TerraLex Cross-Border Guide to Cross-Border Merger & Acquisition Guide

In general, except for certain industry sectors (for example, defence and telecommunication industries), there are no material restrictions on foreign ownership or investment. Authorisation is required for investments in certain regulated areas, such as banking, media, and financial services.

There are no exchange control or currency regulations, except those relating to money laundering.

There is a wide range of grants available for foreign and domestic investors (for example start-up businesses, renewable energy, research and development). Benefits/incentives are mainly given in the form of investment grants or loans at reduced interest.

Occasionally, the benefit is granted in the form of a combination of an investment grant and low interest loans, depending on the geographical location of the investment and the size of the investing company.

In areas hit by unemployment, particularly in Southern Italy, an exemption is granted - subject to certain conditions - from corporate and local taxes. There is no discrimination between incentives to foreign and local investors.

Employees are not entitled to management representation. An employer with more than 15 employees who intends to carry out a collective dismissal (dismissal of more than five employees within a period of 120 days) must consult the unions. For a business transfer, if the transferor employs in total more than 15 employees, both the transferor and the transferee of the business must inform the workers’ representatives in the business and the relevant trade unions. Upon request of the latter, both the transferor and the transferee of the business must carry out a consultation meeting.

Both parties can terminate a contract (other than a fixed-term contract) by giving due notice, on the assumption that termination by the employer is possible only for just cause or justified reasons. Just cause requires a material misconduct by the employee which causes the employment relationship to be deemed unable to continue, even provisionally. In this case, no notice needs to be given, although the employee is still entitled to the termination payment. Justified reasons can be objective (when referred to the business) or subjective (when referred to the employee), and entitle the employee to the notice period and the termination payment.

Other reasons for terminating the relationship are retirement, redundancies, and other substantiated reasons (e.g. business reorganisation).

According to the specific case, an employee who has been dismissed without just cause or justified reasons can be entitled to be reinstated and/or to receive an indemnity ranging from five to 24 monthly salaries, plus - in some cases - the salaries from the dismissal to the reinstatement.

If the employer employs less than 15 employees, however, the employee is only entitled to a payment between 2.5 and 14 monthly salaries.

Redundancy is a form of dismissal, caused by an employer needing to reduce the size of the workforce. "Redundancy" in this context is given a particular legal meaning and reasons for a redundancy to take place can include a business closure, a workplace closure, or a reduced requirement for employees to carry out work of a particular kind. To fairly dismiss on grounds of redundancy, an employer must establish the reason that a redundancy is necessary and must follow a fair procedure. This involves consulting with unions and looking for suitable alternative employment and other ways to avoid the redundancy.

According to Law nr. 223/1991 (which applies only to undertakings with more than 15 employees), if an employer intends to make a collective dismissal (i.e. dismissal of at least five employees during a period of 120 days within the same facility), it must comply with the following procedure:

• give a previous communication to the facilities’ unions and to their national associations, indicating information, such as the reasons for the redundancies; the reasons which prevent the employer from finding a different solution; and the number, qualifications, and duties of the interested personnel;
• a copy of said communication must be sent to the Provincial Labor Office;
• within seven days from the receipt of said communication, upon request of the unions, the employer and the unions will make a joint examination of the situation to verify if there are possible different ways of utilizing such personnel;
• the abovementioned examination must be completed within 45 days from the receipt of the communication from the employer. The results of the exam must be communicated to the Provincial Labor Office by the employer;
• if no agreement is reached between the employer and the union, the Director of the Provincial Labor Office will convene parties for a further review of the situation. Such procedure must be completed within 30 days of the Provincial Labor Office’s receipt of the above said communication by the employer;
• if the affected employees number less than ten, the above said terms are reduced by 50%;
• after completing such procedures, even if no agreement is reached with the unions, the employer can dismiss the employees, in compliance with the due notice period;
• at the same time, the employer must provide the Regional Labor Office, the Regional Commission for Employment and the unions a list of dismissed employees indicating their age, qualifications, domicile, and the criteria utilized in determining which employees to dismiss in compliance with Art. 5 of the law;
• if there is a breach of the above said procedure, the dismissals are unlawful and ineffective;
• if the dismissal does not concern all the employees, the employer will choose the employees to dismiss according to the productive and organizational needs and in compliance with the criteria set forth in the National Bargaining Agreement and with the other parameters set forth by the law. If there is a breach, the dismissal will be unlawful and ineffective;
• for any dismissed employee the employer has to pay the sum provided for by section 31 of art. 2, L. 92/2012 (“the 41% of the ASpI monthly maximum amount for any period of twelve months seniority in the last three years”). If no agreement is reached with the unions within the redundancy procedure, such sum is multiplied by three (section 35 of art. 2, L. 92/2012).

In the event of sales of shares, a registration tax amounting to €200 shall apply. For sales of assets, Italian law makes a distinction between land and building. The following rates are applied: real estate tax (at a rate of 1% in both cases), mortgage tax (at a rate of 2% in both cases), and registration tax (at a rate of 8% for land, 7% for building). There is no capital tax payable on share issues, save for the case of capital increase (in this regard, a registration tax amounting to €200 shall apply).

Triggering events are: the merger of two or more companies (both in the case of two or more companies merging into a new company, and in the case of one or more companies being absorbed by another company), and acquisition of control of the whole or parts of another company. Acquisition of control is not defined in terms of any specific formal parameter, but includes all those cases where acquired rights, contracts, or any other means make it possible to exercise a decisive influence on the strategic commercial behaviour of a company. Control may be direct or indirect. In the last case, it is not exercised through direct links between two companies but it is the result of the existing relations between several parties. Control may be sole or joint. Creation of a joint venture through the setting up of a new company (in case two or more companies set up a new company under their joint control, provided that the joint venture is not of a co-operative nature).

Thresholds are when the aggregate Italian turnover of all companies involved exceeds €498 million; the aggregate Italian turnover of the target company exceeds €30 million. Said thresholds were fixed on March 25, 2019, and are adjusted annually by an amount equal to the increase in the GDP price deflator index.

It depends on the transaction. Documents commonly produced and executed at signing meetings include: acquisition agreement and related annexes; disclosure letter; board resolutions of the parties approving the transaction and giving authority to enter into the transaction documents/special powers of attorney (for example, for execution of the agreement on behalf of the parties).

Documents commonly produced and executed at closing meetings include: evidence of payment of the consideration by way of bankers’ draft/bank transfer; resignation letters for existing directors; and accounts of the target company at closing.

Foreign Direct Investments: According to the so-called 'Golden Power Regulation,' the government can prohibit or impose certain conditions on foreign direct acquisitions in strategic sectors like defense, energy, and telecommunications to safeguard national interests. The request for approval must be submitted within 10 days from the signing.

Sector-Specific Authorizations: Several industries, including telecommunications, energy, and banking, are subject to strict regulatory oversight and require prior approvals from specific authorities before an acquisition can be finalized. For instance, in the banking sector, approval from the Banca d'Italia is mandatory, while in telecommunications, the Italian Communications Authority (AGCOM) must review and authorize transactions. These approvals ensure compliance with industry regulations, maintain market stability, and protect national interests, making them critical steps in the M&A process.

Taxation: Certain extraordinary M&A transactions might be advantageous from a taxation standpoint. For instance, acquisitions of limited liability companies are almost tax-free for buyers. Additionally, from a seller’s point of view, taxation may be particularly advantageous in certain transactions, such as the sale of real estate by individuals or the sale of company shares by other companies under the 'participation exemption regime.'

No – this is a matter for negotiation.

No.

It is standard practice for corporate parties to be alternatively required to: (i) produce a certified board resolution approving the transaction and authorising an individual director (or directors) to execute the documents on behalf of the company; or (ii) produce a notarized special power of attorney granting to the proxy holder the power to execute the documents on behalf of the company. Proof of identity is commonly requested.

Yes. Given that Italian law makes a distinction between private agreements, private agreements with notarised signature, and deeds before a notary public. In the last two cases additional execution formalities are required.

In the event of a private agreement with notarised signature, individuals (or authorised representatives on behalf of a company) are requested to execute the agreement before a notary public.

In the event of a deed before a notary public, individuals are requested to execute the deed before the notary public provided that the latter has drafted the deed in person. The deed before a notary public is required for certain documents (for example, transfer of quotas or sale of line of business).

A company is represented those director(s) who are granted with the powers of representation of the company either by way of bylaws or resolution of appointment. Such director(s) has/have the statutory power to act on behalf of the company and to execute documents/contracts on behalf of the company within the limits of their powers. In addition, the management body can authorise a third-party individual to sign on behalf of the company, usually by way of a special power of attorney.

Certain contracts can be executed by individuals orally. If in written form (for example, settlement agreements or contracts entered into with banks), a signature is required.

In the event of a private agreement with notarised signature, individuals are requested to submit and to then execute the agreement before a notary public.

In case of a deed before a notary public, individuals are requested to execute the deed before a notary public provided that the latter has already drafted the deed in person.

The notary public must be provided with the evidence that the individual executing on behalf of the foreign company is duly authorized to act on behalf of the same. A translation of the official documents empowering such individual duly stamped with the apostille may be required depending on the foreign jurisdiction.

In the event of asset purchases, notaries are mainly requested to certify the agreement entered into between the parties either by way of a private agreement with legalized signature or a deed before a notary public (see above). For share purchases, notaries are mainly requested to certify the deed of transfer and related annexes executed between the parties (for private limited companies by quotas) or the endorsement (for private limited companies by registered shares).

The following types of documents need to be notarised: special power of attorney; office copy of apostilled board of directors’/shareholders’ meeting resolution; deed of transfer; full endorsement.

A notary public does not have any power to change the terms of the deal provided that the terms comply with the mandatory provisions of law. If the notary public deems that the provisions agreed between the parties are not in compliance with the mandatory provisions of law, he may deny his certification and therefore cause the parties to amend the deed accordingly.

In Italy, the notarial fees are fixed by law. The amount depends on the value of the transaction and on the type of document.

Normally not.

The process of appointment includes: - calling the shareholders meeting to appoint the new officers/directors according to the notice period set forth by the applicable bylaws;

• holding said meeting; and
• registering the relevant appointment with the competent Companies Register.

The bylaws can also provide that shareholders’ meetings can be held on a plenary basis (without sending the notice of call within the notice period), provided that the shareholders, the directors, and the internal auditors, if appointed, are in attendance at the relevant meeting, or, in the event any of them is absent, the absent one informs the meeting not to have any objections that the shareholders’ meeting resolves on the relevant agenda. Then, to appoint managing directors, a board meeting must be held. Board meetings must be convened within the notice period set forth by the applicable bylaws, and the resolved appointment must be registered with the competent Companies Register. The bylaws can also establish that board meetings can be held on a plenary basis, provided that in the event any of the directors is absent, the absent one informs the meeting not to have any objections that the board meeting resolves on the relevant agenda.

Italian law makes a distinction between private limited companies by quotas (“Società a responsabilità limitata”) and by shares (“Società per Azioni”). As to private limited companies by quotas, transfer can be either performed by way of paper or electronic procedure. In this regard, the following formalities are required: execution of a deed of transfer before notary public/chartered accountant; payment of registration/self-determined tax; and enrollment and subsequent filing of such deed of transfer with the companies’ register.

As to private limited companies by shares, bearer shares are transferred by way of delivery of the certificate while registered shares are commonly transferred by way of endorsement with notary public’s authentication, on the assumption that the holding endorsee is entitled to record the transfer on the shareholders’ ledger.

An individual or a company can appoint another person to execute documents on its behalf by way of a power of attorney, the latter being either general or special (in this case, the power of attorney is granted to execute certain deeds and/or to perform certain activities only). The appointment of a third-party attorney must be compliant with the provisions of the company’s articles of association and must also be evidenced in writing.

It generally depends on the terms of the power of attorney. The mandatory restrictions mainly concern the capacity of the proxy holder as well as certain formalities. For example, the form of the power of attorney must be consistent with the form of the contract for which the same power is granted.

A faxed document can be admitted in court as evidence of due execution, but it could be subject to objection by the other party should the latter contest the non-conformity of the faxed document with the original version.

Yes. In accordance with the new legislation enacted to specifically allow the text form, a document provided with digital signature is admitted as evidence of due execution.

Yes. The counterparts will be taken together as evidence of the agreement.

Yes. However, it is not common practice for lawyers to give “undertakings” that are strictly enforced.

There is no set rule providing how a closing takes place, as it all depends on the agreements reached between the parties. It is standard practice to render a transaction successfully completed subject to certain pending formalities (as the transfer of funds no later than a certain time limit).

As to private limited companies by quotas, the main formality is the registration of the buyer in the companies’ register. A form, including information on the change of directors/registered office/change of auditors, will need to be filed with the Companies Registry. As to private limited companies by shares, the main formality is the registration of the transfer of shares in the shareholders’ ledger.

This is not common practice in Italy. Nevertheless, as transactions often involve international parties, such opinions have become more common.

Companies' Registry Filing: After closing, companies must update their information with the relevant Companies' Registry held by the Chamber of Commerce. Typical filings include changes in the shareholders of the target company, changes in directors and statutory auditors, and amendments to the company’s name and by-laws.

In Italy, all limited liability companies and joint stock companies are required to maintain and regularly update a register of beneficial ownership as part of their compliance with anti-money laundering (AML) regulations. Companies must notify the Italian Companies’ Registry, managed by the Chamber of Commerce, of the identities of their beneficial owners, who are typically individuals holding significant control or ownership stakes. This information must be promptly updated to reflect any changes in ownership or control, such as new shareholders or shifts in governance structures, ensuring transparency and alignment with AML compliance obligations.

This depends on the complexity of the transaction. In general, negotiations can take anywhere from one month to even one year from start to completion (in the case of both share and asset deals). There are several factors that typically prolong the transaction timetable, for example the level of diligence required, the period of time customarily occurring between the preliminary and the final agreement, or the possible antitrust clearance.

Agreements which limit competition must be evidenced in writing. They are valid if confined to a specific territory or a specific activity, and cannot exceed five years.