
  • shares in favour of employees
  • redeemed shares
  • shares with ancillary rights
  • tracking stocks
  • redeemable shares
  • savings shares.

The S.p.A. may also issue bonds, which represents a debt that the company has with the holders of the bond up to a given amount. All possibilities of using bonds are ruled by laws which concern: issuance, rights and obligations of the holder, the rate of conversion of bonds into shares.

The S.p.A. may also issue hybrid financial instruments, which grant to holders the rights of participation and property but not voting rights. The Articles of Association of the S.p.A. sets the rules, conditions and procedures for issuance, rights of the holders, penalties in the event of non-performance of obligations and   circulation.

The corporate law reform of 1 January 2004 has approved the “segregated asset pool” by which the S.p.A. may separate an amount of its equity and earmark it exclusively to any specific business deal through the issuance of financial instruments; the law has specified the rights of the holders of these instruments and limited to the segregated asset pool any liability for obligations arising from the business deal. The S.p.A. may subscribe financing agreements for certain business deals, specifying that all or a part of the revenues coming from the deal shall be earmarked to repay the debt in whole or in part (“segregated financing”).

The corporate law reform of 2004 stated the Sole shareholder of a S.p.A. under which is now possible to establish a S.p.A. by a single shareholder which benefits from limited liability only whereby:

  • share capital is wholly subscribed and paid up
  • have been met legal obligations on disclosure of existence of a sole shareholder, replacement thereof or establishment (or re-establishment) of multiple shareholders.   

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