Italy has recently transposed the Directive (EU) 2019/2121 of 27 November 2019 (amending Directive (EU) 2017/1132 as regards cross-border conversions, mergers and divisions), setting forth, inter alia, the rules governing the division by separation (scissione mediante scorporo).
Until the transposition of Directive (EU) 2019/2121, the Italian law regulated only two kinds of company division:
In case of a full division (scissione totale), a company, on – usually – being dissolved without going into liquidation, transfers all its assets and liabilities to two or more recipient companies, in exchange for the issue to the members of the company being divided of securities or shares in the recipient companies.
In case of a partial division (scissione parziale), a company transfers part of its assets and liabilities to one or more recipient companies, in exchange for the issue to the members of the company being divided of securities or shares in the recipient companies, and, under certain circumstances, in the company being divided or in both the recipient companies and the company being divided.
When a division by separation (scissione mediante scorporo) occurs, a company being divided transfers part of its assets and liabilities to one or more newly formed recipient companies, in exchange for the issue to the company being divided of securities or shares in the recipient companies.
More in details, the new rules have been enacted by implementing the Italian Civil Code with article 2506.1, headed ‘Scissione mediante scorporo’.
Furthermore, it has been discussed whether the company being divided can assign all of its assets and liabilities to the recipient company(ies). The prevalent opinion is that only part of the assets and liabilities can be assigned, thus sticking to the literal meaning of article 2506.1: if all the assets and liabilities were transferred, the transaction should be considered a contribution in kind (conferimento).
In addition, it is important to note that recipient company(ies) have to be newly formed and cannot pre-exist the division.