Under Italian Law, capital contributions are typically performed through injection of cash. Those who intend to make capital contributions by means of assets or credits must provide the company with a sworn appraisal by a professional expert, to be attached to the company’s incorporation documents, which must, inter alia, describe such assets or credits and specify the criteria that were used for their evaluation.

The increase of capital under Italian Law triggers an amendment of the by-laws to be resolved by the shareholders’ meeting the minutes of which must be drafted by a notary, who subsequently files the minutes at the companies’ register. When the notary deems that the legal requirements of the meeting to proceed with the registration are not met, he must notify the directors of the company, which can avoid that the resolution is finally declared ineffective by calling a specific shareholders’ meeting to remedy the items not compliant with the law or by requesting the court to order that the shareholders’ meeting is recorded at the companies register.

A very recent and interesting decision rendered by the Court of Brescia on 18 July 2018 rejected the appeal filed by the director of a company against refusal by a notary to record at the companies register the minutes of a shareholders’ meeting which had resolved on the capital increase through contributions of assets. Specifically, the meeting had resolved on the contribution of certain artistic paintings by one shareholder and of a substantial amount of cryptocurrency by the other shareholder, for an amount of Euro 714,000, which was accompanied by the mentioned sworn appraisal drafted by a professional expert.

The notary, however, argued that the high volatility of the cryptocurrencies would have avoided a concrete evaluation of the amount of the contribution to the capital of the company.

In the appeal before the court, the company highlighted, inter alia, that the value of the cryptocurrency was confirmed by the appraisal of the expert, that such currency was effectively transferred to the company by means of the transaction password made available to the company by the shareholder, and that the theoretic value of cryptocurrencies is undisputable also on the assumption that the Italian Tax Authority clarified the need to register them in the annual tax statement of income.

The Court, however, did not dispute that cryptocurrencies may generally be considered as acceptable assets for capital contributions, but stated that they must strictly comply with Civil Code requirements under which they shall be eligible for economic evaluation. In the specific case, the Court maintained that such evaluation was lacking as the currency was indeed operated on a single platform managed by the currency creators, and the expert simply took its value from the website managed by, or somehow referable to, the same creators of the currency without making an independent analysis of its real value.

Therefore, the principle rendered by the Court is that cryptocurrencies must be subject to a proper economic evaluation in order to qualify as eligible assets for capital contributions, and a relevant criterion to assess such value lays in the actual extension and recognition of the market in which the currency is operated.