Private mergers and acquisitions in Italy: overview

Q&A guide to private mergers and acquisitions law in Italy.

The Q&A gives a high level overview of key issues including corporate entities and acquisition methods, preliminary agreements, main documents, warranties and indemnities, acquisition financing, signing and closing, tax, employees, pensions, competition and environmental issues.

To compare answers across multiple jurisdictions, visit the Private mergers and acquisitions Country Q&A tool.

This Q&A is part of the global guide to private acquisitions law. For a full list of jurisdictional Q&As visit

Antonio Pedersoli, Pedersoli e Associati

Corporate entities and acquisition methods

1. What are the main corporate entities commonly involved in private acquisitions?

The law offers a variety of legal forms (for example, corporations and partnerships) that are subject to specific corporate laws and tax rules.

The most common forms of Italian corporate vehicles are:

  • Joint stock companies (Società per Azioni) (SpA).

  • Limited liability companies (Società a responsabilità limitata) (Srl).

2. Are there any restrictions under corporate law on the transfer of shares in a private company? Are there any restrictions on acquisitions by foreign buyers?

Restrictions on share transfer

Corporate law does not provide for legal restrictions on the transfer of shares in a private company. Restrictions may though be included in the target company's articles of association or in a shareholders' agreement. These restrictions can result from the enforcement of pre-emptive rights or approval clauses, as well as from lock-up provisions. If these restrictions are covered in the target company's by-laws cannot generally exceed:

  • A five-year term for a SpA.

  • A two-year term for a Srl.

Foreign ownership restrictions

Foreign investments are traditionally welcomed in Italy and there are no general restrictions on foreign investments. However, a recent legislative intervention (Law No. 56/2012) was approved to protect the national interest in relation to any investment made by non-EU players (save where reciprocity is provided) in Italian companies operating in certain strategic fields such as:

  • Defence.

  • National safety.

  • Energy.

  • Infrastructures.

3. What are the most common ways to acquire a private company? What are the main advantages and disadvantages of a share purchase (as opposed to an asset purchase)?

Share purchases: advantages/asset purchases: disadvantages

The transfer of shares is the fastest and easiest way to transfer a private company considering that:

  • The formalities for transferring shares are very limited (see Question 24).

  • In principle, there are no material taxes due on the transfer (see Question 25).

Additionally, the change of controlling interest in the target company does not determine a formal change of employer, and there are no express legal obligations to notify, or consult with, trade unions in advance of the share purchase, which there are for the transfer of a business (that is, an asset purchase).

From the seller's perspective, another major advantage to a share deal is that all liabilities remain with the company and therefore pass to the buyer on transfer of ownership. Except for the warranty against the shares' eviction, there is no implied or automatic seller's warranty for the assets of the target company. Purchasers therefore usually request specific representations and warranties and indemnity provisions in the purchase and sale agreement (see Question 14).

Asset deals are typically negotiated when the subject matter of the sale is a business division or branch of the seller or one of the businesses of the seller. Asset deals (that is, purchases of a business as a going concern) are relatively common in the Italian market, particularly in small-size deals.

The Italian Civil Code provides specific rules on the definition of business or business division or branch (azienda and ramo d’azienda) and their transfers (Articles 2555 to 2562, the Italian Civil Code). These rules are essentially designed to:

  • Enhance continuity of the business.

  • Protect both creditors and employees of the business.

Intuitu personae agreements (where the identity of one of the contracting parties is an essential term of the contract) cannot be transferred through an asset deal and in all other cases the (transferred) third party may withdrawal from the agreement if a just cause exists.

Finally, tax considerations should be taken into account when considering the acquisition of a business through a transfer of shares or a transfer of assets (see Questions 25 to 29).

Share purchases: disadvantages/asset purchases: advantages

When acquiring a business through the acquisition of shares, all underlying assets and liabilities are (indirectly) transferred as well. The main advantage of an asset deal is that the buyer can "cherry pick" the assets and liabilities it deems necessary for the business. Therefore, the risks and potential liabilities assumed as a result of the acquisition are, in principle, limited to the acquired assets and liabilities (see Question 6). This is often used within the framework of distressed companies, in which case potential tax and bankruptcy liability issues should be taken into account.

4. Are sales of companies by auction common? Briefly outline the procedure and regulations that apply.

Auctions for the sale of companies outside the framework of distressed mergers and acquisitions (M&As) are not common. However, whether or not the sale of a company is performed through an auction mainly depends on the seller's intentions and objectives. Realistically, the higher the deal value, the more likely the sale is to be performed through an auction.

For distressed M&As, particularly where there is a sale of a business within a judicial reorganisation procedure under the Italian Bankruptcy Law, most transactions are organised as a competitive auction.

Except for this specific case, negotiated acquisitions through auctions are generally not regulated by any specific provisions of law and the general contract law principles apply. Therefore, the procedure is commonly covered in a process letter issued by the seller.


Preliminary agreements

5. What preliminary agreements are commonly made between the buyer and the seller before contract?

Letters of intent

A letter of intent is commonly executed between the buyer and the seller before the contract is entered into. Whether the document is partially binding or not depends on the specific case and on the will of the parties. The name of the document, for example, letter of intent, heads of agreement, memorandum of understandings or term sheet, is not always significant.

Under the law, a preliminary agreement is normally binding once it has been established that the parties agree on both of the main elements of the transaction:

  • Price (or the formula to determine the price).

  • Object (for example, the shares to be transferred).

However, the letter of intent typically provides for a number of:

  • Non-binding clauses.

  • Binding clauses (for example, relating to costs, term, exclusivity and confidentiality).

  • Assumptions or conditions that must be fulfilled if the deal is to proceed.

Exclusivity agreements

If the potential buyer invests considerable time and money for the preparation and assessment of the transaction (for example, by conducting a due diligence), he usually requests exclusivity. This is typically covered in the letter of intent, but it also may be the subject matter of a separate agreement.

A transfer in breach of an exclusivity undertaking cannot be revoked, but the seller may be held liable for damages as well as the third party purchaser if it is established that he was aware of the exclusivity undertakings.

Non-disclosure agreements

Although the duty of confidentiality is already included in the general principle of good faith in negotiations, entering into a non-disclosure agreement is standard practice in any kind of transaction.

There are no specific provisions applicable to non-disclosure agreements, but most agreements typically provide for standard exceptions, such as disclosures required by law.

A party can claim damages if the other party breaches the confidentiality undertaking. As it might be difficult to prove that damages resulted from such a breach, contractual lump sum indemnities might be provided for.


Asset sales

6. Are any assets or liabilities automatically transferred in an asset sale that cannot be excluded from the purchase?

If the asset sale qualifies as a transfer of an undertaking, business or part of a business, the protective rules under Italian Civil Code apply. Therefore, employees of the transferred undertaking, business or part of a business are automatically transferred (see Question 31).

With a transfer of universality or a branch of activities (see Question 3), all assets and liabilities relating to the universality or branch are transferred automatically by operation of law, although the parties may decide to exclude certain assets.

7. Do creditors have to be notified or their consent obtained to the transfer in an asset sale?

The consent of the other contracting party is, in principle, required to transfer the contract. With a transfer of a going concern, the other contracting party's consent is not necessary, although the other contracting party can withdraw for cause from the transferred contract.

The consent of the creditors in an asset sale is not necessary for the effectiveness of the sale, although the seller is not freed from the debts relating to the going concern (preceding the sale) if the creditors did not give their consent.


Share sales

8. What common conditions precedent are typically included in a share sale agreement?

The following conditions precedent are typically included in a share sale agreement:

  • Non-occurrence of a material adverse change between signing and closing (MAC clause).

  • Third party consents.

  • Bank financing.

  • The obtaining of the necessary competition approvals from the competent antitrust authorities (see Question 33).

Specific tailor-made conditions precedent may be included, depending on the characteristics of the transaction and the parties involved. Examples of these condition precedents are:

  • The execution of certain transaction-related documents such as a transition services agreements or a management agreement.

  • The completion of certain restructurings or divestments.


Seller's title and liability

9. Are there any terms implied by law as to the seller's title to the shares in a share sale? Is any specific wording necessary and do buyers normally impose a higher standard than is implied by law?

Shares issued by a SpA are represented by share certificates that are usually transferred before a notary public or bank officer. Such transfer must be recorded in the company's shareholders' ledger for it to be enforceable in relation to the target company. With un-certificated shares, the transfer is formalised by registration in a centralised system.

The corporate capital of an Srl is divided into quotas that are in book-entry form rather than represented by certificates. It is therefore necessary to execute an agreement before a public notary or with the assistance of an accountant duly authorised according to the relevant law (Article 36, Paragraph. 1 bis Legislative Decree No 112/2008 converted into Law No. 133/2008) and to file this with the Companies Register so that the transfer of the ownership is enforceable even in relation to the target company and third parties.

Under the law, share purchase agreements typically provide for very strict seller's warranties and indemnities explicitly relating to the seller's title to the shares (see Question 14).

10. Can a seller and its advisers be liable for pre-contractual misrepresentation, misleading statements or similar matters?


Generally, under Italian civil law, each party must always act in good faith and in a diligent manner. This means they must act as a normal and reasonable person (bonus pater familias) would do in the same circumstances.

If negotiations are taking place without any contractual relationship between the parties (that is, there is no letter of intent or non-disclosure agreement), any party acting in bad faith can be held liable on the basis of general tort law. For example, in certain circumstances, the omission to inform a candidate buyer about the existence of a material debt contract or about any new material elements that have arisen during the negotiations may result in pre-contractual liability. Another typical example of pre-contractual liability is where a party suddenly abandons well-advanced negotiations, having created the (justified) impression in the other party's eyes that it would enter into the transaction.

If the negotiations eventually result in the execution of a share or asset purchase agreement, any misleading statements or similar matters during the negotiations or due diligence phase are, in principle, dealt with in the purchase agreement. Therefore, they are no longer governed by the general principles of tort law but by the contractual provisions of the purchase agreement.


In principle, professional advisers are only liable towards their client. This is because, when dealing with, or providing certain information within, the framework of the contemplated transaction, they are acting in the name of and on behalf of their client.

An adviser can only be held liable for misleading statements or similar matters where the advisers have issued a reliance letter allowing the recipient of the information to rely on the information provided. For example, this may happen within the framework of a seller due diligence.


Main documents

11. What are the main documents in an acquisition and who generally prepares the first draft?

In addition to any preliminary agreements (see Question 5), the main document in the acquisition is the share or asset transfer agreement (including its various annexes).

The buyer usually prepares the first draft of the transfer agreement, although this depends on the nature of the transaction and the position of the parties.


Acquisition agreements

12. What are the main substantive clauses in an acquisition agreement?

A typical share or asset transfer agreement includes the following clauses:

  • Recitals.

  • Definitions.

  • Object clause.

  • Purchase price (including the mechanism to calculate the purchase price, any deferred payments or earn-outs and payment into an escrow account).

  • Conditions for closing (for a separate signing and closing).

  • Covenants of the buyer and the seller (including pre-closing covenants for the interim period between signing and closing and post-closing covenants).

  • Closing.

  • Representations and warranties (see Questions 14 to 15).

  • Indemnification (see Questions 14 to 15).

  • General provisions (for example, notices, confidentiality, termination, assignment, costs, governing law and dispute resolution).

Except for the object clause, these clauses are similar in a share or asset deal. For a share deal, the object clause is a straightforward exercise as it includes the transferred shares including all related rights. For an asset deal, the exercise is more complex as the parties must explicitly define in detail (often in an annex to the agreement) which assets and liabilities are:

  • Transferred.

  • Explicitly excluded from the scope of the transaction.

13. Can a share purchase agreement provide for a foreign governing law? If so, are there any provisions of national law that would still automatically apply?

A share purchase agreement relating to the transfer of shares in an Italian company can be governed by foreign law. Nevertheless, parties should comply with the formalities for transferring shares in an Italian company (see Question 24), as well as with provisions of Italian law that, under Italian conflict of law requirements, are considered compulsory.

The choice of foreign law can also complicate things if there is post-acquisition litigation, as the competent courts may not be familiar with issues that are to be interpreted from a foreign law perspective, for example the:

  • Impact of environmental or tax issues.

  • Management of the company.

  • Meaning and the scope of the warranties.

  • Meaning of certain terms used under the transfer agreement that are defined by reference to the relevant law.

Therefore, it is current practice that the law governs the share purchase agreement for an acquisition by a foreign entity of an Italian target company.


Warranties and indemnities

14. Are seller warranties/indemnities typically included in acquisition agreements and what main areas do they cover?

A buyer has limited protection, as the law does not cover or provide any protection for the company's underlying assets. This is particularly the case in share deals. In share deals, the implied or automatic seller's warranty is limited to the ownership of the shares, and it is not extended to the assets of the target, as it is in assets deals. In share deals, representations and warranties (R&W) provisions are therefore essential to allow the buyer to shift some of the liabilities of the target company back to the seller.

However, this difference between deal structures has become less relevant in practice as a result of the use of more sophisticated and detailed agreements. In both asset deals and share deals, it is standard practice, even in small-size deals, to include extensive R&W provisions in the purchase and sale agreement. The wording of these provisions must be carefully tailored and assessed on the basis of either the:

  • Nature of the target company's business.

  • Nature of the transaction (for example, a management buy-out).

  • On the buyer's knowledge of the target and its business.

The seller agrees to a set of R&Ws and explicitly states that these are true, complete, accurate and not misleading.

In most cases, the R&Ws are based on a standard list and relate to, among other things:

  • The existence of, and the title to, the target, shares or assets.

  • Financial information.

  • Real estate and movable assets.

  • Litigation.

  • Personnel.

  • Tax and environmental issues.

  • Permits and subsidies.

  • Intellectual property rights.

  • Compliance with laws.

  • Key contracts.

  • Intra-group arrangements.

  • Arrangements with shareholders and directors.

The specific wording of the R&Ws is important as the courts usually interpret them restrictively.

For two-step transactions, the seller is usually required to repeat the R&Ws at the time of closing. Therefore, they confirm that the representations and warranties are not only true, complete, accurate and not misleading at the time of signing, but also at the time of closing.

15. What are the main limitations on warranties?

Limitations on warranties

To limit its contractual liability under the purchase agreement, the seller can make certain disclosures against the representations and warranties (R&Ws). The format and scope of these disclosures can vary, and are therefore subject to negotiations.

Qualifying warranties by disclosure

The R&Ws may be qualified with terms such as "to the best knowledge of the seller". As a result of the qualifier, facts and circumstances that the seller, acting in good faith, could not have known are excluded from the scope of the R&Ws. The scope of this limitation largely depends on the definition of this expression, which is subject to negotiations.

Typically, a buyer attempts to set the scope of the qualifier as broad as possible, including not only the seller's knowledge, but also that of any director, executive or relevant employee of the target. This suggests that the relevant persons are deemed to have knowledge of any fact that a diligent person placed in the same circumstances could be expected to have.

16. What are the remedies for breach of a warranty? What are the time limits for bringing claims under warranties?


The buyer can seek indemnification from the seller for a breach of a warranty (subject to the applicable legal and contractual time limitations for bringing a claim (see below, Time limits for claims under warranties)).

Depending on the nature of the breach and the wording of the purchase agreement, the buyer may also be able to terminate the purchase agreement and unwind the transaction. However, the seller will usually negotiate a provision under which the indemnification remedy is the sole remedy available for the buyer. The first option may particularly be relevant where a breach of a warranty occurs in the period between signing and closing.

Time limits for claims under warranties

Under Italian civil law, the legal statute of limitation for bringing contractual claims is ten years. Commonly, the parties agree a general time limitation for bringing claims under the warranties. The average time limit is two years (although the agreed time limit often also depends on the size and the nature of the transaction), provided that with certain warranties, such as tax, environmental, social security and labour, reference is made to the applicable legal statutes of limitation.

However, negotiations between a buyer and seller regarding the limitations of the indemnification obligation follow a pattern similar to other European countries:

  • Baskets or thresholds.

  • Caps.

  • Survival periods.

  • Prevention of double recovery.

  • Indemnities.

  • Insurance policies.


Consideration and acquisition financing

17. What forms of consideration are commonly offered in a share sale?

Forms of consideration

For a purchase price to be valid under law it must be determined or determinable on the basis of objective elements.

Consideration offered within the framework of private acquisitions typically consists of cash.

Factors in choice of consideration

See above, Forms of consideration.

18. If a buyer listed in your jurisdiction raises cash to fund an acquisition by an issue of shares, how is the issue typically structured? What consents and regulatory approvals are likely to be required?


The issue of shares to fund an acquisition results in a capital increase at the level of the issuer.

The applicable legal framework varies depending on whether or not the offering qualifies as a public offer. A public offer is a communication to persons in any form and by any means, presenting sufficient information on the terms of the offer and the securities to be offered, to enable an investor to decide to purchase or subscribe to these securities (Consolidated Law on Finance).

Consents and approvals

If an offering of securities qualifies as a public offering, the issuer must draw up a prospectus. The prospectus must be approved by Commissione Nazionale per le Società e la Borsa (CONSOB) before it can be made public.

Requirements for a prospectus

The prospectus must contain all information that is necessary to enable investors to make an informed assessment of the:

  • Assets and liabilities, financial position, profit and losses, and prospects of the issuer and of any guarantor.

  • Rights attaching to the securities.

What information is necessary depends on the particular nature of the issuer and of the securities offered to the public or admitted to trading on a regulated market. The Consolidated Law on Finance and the related regulations issued by CONSOB provide the legal requirements for a prospectus.

19. Can a company give financial assistance to a potential buyer of shares in that company?


Financial assistance (for example, providing funds, granting loans or providing security) by an Italian target company to a third party for the acquisition of its own securities is only permitted under very strict conditions:

  • The transaction must take place under the responsibility of the target's board of directors and under fair market conditions (that is, taking into account the usual market interest rate and the usual collaterals for similar types of financing, as well as the third party's credit standing).

  • The transaction is subject to prior approval by the general meeting of shareholders (with the same quorum and majority requirements as for an amendment to the articles of association).

  • The board of directors must draft a special report to the shareholders to be deposited at the company's registered office for review 30 days prior to the shareholders' meeting that was called to approve the transaction and explaining the:

    • conditions of the transaction;

    • business reasons and objectives underlying the transaction;

    • "specific interest" of the company in entering into the transaction;

    • potential risks to the liquidity position or solvency of the company.

The special report must also state that the transaction will take place at arms' length particularly in relation to the guarantees provided or the interest rates applicable to the loan. The credit-worthiness of the third party purchaser or subscriber must also be verified.

This type of transaction must be approved at an extraordinary shareholders' meeting.

The amount of guarantees or loans provided as financial assistance cannot exceed the amount of distributable profits or available reserves as indicated in the most recently approved financial statements of the company.

The target company must set up a non-distributable reserve in an amount equal to the aggregate amount of the financial assistance provided.

The law prohibits a SpA from accepting its own shares as a form of guarantee under any circumstances.


For transactions aimed at incentivising the acquisition of shares by the company's employees or by the employees of an affiliate, the restrictions listed above do not apply. However, the amount provided as financial assistance cannot exceed the amount of distributable profits or available reserves as indicated in the most recently approved financial statements of the company and the target company must set up a non-distributable reserve in an amount equal to the aggregate amount of the financial assistance provided.


Signing and closing

20. What documents are commonly produced and executed at signing and closing meetings in a private company share sale?


At signing, the share or asset purchase agreement is executed by the authorised representatives of the seller and the purchaser. The purchase agreement may contain, as an annex, a number of documents that have not yet been executed (for example, transitional services agreement) at signing but that are included in an agreed form for execution at closing.


Sometimes the parties, depending mainly on the size of the deal, execute a closing memorandum, confirming that all conditions precedent are satisfied.

Any ancillary documents or agreements are also executed or exchanged, for example:

  • The transitional services agreement.

  • Dismissal letters.

  • Third party consents.

In a share deal, the following documents or actions are executed:

  • Transfer of the shares in front of a notary.

  • Registration of the transfer in the shareholders' ledger.

  • An ordinary shareholders' meeting confirming the dismissal of the seller's directors (and granting discharge) and appointing the purchaser's directors.

  • A meeting of the new board of directors terminating any previously granted specific powers and granting new powers (for example, banking powers).

In an asset deal, the following actions may be executed:

  • Providing tax certificates to confirm that the company has no outstanding tax debts.

  • The execution of any other documents or forms required to transfer certain assets (for example, permits, licences and registered trade marks).

21. Do different types of document have different legal formalities? What are the formalities for the execution of documents by companies incorporated in your jurisdiction?

Each document has to be executed enough times to cover the amount of parties there are with different interests. As soon as the documents have been executed by the authorised signatories of each of the relevant parties, the documents are validly executed and no other formalities apply. The parties usually initial each page for evidence purposes.

In order to register the transfer of title of a company, the deed of transfer must be notarised. Where there is a change of controlling shareholder, a proper filing with the Companies Register must also be completed to give disclosure of the change of coordination and direction (Article 2497 bis, Italian Civil Code). 

22. What are the formalities for the execution of documents by foreign companies?

There are no specific formalities for the execution of legal documents by foreign companies. However, in some cases the parties may request both:

  • A copy of the articles of association by-laws of the foreign company.

  • An extract from the relevant commercial or trade register confirming the authority of the signatories.

Parties can also require a legal opinion confirming the:

  • Capacity.

  • Due incorporation.

  • Existence of the signatories.

Eventually, the foreign company that becomes a shareholder of an Italian company needs to obtain an Italian fiscal code.

23. Are digital signatures binding and enforceable as evidence of execution?

Yes, digital signatures are recognised as valid evidence of the execution of an agreement.

24. What formalities are required to transfer title to shares in a private limited company?

There are very few formalities required to transfer title to shares or quotas in a private limited company (see Question 9). Typically, the share purchase agreement provides a specific clause in this respect. In order to register the transfer of title of a limited company, the deed of transfer must be notarised (or executed with the assistance of an accountant duly authorised according to the relevant law). Where there is a change of the controlling shareholder, a proper filing with the Companies Register must also be completed to give disclosure of the change of coordination and direction (Article 2497 bis, Italian Civil Code).



25. What transfer taxes are payable on a share sale and an asset sale? What are the applicable rates?

Share sale

A registration fee of EUR200 is due on the sale of shares of companies.

Asset sale

A registration fee is due on the transfer of the business with the following rates:

  • 9% plus EUR100.00 on the value of the real estates.

  • 0.5% on the value of the receivables.

  • 3% on other assets net of liabilities.

26. What are the main transfer tax exemptions and reliefs in a share sale and an asset sale? Are there any common ways used to mitigate tax liability?

Share sale

It is possible to defer payment of the registration fee for the "case of use" (for example, litigation) when the transfer of shares is finalised through a contract made without the involvement of a public notary and through the exchange of correspondence.

Asset sale

There are no specific transfer tax exemptions or reliefs on the sale of assets.

27. What corporate taxes are payable on a share sale and an asset sale? What are the applicable rates?

Share sale

Capital gains on the sale of shares are generally subject to a corporate tax of 27.5%. Capital gains realised by financial entities are subject to a standard tax rate of 31.40% equal to the sum between the corporate tax (27.5%) and the regional tax on productive activities (3.9%).

Asset sale

Capital gains on the sale of assets are generally subject to a standard rate of 31.4% equal to the sum between the corporate tax (27.5%) and the regional tax on productive activities (3.9%). The tax can be paid, under certain circumstances, in five annual installments.

28. What are the main corporate tax exemptions and reliefs in a share sale and an asset sale? Are there any common ways used to mitigate tax liability?

Share sale

Capital gains benefit from the 95% exemption if the participation:

  • Is held continuously for at least 12 months.

  • Was recorded as a fixed financial asset in the first financial statement closed after the participation was acquired.

  • The company in which the participation is held must not be resident in a tax haven and has to be run effectively.

Otherwise, capital gains are entirely taxed at the standard rate.

Asset sale

There are no specific transfer tax exemptions or reliefs on the sale of assets.

29. Are other taxes potentially payable on a share sale and an asset sale?

A financial transaction tax is due for the transfer of shares issued by companies having their registered office in Italy and an average market capitalisation in November of the previous year of more than EUR500 million. The financial transaction tax is due at the ordinary rate of 0.2%, reduced to 0.1% for transactions concluded in regulated markets or in multilateral trading platforms.

30. Are companies in the same group able to surrender losses to each other for tax purposes? For example, can interest expenses incurred by a bid vehicle incorporated in your country be set off against profits of the target before tax?

Companies resident in Italy for tax purposes belonging to the same group can elect to adopt the consolidated taxation mechanism. Accordingly, the subsidiaries' income or loss is attributed to the parent company. The entire group calculates a single taxable income represented by the algebraic sum of the companies' net profit or loss included within the consolidation scope. The taxation mechanism enables the offsetting of the taxable income of one group of companies against the tax losses generated by another group of companies.

Non-deductible interest expenses and similar charges attributable to a participant in the consolidated taxation mechanism (that is, expenses exceeding 30% of gross operating profit (GOP)) can be used to reduce group taxable income if other participants in the consolidated taxation mechanism have not entirely used the available GOP for deduction. The rule also applies for any excess carried forward, with the exception of excess generated prior to participation in the consolidated taxation mechanism.



31. Are there obligations to inform or consult employees or their representatives or obtain employee consent to a share sale or asset sale?

Asset sale

For asset sales and specifically transfers of business or branch of business, an information and consultation obligation exits if either the transferor or the transferee employ more than 15 employees. In fact, the transferor and the transferee must notify in writing the unions of the operation 25 days before it is completed (Article 47, Law 428/1990). The communication to the unions must contain, among other things:

  • An indication of the proposed date of the transfer.

  • The reasons for the transfer of the business or branch of business.

  • The legal, economic and social effects that the transfer will have on the employees, if any.

  • The foreseen measures, if any, that will be taken in relation to the employees.

The information-consultation procedure lasts 25 days during which one or more meetings between the transferor, the transferee and the unions take place. The consultation is aimed at settling any disagreements that may exist about the effects of the transfer on the employees' rights and protecting the employees' interests and can be concluded with or without an agreement with unions. Even if no agreement with the unions is reached within the 25 days, the consultation is considered completed and the transfer can be legitimately executed.

The information-consultation procedure (Article 47, Law 428/1990) must also be followed where there is a:

  • Contribution in kind.

  • Merger.

  • Demerger.

  • Lease of business or a branch of business.

Share sale

With share sales there is no obligation to inform or consult the employees or the unions.

32. What protection do employees have against dismissal in the context of a share or asset sale? Are employees automatically transferred to the buyer in a business sale?

Share sale

A share deal does not affect the employees' situation (there is no change of employer). Therefore, the dismissal of one or more employees is subject to the normal employment termination rules.

Asset deal/ transfer of a business

With asset deals, the employees are automatically transferred from the transferor to the transferee (Article 2112, Italian Civil Code) and the following provisions apply:

  • The employment relationships continue with the transferee and the employees retaining all the personal rights that they accrued prior to the transfer.

  • The transferor and transferee are jointly and severally liable for all the employees’ credits accrued prior to the transfer.

The automatic transfer will operate for all the employees belonging to the business or, in case of transfer of a branch of business, to the "perimeter" of the branch of business to be transferred. Therefore, where only a part of a business is transferred, only the employees belonging to the transferred branch of business are transferred.

The rule of automatic transfer (Article 2112, Italian Civil Code) also applies to a:

  • Contribution in kind.

  • Merger.

  • Demerger.

  • Lease of business or a branch of business.

The law (Article 2112, Italian Civil Code) expressly provides that the transfer of business cannot be a reason for dismissal.



33. Do employees commonly participate in private pension schemes established by their employer? If an employee is transferred as part of a business acquisition, is the transferee obliged to honour existing pension rights or provide equivalent rights?

Supplementary pension schemes are ruled by the Legislative decree 252/2005. According to this decree, the employees can on a voluntary basis participate in certain funds, including:

  • Pensions funds contract (FPC).

  • Pre-existing pension funds (PPF).

  • Open pension funds (Fpa).

  • Individual pension plans.

Subscription is voluntary rather than mandatory. All pension funds are contribution funds. The exact contribution is established by the bylaws of the funds. In general, both the employee and the employer finance part of the contribution. This implies that if an employee decides to participate in a pension fund, the employer must contribute. Both with share deals and asset deals, the purchaser or transferee must honor the existing pension funds, meaning that they must continue financing them.

With managers (dirigenti), collective bargaining agreements make certain supplementary pension funds mandatory. Also with these funds (whether they are a share deal or asset deal), the purchaser or transferee must continue financing them.


Competition/anti-trust issues

34. Outline the regulatory competition law framework that can apply to private acquisitions.

Law No. 287 of 10 October 1990 (Competition Law), together with the Implementing Regulation (Presidential Decree No. 217, 30 April 1998), provides the statutory framework for merger control.

Merger control rules are enforced by an independent body, the Italian Antitrust Authority (IAA).

Other provisions deal with specific merger control issues for particular sectors, for example, telecommunication, insurance, banking and cinemas.

Triggering events/thresholds

Merger control rules apply to concentrations, defined as:

  • Mergers between two or more independent undertakings, including mergers in the strict sense and mergers through incorporation.

  • Acquisitions of shares or assets, by contract or other means, resulting in the acquisition of direct or indirect control of the whole or parts of one or more undertakings.

  • The creation of a full function joint venture.

Concentrations require prior notification to the IAA where both the following thresholds are met (the thresholds are subject to yearly adjustment by the IAA):

  • The combined aggregate Italian turnover of all undertakings involved exceeds EUR492 million.

  • The aggregate domestic turnover of the target undertaking exceeds EUR49 million.

Turnover is calculated using the criteria set out by the EC Merger Regulation and its related EC Notice, apart from the exception concerning financial institutions. Turnover corresponds to the revenues achieved by the parties in the previous financial year from the sale of products and services to customers located in Italy. Special rules apply for banks and insurance companies:

  • The turnover of banks and financial institutions corresponds (for merger control purposes) to one-tenth of their total assets, with the exclusion of memorandum accounts.

  • The turnover of insurance companies is represented by the total value of the collected premiums.

Notification and regulatory authorities

The relevant authority for the enforcement of merger rules in Italy is the Italian Antitrust Authority (IAA).

Prior notification is mandatory where the transaction is deemed as a concentration according to Competition Law and the turnover thresholds are met.

Filing must occur at any time:

  • Prior to the implementation of the transaction, that is, before the concerned undertaking acquires the ability to exercise control over the business conduct of the target undertaking.

  • But after the parties have signed an agreement allowing a full appraisal by the IAA of the proposed transaction, which must be at least a signed letter of intent covering the main terms of the transaction.

The parties can implement the concentration before clearance is received. However, if an investigation is opened, the IAA can order the parties to suspend the implementation of the transaction. Should the transaction be prohibited, the IAA may impose the unwinding of the concentration or specific remedies to restore competition. As a result, when the parties elect to execute the notified concentration pending the IAA's review, they do so at their own risk. Such course of action is generally not advisable where the concentration raises competitive concerns.

The IAA has 30 calendar days (15 calendar days for public bids) from filing to decide to:

  • Clear the transaction, if the concentration does not raise competition concerns (Phase I).

  • Open an in-depth investigation, if the concentration raises serious doubts as to its compatibility with antitrust law (Phase II).

Phase I can be suspended when parties fail to provide the requested information and documents (the review period restarts on their receipt). Phase II shall be completed within 45 calendar days of the decision to open an investigation (subject to a 30-day extension if additional evidence or information is necessary). On the conclusion of Phase II, the IAA can prohibit or approve (either unconditionally or subject to conditions) the transaction.

For concentrations affecting the banking industry, the IAA must decide (both phase I and phase II) within 60 working days.

In addition, the regulatory authority for the insurance sector(Istituto per la Vigilanza sulle Assicurazioni) (IVAAS) and the Telecom Authority must also be consulted before the IAA takes any measures relating to, respectively, insurance companies and telecom or media undertakings. The opinions of these regulatory bodies are not binding on the IAA. The requirement of these opinions delays the timing of the phase I investigation by up to 30 days.

Pre-notification contacts are possible. The pre-notification phase generally takes at least 15 days.

Substantive test

The IAA prohibits a concentration if it creates or strengthens a dominant position so that competition is restricted or eliminated substantially and on a lasting basis.

The assessment of the IAA is based on the following factors that are not exhaustive:

  • Alternatives available to suppliers and customers.

  • Market position of the undertakings concerned.

  • Access conditions to supplies or markets.

  • Structure of the relevant geographic and product markets.

  • Degree of competition in the domestic industry.

  • Barrier to entry into the relevant markets.

  • Supply and demand trends for the products or services involved.



35. Who is liable for clean-up of contaminated land? In what circumstances can a buyer inherit and a seller retain liability in an asset sale and a share sale?

The "polluter pays" principle (the person who created the pollution is liable for cleaning up) is applied under the law. However, if no action is possible against the polluter, other persons can be held accountable for cleaning up, for example:

  • The operator of the land may be held liable if it would be impossible or too difficult to identify the polluter, or if it would be impossible or too difficult to establish its responsibility. The operator can also be held responsible if the initial polluter is insolvent.

  • The owner, usufructuary, superficiary or emphyteutic lessee can be held accountable under the same circumstances as the operator.

In an asset deal (including land), the seller remains liable for:

  • Environmental contamination caused before the sale.

  • Any future damage resulting from the contamination.

However, if the polluter cannot be identified or is insolvent, the buyer (operating or owning the land) may be held accountable for cleaning up the land.

In a share deal, the target company remains accountable for the pollution it caused. Therefore, any liability relating to the contaminated land is transferred to the buyer, unless the purchase agreement explicitly states otherwise.

Typically, in both an asset deal and a share deal, the purchase agreement provides for specific representations and warranties or specific indemnities (see Question 14) in respect of soil contamination (or environmental issues in general).


Contributor profile

Antonio Pedersoli, Partner

Pedersoli e Associati

T +39 02 303051
F +39 02 30305333

Professional qualifications. Italian Bar, 1991; Italian Supreme Court, 2006

Areas of practice. Corporate M&A.

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