ITALY Law and Practice Contributed by: Silvia Bordi, Emanuele Bosia, Federico Dettori and Rodrigo Boccioletti, Gianni & Origoni
While founders retain operational control in most cases, Italian market practice increasingly reflects a balanced power structure where inves - tors protect their financial interests and strategic influence, especially in later-stage companies. This alignment is critical in the relatively illiquid Italian market, where investors seek assurance that their capital is managed prudently. 3.7 Contractual Protection In Italian VC financings, representations and warranties typically cover corporate organisa - tion, capitalisation, intellectual property owner - ship, compliance with laws, financial statements accuracy and the absence of undisclosed liabili - ties. Founders and the company guarantee that all material information disclosed to investors is true, complete and not misleading, providing a basis for investor trust and legal recourse. Covenants and undertakings also form a core part of the agreements, committing the compa - ny to maintain proper governance, avoid unau - thorised debt or asset sales and protect intellec - tual property. Negative covenants may restrict certain actions without investor consent, while affirmative covenants require regular reporting and compliance with business plans. Remedies for breach usually involve indemnifi - cation, where the breaching party compensates investors for losses directly resulting from mis - representations or covenant violations. Liability caps are common, limiting the financial expo - sure of founders and the company, often up to a percentage of the investment or total deal value. Disclosure schedules appended to agreements allow the company to list known exceptions, lim - iting liability if previously disclosed. In severe breaches, remedies may include rescission of the agreement, forced repurchase
of shares or adjustments in equity stakes. Italian practice typically favours negotiated settlements but allows for litigation or arbitration where dis - putes cannot be resolved. Given Italy’s legal framework, careful drafting of these provisions is crucial to ensure enforceability, especially when balancing founder liability and investor protec - tion.
4. Government Inducements 4.1 Subsidy Programmes
Italy offers several government and quasi- government programmes aimed at incentivis - ing equity financing in growth companies, par - ticularly for start-ups and SMEs. Key initiatives include the following. • Fondo Nazionale Innovazione (National Inno - vation Fund): a state-backed VC fund that co-invests with private investors, reducing the risks associated with early-stage ven - tures. This fund supports innovative compa - nies, particularly those in high-tech sectors, contributing to the overall growth of the Italian start-up ecosystem. • Angel Investor Tax Credit: this programme provides tax credits of up to 30% for invest - ments in eligible start-ups. It encourages individual investors to support early-stage companies, especially in sectors like tech, biotech and green innovation. • Smart&Start Italia: this initiative provides grants and loans to innovative start-ups across Italy, especially in regions less prone to VC investments. It helps overcome finan - cial barriers to innovation and encourages business creation. • Euronext Growth Milan: formerly known as AIM Italia, Euronext Growth Milan is a market tailored to dynamic SMEs seeking capital to
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