Company Groups and Shareholding Regulations

Company Groups

• A company group is a collection of companies that maintain their legal independence but are managed under a unified leadership.
• From a formal perspective, each company is autonomous. However, they are united by a common purpose or "group interest."
• Economically, the group functions as a single business entity, despite having multiple legal entities.

Cross-Shareholdings (art. 2359-quinquies c.c.)

• A subsidiary company cannot subscribe to capital increases of the parent company.
• If this rule is violated, the subscription is deemed to be made by the subsidiary's directors.

Purchase of Shares with Controlling Relationships (art. 2359-bis, 2359-ter c.c.)

• When a controlling relationship exists, the purchase of parent company shares by a subsidiary is treated as a purchase of the subsidiary's own shares.
• This purchase is subject to similar limitations as share purchases by a company of its own shares.
• Shares must be fully paid-up.
• Profits distribution and available reserves are limited.
• The nominal value of acquired shares cannot exceed one-fifth of the parent company's share capital (if it's a public company).
• The purchase must be authorized by a shareholder meeting.
• The controlled company cannot exercise voting rights.

Liability (art. 2497 c.c.)

• Companies managing/coordinating other companies, acting to the detriment of the controlled companies, are directly liable to those companies' shareholders and creditors.
• This liability applies when damage occurs to shareholders' shareholdings or to the integrity of the company's assets.
• Liability is excluded if no damage results or if any damage is neutralized, or, by actions within the group, shareholders and creditors are successfully compensated by the subsidiary.

Disclosure (art. 2497-bis c.c.)

• Companies subject to management and coordination must disclose this relationship in official documents.
• The disclosure needs to be registered in the dedicated section for management and coordination in the business register.
• Directors are liable for non-compliance.

Justification of Decisions (art. 2497-ter c.c.)

• Decisions impacted by management and coordination activities must be clearly justified, explaining the rationale and relevant influences on the decision.

Right of Withdrawal (art. 2497-quater c.c.)

• Shareholders of companies under management and coordination, may withdraw if certain events affecting the parent company cause changes in the initial investment conditions.

Situations allowing withdrawal

• Parent company changes status (e.g., changes the company's purpose, object)
• Resolutions involving subsidiaries, or court rulings, influencing subsidiary companies.
• At the beginning or end of management and coordination activity (with the exception for listed companies)

Intra-group Financing (art. 2497-quinquies)

• Rules dictate that intra-group loans are subject to regulations regarding repayment, and are positioned behind other creditors.

Consolidated Financial Statements

• Consolidated financial statements are drawn up by a parent company considering the group as a whole.
• It includes the financial data of all contained companies and illustrates the entire economic and financial situation. This is relevant when there are management and coordination activities within the group of companies

Presumption of Management and Coordination Activity (art. 2497-sexies, 2497-septies)

• Presumption of management and coordination activity occurs in these situations:
• Obligation for consolidation of the financial statements.
• Specific situations outlined in Article 2359 of the Civil Code.
• Contracts or bylaws indicating a unification of direction or joint management strategies.

Explore the intricacies of company groups and their legal autonomy while understanding the rules around cross-shareholdings and share purchases among parent and subsidiary companies. This quiz delves into articles 2359-quinquies and 2359-bis of the Italian Civil Code, emphasizing the legal framework governing these relationships.