ITALY Law and Practice Contributed by: Silvia Bordi, Emanuele Bosia, Federico Dettori and Rodrigo Boccioletti, Gianni & Origoni
• Patent Box and super-depreciation: tax incentives like the Patent Box and super- depreciation schemes encourage companies to invest in R&D and innovation. These initia - tives reduce tax burdens and make invest - ments in equity more attractive, especially for tech and biotech sectors. • Euronext Growth Milan: this market contin - ues to provide a platform for SMEs seeking growth capital. The simplified listing pro - cess and tailored regulatory support offer an attractive option for companies to access equity financing while benefiting from ongoing advisory support. This has become a crucial tool for expanding equity financing options for growing companies in Italy. These measures, along with continuous improve - ments in tax and regulatory frameworks, aim to increase equity financing activity and promote Italy’s growing start-up ecosystem In Italy, the long-term commitment of founders and key employees is typically ensured through a combination of contractual obligations and incentive mechanisms. A common approach is the inclusion of reverse vesting clauses in shareholder agreements, which link ownership of equity or quotas to continued involvement in the business. Under reverse vesting, founders may initially hold shares or quotas, but risk los- ing part of them if they leave the company before a specified vesting period ends. This structure ensures alignment between the founders’ inter - ests and the company’s growth trajectory. Good leaver and bad leaver provisions are also widely used. These define the financial and legal 5. Employment Incentives 5.1 General
consequences if a founder or key employee departs voluntarily, is dismissed for cause, or breaches their obligations. A bad leaver typi - cally forfeits part of their equity or must sell it back at a discounted price, while a good leaver may retain their rights or sell their stake at fair market value. Non-compete and non-solicitation clauses often reinforce these mechanisms, preventing found - ers from immediately competing with the com - pany or poaching clients or employees upon departure. These clauses are structured within Italian employment law and civil law frameworks, ensuring enforceability while protecting the busi - ness. Overall, the goal is to align personal incentives with long-term company success, minimise dis - ruptive departures, and secure investor confi - dence that the founding team will remain fully engaged throughout the critical growth phases. 5.2 Securities In Italy, equity-based instruments are commonly used to incentivise founders and key employ - ees, with stock option plans, work-for-equity schemes, and, less frequently, phantom shares serving as standard tools. These instruments grant rights to acquire equity under certain con - ditions, aligning individual rewards with the com - pany’s success. Stock option plans are structured to allow partic - ipants to purchase company quotas or shares at a predetermined strike price, typically lower than market value, after meeting vesting conditions. Reverse vesting schedules are widely used, tying ownership rights to continued service over several years. If a founder or employee leaves before full vesting, part of the granted options or equity may be forfeited or bought back at a
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