Month: September 2023

Generally speaking, most foreign citizens are allowed to set up a business in Italy. We will limit this paper to the case of foreign companies willing to start operating in Italy.

Basically, there are three ways by which such aim can be reached: either (a) opening a branch office or (b) incorporating a subsidiary company or (c) purchasing an existing company.

(a)     Branch office

In order to start operating in Italy, a company based abroad could simply open a branch office. Once the premises have been found, the company is required to appear, through its legal representatives or an attorney, before a notary in Italy in order to sign a deed of incorporation of the branch.

Several pieces of information must be included in the deed: name of the company, registered office, name and address of the branch office, person in charge of the branch office, etc.

A copy of the company’s articles of association must be attached to the deed (the copy must be stamped with the apostille, translated in Italian and sworn in court). Satisfactory evidence of the powers of the representatives/attorneys must be provided to the notary.

Then the notary will file the deed to the relevant company register office (called in Italy “Registro delle Imprese”, a register held by the Camera di Commercio). Company register fees and taxes are to be paid.

(b)     Subsidiary company

The first step is defining the kind of company that suits most the needs of the parent: a public company or a limited company are the most commonly used kinds.

Then the articles of association must be drawn up in the form that, in accordance with the law, suits the needs of the business. Share capital amount, registered office, directors and, in some circumstances, auditors have to be defined at this stage.

Once again, in order to incorporate the company, a notary is needed: he or she will witness the memorandum of association that will be signed as a deed by the parent’s company representatives or by their attorneys. Satisfactory evidence of the powers of the representatives/attorneys must be provided to the notary. Then the notary will file the memorandum of association and the articles of association to the company register.

(c)      Purchasing a company

Finally, purchasing the share capital of an existing company can be an option. In this case, after a due diligence process, aimed at evaluating the target company as well as at highlighting any critical aspect/risk of the acquisition, lawyers draft a sale and purchase agreement that has to be negotiated by the purchaser and the seller and their lawyers. This step can take time, depending on the value of the transaction and its complexity.

After the contract has been negotiated in its final text, normally, the parties sign it before a notary as a deed. Once again, satisfactory evidence of the powers of the representatives/attorneys of the parties must be provided to the notary.

Is the independent bank guarantee issued under the URDG 758 valid in Italy?

Business clients dealing with international trade frequently asked us whether an independent bank guarantee issued under the URDG 758 (the ICC Uniform Rules for Demand Guarantees 2010) is valid, binding and enforceable under the Italian law or not and, if not, whether and how it can be amended in order to ensure it is valid, binding and enforceable as an independent bank guarantee under the Italian law.

Any major transaction nowadays does not take place without this kind of guaranty support. The principal feature of this kind of guarantee is its autonomy from the principal contract of the transaction.

The guarantee is a contract between a guarantor/bank and the beneficiary and underneath there is always a contractual relationship (the “principal” or “underlying” contract) between a creditor and a debtor which includes the obligation of providing a guarantee in favor of the creditor in case of debtor’s default in performing its obligations.

Its purpose is to indemnify the beneficiary from the possible default of the debtor in the underlying relationship: the beneficiary’s right to claim the payment is to be determined only with reference to the guarantee and the bank has to pay with no right to remedies arising out from the underlying contract.

First demand guarantee

The most used is the “first demand” guarantee which entitles the beneficiary to receive the payment from the bank when the conditions of the guarantee are met, without any proof of the debtor’s default.

Independent guarantee issued under the URDG 758

In general terms, according to the Italian statutory law and Italian Courts’ rulings, an independent guarantee issued under the URDG 758 will be considered a valid, binding and enforceable independent guarantee, provided that it includes a clause binding the guarantor to pay any amount demanded under the guaranty notwithstanding any contestation concerning the underlying contract and by which it waives the right to require exhaustion of remedies against the debtor, any right to withhold performance, any right of retention, any right of avoidance, any right to offset, and the right to assert any other claims which the debtor or any third party may have under the principal contract or in connection with it or on any other grounds (such clause being known as “senza eccezioni”).

Anyway, a deep analysis of the text guarantee is always recommended.

 

DISCLAIMER: This summary is intended for general information purposes only. It is not to be considered accurate, updates, complete or a legal opinion. It is neither an offer nor a binding lawyer / client contract or relationship.

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