Structure and process, legal regulation and consents

Structure

How are acquisitions and disposals of privately owned companies, businesses or assets structured in your jurisdiction? What might a typical transaction process involve and how long does it usually take?

Acquisitions and disposals of privately owned companies, businesses or assets are typically carried out through a one-to-one negotiation between the buyer and the seller. In most cases, the buyer and the seller are limited liability companies or joint-stock companies.

Depending on the complexity of the deal and the value of the transaction, the process may be carried out through an auction process organised by the seller with the support of financial, legal and other advisers.

A standard auction process in Italy would entail a first phase during which several buyers are invited to submit preliminary and non-binding offers, on the basis of which one or more potential buyers are then admitted to a second phase (depending on the process, one of the potential buyers may be granted with exclusivity for a limited period of time to finalise the deal). During the second phase, the potential buyers carry out all the due diligence activities (if not conducted in the first phase), then possibly submit a binding offer to the seller and engage in a negotiation process.

In general, a standard acquisition process lasts around six months from the start of the negotiations (in some cases, depending on, inter alia, the complexity of the deal, the process may take longer time).

Legal regulation

Which laws regulate private acquisitions and disposals in your jurisdiction? Must the acquisition of shares in a company, a business or assets be governed by local law?

Private acquisitions and disposals in Italy are normally regulated by applicable Italian law provisions. Indeed, the parties may choose the law of a different jurisdiction to regulate their contractual obligations, although certain law provisions may not be derogated from by the parties (eg, the laws regulating the transfer of a real estate asset). Moreover, an Italian court may impose the application of certain mandatory provisions of Italian law and refuse to apply any law other than Italian law as the governing law of a contract if its application is manifestly incompatible with public policy in Italy.

Legal title

What legal title to shares in a company, a business or assets does a buyer acquire? Is this legal title prescribed by law or can the level of assurance be negotiated by a buyer? Does legal title to shares in a company, a business or assets transfer automatically by operation of law? Is there a difference between legal and beneficial title?

In the case of a sale, the buyer acquires full ownership of the shares, business or assets purchased from the seller. Indeed, Italian law prescribes that the seller shall ensure that the buyer acquires such ownership right over the transferred asset, and in cases where the buyer loses ownership over an asset because of third party’s rights, the seller shall indemnify the buyer for any losses incurred in respect thereto. Nevertheless, in the acquisition agreement, the buyer may negotiate additional guarantees to be given by the seller with respect to the transferred asset.

Although the general principle of Italian law is that, upon agreement among the parties, the ownership is transferred to the buyer, the duly executed perfection of the transfer of shares, a business or assets may require additional formalities. In particular, for the transfer of the shares of a joint-stock company, either the endorsement of the shares’ certificates or the registration of the transfer on both the share certificates and the shareholders’ ledger is required, while for the transfer of quotas of limited liability companies or for the transfer of a business or certain assets (eg, real estate assets) a specific deed must be executed before an Italian public notary, then registered with the competent public registers.

The distinction between beneficial and legal title is not expressly provided by the Italian civil code; therefore, it is not a common concept in private transactions. Such a distinction is instead considered in different fields such as tax law.

Multiple sellers

Specifically in relation to the acquisition or disposal of shares in a company, where there are multiple sellers, must everyone agree to sell for the buyer to acquire all shares? If not, how can minority sellers that refuse to sell be squeezed out or dragged along by a buyer?

In cases where there are multiple sellers, all such sellers must expressly agree to transfer their shares in a company unless the company’s by-laws or a shareholders’ agreement, or both, provide for a specific right of one of the sellers (generally the majority shareholder) to drag along all the other shareholders in order to sell to the buyer 100 per cent of the shares (in such a case, the seller is obliged to sell). Exclusively in acquisitions of listed companies, a buyer may have the right, upon the occurrence of certain circumstances, to squeeze out minorities that are not willing to sell their shares.

Exclusion of assets or liabilities

Specifically in relation to the acquisition or disposal of a business, are there any assets or liabilities that cannot be excluded from the transaction by agreement between the parties? Are there any consents commonly required to be obtained or notifications to be made in order to effect the transfer of assets or liabilities in a business transfer?

In the context of an acquisition or disposal of a business, the buyer will be jointly liable with the sellers for the tax liabilities of the transferred business for the year of the transfer and the two preceding years, and this regime would apply even if different agreements have been reached between the parties. See questions 33 to 35 regarding employment-related matters.

In addition, the seller will continue to be liable for the debts concerning the transferred business unless the creditors have agreed otherwise.

Finally, contracts (other than those having a personal nature) and receivables relating to a transferred business are automatically transferred to the buyer unless the parties agree otherwise. Specific notification duties or the obtainment of express waivers or consents may be provided by the contractual documentation concerning the agreements or receivables that are part of the transferred business.

Consents

Are there any legal, regulatory or governmental restrictions on the transfer of shares in a company, a business or assets in your jurisdiction? Do transactions in particular industries require consent from specific regulators or a governmental body? Are transactions commonly subject to any public or national interest considerations?

The government has special rights (golden powers) in connection with the approval of certain corporate resolutions related to the disposal or change of use concerning assets or companies identified as having strategic importance (eg, telecommunication companies, companies manufacturing military products, metropolitan networks, routers and long-distance networks, facilities used for the provision to end-users of certain services, high-tech companies). In particular, the special rights of the government include, in certain circumstances:

  • a veto right to certain corporate resolutions concerning extraordinary transactions (such as a merger, demerger, transfer of technology);
  • the right to impose specific conditions in the case of an acquisition (direct or indirect) by a non-EU purchaser of a controlling stake in a company owing strategic assets; and
  • the right to oppose the above acquisition in only exceptional cases if the specific conditions are not sufficient.

Moreover, depending on the type of industry, certain transactions may require consent from regulators or public authorities, or both. For example, the acquisition of stakes representing 10 per cent or more of an Italian bank needs to be authorised by the Bank of Italy.

Are any other third-party consents commonly required?

Generally speaking, consent is not required to execute a transfer of shares, assets or business. However, a consent may be required in certain specific cases such as, among others, for transfers of shares, the consent of the board of directors of a company in cases where the shares are to be transferred to a competitor, provided that such consent is statutorily required by the company’s by-laws; and for asset transfers, the consent of certain authorities may be required in cases where the asset is subject to specific restrictions for public interest reasons.

Moreover, third-party consents typically required in private transfers of shares, a business or assets are those expressly provided in commercial or financing agreements.

Regulatory filings

Must regulatory filings be made or registration (or other official) fees paid to acquire shares in a company, a business or assets in your jurisdiction?

Depending on the characteristics of the transaction and of the target company, business or assets, certain acquisitions may be subject to specific regulatory filings including, by way of example and without limitation, antitrust filings, or filings with the Bank of Italy or the European Central Bank if the target is a credit institution or a financial intermediary.

Moreover, certain registration fees must be paid in the event that certain acts or documents, or both, are to be filed with specific public registers.