di Marco Gardino e Pierluigi Tusino
As part of the process of strengthening the equity of Italian companies and to fight the effects of Covid-19 undertaken with the “Decreto Rilancio” (Legislative Decree no. 34/2020), the legislator recently introduced important provisions. Article 44 of Legislative Decree no. 76/2020 (the so-called “Decreto Semplificazioni”, converted with amendments into Law no. 120/2020) introduced significant changes to the provisions of the Italian Civil Code relating to the share capital increases of Italian joint-stock companies (S.p.A.) and limited liability companies (S.r.l.).
As a preliminary comment, it is worth noting that the provisions of the Decreto Semplificazioni must be read in coordination with those set forth in art. 26 of the Decreto Rilancio, aimed at strengthening the equity of medium-sized companies (i.e. companies with revenues between Euro 5 and 50 million) through the granting of a tax credit for new share capital contributions.
The modifications introduced by the aforementioned article 44 of the Decreto Semplificazioni may be divided in temporary modifications and permanent amendments to the Italian Civil Code.
The temporary modifications
The temporary modifications introduced by the legislator through art. 44 of Legislative Decree no. 76/2020 will be in force for a limited period of time, until June 30, 2021.
The first paragraph of article 44 of the Decreto Semplificazioni provides for an express exception to the second paragraph of article 2368 and the third and seventh paragraphs of article 2369 of the Italian Civil Code.
With regard to S.p.A. companies, such temporary modifications provide for an exception to the quorums to convene and pass resolutions relating to (i) share capital increases by means of new contributions, as provided for by articles 2439, 2440 and 2441 of the Italian Civil Code and (ii) the introduction into the company's by-laws of the delegation of powers to the directors to approved increases of the share capital pursuant to article 2443 of the Italian Civil Code.
In light of such temporary modifications, resolutions of the shareholders of a S.p.A. concerning share capital increases or the introduction in the company’s by-laws of the delegation of powers to the directors to increase the share capital may be approved with the favorable vote of the majority of the share capital represented at the shareholders' meeting, provided that at least half of the share capital is represented at such meeting and that such resolution is passed by June 30, 2021. This also by way of derogation to the by-laws currently in force.
The second paragraph of article 44 of Legislative Decree no. 76/2020 extends the aforementioned temporary provisions also to limited liability companies (s.r.l.), in accordance with articles 2480, 2481 and 2481 bis of the Italian Civil Code.
With the initial version of the law decree the above provisions were dedicated to a limited number of s.p.a. only, while with the recent September modification by the conversion law it was extended to the generality of the s.p.a. and s.r.l. entities.
It is not clear if the above provision can derogate to the existing shareholders agreement in place or whether such agreement shall prevail between the parties who subscribed them. Also, it is clear how the provision gives an important tool in the hands of majority shareholders (with relevant financial capabilities) to recapitalize companies, with consequent dilution effects, also against the will of minority shareholders, who will not be entitled to rely on protections in terms of blocking minorities provided for by the by-laws. On the other hand, it is not clear whether such provision can supersede a specific right attributed to a single shareholder (and not to anyone with a certain quota) in a limited liability company (s.r.l.).
The last temporary provision introduced by the Decreto Semplificazioni (art. 44, third paragraph, Legislative Decree no. 76/2020), applies to companies with shares listed on regulated markets or traded in multilateral systems. This modification relates to share capital increases by means of new contributions with the exclusion of option subscription rights, provided for in the fourth paragraph, second sentence, of article 2441 of the Italian Civil Code.
According to the Decreto Semplificazioni, the current limit of the exclusion of subscription rights for current shareholders to 10% relating to share capital increases by means of new contributions of companies with shares listed on regulated markets or traded in multilateral systems - provided for in the aforementioned article 2441 of the Italian Civil Code. - is increased to 20% of the pre-existing share capital, even if no specific provision in the company's by-laws exists.
The permanent amendments
As far as the permanent amendments implemented by the Decreto Semplificazioni are concerned, the same are set out in the fourth - and last - paragraph of article 44 of Legislative Decree no. 76/2020.
These amendments only apply to S.p.A. companies, in relation to article 2441 Italian Civil Code, which regulates the option right for the shareholders in the event of a share capital increase.
The amendments made to the aforementioned article of the Italian Civil Code are three:
- the reduction by one day (from 15 to 14 days) of the deadline for exercising the subscription right (article 2441, second paragraph of the Italian Civil Code). This term starts from the date of publication of the offer on the company's website or, otherwise, from the registration of the offer with the Company Registry;
- the addition of two specific details in the third paragraph of article 2441 of the Italian Civil Code: (i) the shares affected by this provision may also be those admitted to a multilateral trading facility (as well as traded on regulated markets) and (ii) the number of sessions for the offer of unexercised subscription rights by the directors is reduced from 5 to 2;
- the introduction to the fourth paragraph of art. 2441 of the Italian Civil Code of a provision that clarifies that the shares affected may also be those listed on a multilateral trading facility as well as on a regulated market and, in addition, the provision that the directors are required to prepare a report showing (i) the reasons for the exclusion or limitation of the subscription right and (ii) the criteria adopted for determining the price of the issued shares. This report must be filed at the company's registered office and published on the company's website within the term of the call of the shareholders' meeting, except as required by specific laws.
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