ITALY Law and Practice Contributed by: Maurizio Marullo, Giorgio Vagnoni, Claudia Marongiu and Pasquale Ambrosio Cepparulo, LAWP Studio Legale e Tributario
• exit strategy; • discipline on distribution of dividends; • control rights; and • regulation on the winding-up and liquidation of the JV. The Italian regulatory framework (including, for instance, the possibility to issue special classes of shares, grant specific rights to each co-venturer, and allocate profits) offers great variety and flexibility in structuring by-laws tailored to the needs of the pro - ject. 6.2 Governance and Decision-Making Contractual JV Contractual JV decisions are typically made by mutual agreement. The JV agreement may permit independ - ent activities by one co-venturer, provided regular reports are shared for transparent progress tracking. Corporate JV Corporate JVs typically involve two levels of deci - sion-making: shareholders and the administrative body. Shareholders, as investors, make key decisions affecting their position via meetings, regardless of the JV’s company form. In particular, the shareholders, while not having a managerial role, may resolve certain approval rights over the following decisions: • the approval of the financial statements and distri - bution of profits; • the appointment of directors and the determination of their consideration; • the appointment of statutory auditors and the determination of their consideration; • amendments to the bylaws, including decisions to substantially amend the corporate purpose and introduction or amendment of special rights (ie, diritti particolari ) or class of shares (ie, categorie di quote/azioni ) granted to specific shareholders; • authorisation to proceed with the purchase by the JV, for consideration equal to or greater than one- tenth of the share capital, of assets or receivables from co-venturers or directors within two years of the company’s incorporation, (so-called hazardous purchases, ie, acquisti pericolosi );
• waiver or settlement of liability claims brought against directors (which, requires the “consent” of a majority of shareholders representing two-thirds of the share capital); and • reduction of share capital due to losses. Resolutions generally pass with a majority sharehold - er vote. However, bylaws/JV agreements can require higher quorums or grant minority shareholders veto power for certain matters. Voting rights can also be allocated disproportionately. The administrative body exclusively manages the JV’s business. The shareholders’ meeting can appoint a sole director or a board of directors. In the case of appointment of a board of directors, as detailed in 7.2 Duties and Functions of JV Boards and Directors , the decisions are usually taken by majority vote and every director has one vote. The JV’s bylaws may provide that a decision on specific relevant matters will be adopted with: • unanimity of consent; • an enhanced quorum; or • the favourable vote of at least one director appoint - ed by the minority shareholder (so called veto power). In the event of a tie within the board of directors, the chairperson or another member may be granted the right to cast a deciding vote (commonly known as a JVs can be financed via equity (shareholder contri - butions, typically cash, or non-cash with valuation reports confirming the values of the in-kind contribu - tions made by the members) or debt (loans from finan - cial institutions, lenders, or shareholders). Shareholder loans under Italian law are typically subor - dinated and, in certain circumstances, their repayment may be subject to claw-back actions. Depending on the JV’s structure, bonds or other debt instruments may also be issued. “casting vote”). 6.3 Funding
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