Merger By Incorporation In Italy

Merger by incorporation in Italy: definition

The expression "merger by incorporation in Italy" refers to the process of merging together a number of companies into one company.

In Italy, mergers by incorporation can take the form either of a merger by creation, where the original companies are merged into a new company, losing their own legal personality), or of a merger by absorption, where different companies are merged into one already existing company, so that the latter retains its legal personality, while the incorporated companies cease to exist.

Moreover, mergers by incorporation can either be homogeneous, wheninvolving companies of the same kind), or heterogeneous, when involving companies of different kind.

Mergers by incorporation can have different objectives:

- productive objectives, aimed at increasing productivity, improving capacity utilisation, and integrating different production phases;

- commercial objectives, aimed at increasing competitiveness, reducing competition by acquiring a competitor company, enlarging and integrating the range of offered products, improving contractual positions or advertising opportunities;

- technological objectives, aimed at acquiring brands, patents, licenses, production secrets, exploitation rights, know-how, as well as achieving economies of scale and developing research and planning;

- administrative objectives, aimed at reducing administrative costs, by means of advannced structures and information systems;

- logistical objectives;

- financial objectives.

It is worth noticing that companies in compulsory liquidation distributing their assets aren't allowed to take part in mergers.

Merger by incorporation of Italian and foreign companies

Mergers by incorporation of Italian and foreign companies (in the specific case of a merger of fully owned companies), are regulated by Article 2505 of the Italian Civil Code, establishing a "simplified" merging procedure.

This latter is possible only on condition that all shares of the incorporated company are owned by the incorporating company at the moment the merger takes place. Thus, in the case of a merger by incorporation of an Italian company into a foreign company, the Italian company divests its shareholdings in the foreign company, transfers its registered office abroad and waives to be subject to Italian jurisdiction.

As a result, the Italian company becomes a foreign company and is removed from the Italian Company Register.

The foreign...