News regarding the online incorporation of limited liability companies and simplified limited liability companies and the online registration and cancellation of branches of companies incorporated in other EU countries.
A new day is dawning for the telematic incorporation of limited liability companies and simplified limited liability companies and for the telematic registration and cancellation in Italy of branches of companies incorporated in other EU countries.
In fact, on August 5, 2021, the Government preliminarily approved the draft legislative decree for the transposition in Italy of European Directive no. 2019/1151 (amending European Directive no. 2017/1132) on the use of digital tools and processes in corporate law.
According to the provisions of the draft legislative decree (art. 2), the deed of incorporation of limited liability companies and simplified limited liability companies having their registered office in Italy and with capital paid by means of cash contributions may be received by the notary by digital public deed, with the participation by videoconference of the requesting parties or some of them.
The deeds may be received by the notaries through the use of a telematic platform, set and managed by the National Council of Notaries, which will enable them to ascertain the identity of the parties, verify the affixing of the digital signature to the deeds, verify and certify the validity of the digital signature certificates used as well as perceive what happens to the parties connected by videoconference at the moment in which they express their will.
The platform will also make it possible to view the deed to be signed and the deeds of incorporation may be received by the Notary using standard models adopted by decree of the Ministry for Economic Development within sixty days of the date on which the legislative decree comes into force.
The uniform models will also be drawn up in English and will be available on the website of the Chambers of Commerce.
If the parties are resident abroad any notary may receive the deed, whilst in the case of citizens resident in Italy it is envisaged that they may only apply to notaries in the place where at least one of the parties involved has its residence or registered office.
Again, in accordance with the provisions of the draft legislative decree, also the registration and cancellation of branches in Italy by companies incorporated under the law of a European Union Member State may be filed with a Notary in Italy by the same telematic means.
In this regard, art. 6 of the draft legislative decree envisages the introduction of a new article in the Civil Code: art. 2508 bis – “Telematic registration and cancellation of the branches of a company subject to the law of a European Union Member State”.
This article includes an analytical list of the data and documentation required for the registration and cancellation of branches and provides that the deeds may be filed with the Italian notary, by videoconference, on digital duplicates or digital copies issued by the competent company register in which the foreign company is registered, without prejudice to the obligation for applicants to accompany the documents drafted in a foreign language with a sworn translation.
While waiting for the final approval of the legislative decree, it therefore seems possible to imagine a forthcoming simplification and acceleration of procedures in which the contribution of notaries will, as always, certainly play a significant role.
Amendments and additions to the Code for Crisis and Insolvency (Part Three).
At the beginning of the discussion, it is worth mentioning the conclusion of the work, in June, of the commission set up by the Ministry of Justice to make further amendments to the Code of Crisis and Insolvency. During the Council of Ministers meeting of August 6, 2021, a decree-law was approved which postpones the entry into force of the said Code until May 15, 2022.
The alert tools, moreover, will come into force in 2024 and will introduce new obligations for entrepreneurs, professionals and public entities.
The Chamber of Commerce, with which the debtor is registered, will be the public body of reference for the institution of the negotiated composition for the solution of the business crisis, as from 15th November 2021.
Having said this, in this third and final part, we analyse the latest amendments made by Legislative Decree no. 147 of 26 October 2020 (also known as the Corrective Decree) with reference to: claw back actions, procedure for ascertaining liabilities, fresh start notion, register of crisis managers and, finally, organizational structures of companies.
Claw back actions
The previous regulations regarding claw back actions, in article 166, paragraph 3, letter b, envisaged that “transfers made to a bank account which have not substantially and durably reduced the debtor’s exposure to the bank” would not be subject to claw back actions.
The aforementioned regulation was modified by Legislative Decree no. 147 of October 26, 2020, through the elimination of the words “substantially” leaving in force only the requirement of the debtor’s long-term exposure to the bank.
Procedure for ascertaining liabilities
Article 205 in its previous version – communication of the outcome of the proceedings to establish the liabilities – envisaged the trustee’s obligation to immediately notify all the claimants of the declaration of enforceability of the statement of claims lodged within the estate, informing them of their right to file an opposition if the application is not accepted.
The corrective decree, by adding a second paragraph, establishes that the communication, referred to in the first paragraph, must also contain a brief description of the concrete forecasts of satisfaction of the creditors.
All of this is aimed at limiting the appeals against the statement of claims for those creditors who would not be able to see their reasons satisfied.
With regard to the institution for fresh start, first of all, the heading of Section II, Part I, Title V, Chapter X has been replaced by a heading with the following content: “Provisions on the Fresh start of over-indebted persons”. This is a mere lexical change. The Corrective Decree has also made the following changes to art. 282;
Paragraph I introduces the provision for the publication of the decree of fresh start of the consumer or professional in a special area of the website of the Court or the Ministry of Justice.
The new paragraph II establishes that the institution in question does not apply in the cases envisaged by article 280 – conditions for fresh start – as well as in the cases in which the debtor has caused the situation of over-indebtedness through serious fault, bad faith or fraud.
The new paragraph III states that the measure referred to in paragraph I or that referred to in paragraph II, with which the Court declares the existence of the preclusions to be able to grant Fresh start, must be communicated to the Public Prosecutor, the creditors and the debtor.
These aforementioned parties may lodge a complaint within 30 days pursuant to article 124.
The register of crisis managers.
Other new features introduced by the Decree concern the requirements that professionals such as lawyers, accountants, accounting experts and labor consultants must have in order to be registered in the register of crisis managers governed by article 356 of Legislative Decree no. 14/2019.
The categories of professionals belonging to the professional orders mentioned above, must attend training courses lasting 40 hours pursuant to article 4, paragraph 5, letter b, of Ministerial Decree of September 24, 2014 No. 202.
For the purposes of the so-called “first crowding” of the register, subjects in possession of the requirements set out in article 358 paragraph 1 may also obtain registration, documenting, however, that they have been appointed as receivers, commissioners or judicial liquidators, in at least 2 procedures in the last 4 years and no longer 4, always in the same time frame, as it was previously established.
It is also specified that a specific two-yearly continuing education course, organised by the Superior School of the Judiciary, must be attended in order to maintain registration in the register of crisis managers.
Organizational structures of companies.
The scope of the second paragraph of art. 2086 of the Italian Civil Code is very innovative, in fact it envisages the duty, for the entrepreneur who operates in corporate form, both to set up an organisational, administrative and accounting structure that conforms to the nature and size of the business and in function of the timely detection of the business crisis, and to take action without delay for the adoption and implementation of one of the instruments provided for by the law for overcoming the crisis and recovering business continuity.
Article 40 of the Corrective Decree has reformed articles 2257, 2380 bis, 2409 novies and 2475 of the Italian Civil Code, identifying the parties obliged to set up the organisational structures mentioned previously:
– with regard to simple companies pursuant to article 2257 of the Italian Civil Code and limited liability companies pursuant to article 2475 of the Italian Civil Code, it is the directors who are obliged to set up organisational structures;
– as regards S.p.A. companies, the directors or the management board pursuant to articles 2380 bis and 2409 novies of the Italian Civil Code.
If you are interested in the previous parts:
Amendments and additions to the Code of Crisis and Insolvency (Part Two)
Amendments and additions to the Code of Crisis and Insolvency (Part One)
Executive Decree of the Ministry of Justice of 28 September 2021 on the new negotiated settlement for the solution of business crisis provided for by the ‘Pagni’ Decree-Law of 24 August 2021, no. 118.
On 28 September 2021, the executive decree of the Ministry of Justice “Negotiated settlement for the solution of the business crisis provided for by the ‘Pagni’ decree of 24 August 2021, no. 118” was issued.
The text regulates in detail, in addition to the practical test for the verification of the reasonable pursuit of recovery available online, the detailed checklist for the drafting of the recovery plan for the analysis of its consistency, the protocol for conducting the negotiated settlement, the training of experts and the platform.
On 24 August 2021, Law Decree no. 118 of 24 August 2021 “Urgent measures regarding business crisis and company reorganisation, as well as further urgent measures regarding justice”, the so-called “Pagni Decree”, was published in the Official Gazette no. 202.
As already explained, the Pagni Decree introduced, among the most relevant innovations, the negotiated settlement for the solution of business crises, effective as of 15 November 2021, providing that the main aspects of this new institution would be defined by executive decree of the Ministry of Justice to be adopted within thirty days from the entry into force of the same decree-law.
Therefore, on 28 September 2021, the executive decree of the Ministry of Justice “Negotiated settlement for the solution of business crisis provided for by the Decree-Law No. 118 of 24 August 2021” was issued. The text of the decree is accessible on the website of the Ministry of Justice.
The decree consists of five sections: (i) the practical test for the verification of the reasonable pursuit of recovery available online; (ii) the detailed checklist for the drafting of the recovery plan for the analysis of its consistency; (iii) the protocol for conducting the negotiated settlement; (iv) the training of experts; and (v) the so-called ‘platform’.
The purpose of the test, as specified in the first section, is to allow a preliminary assessment of the complexity of the recovery through the relationship between the amount of debt to be restructured and the amount of free cash flows that can be placed annually at its service. In particular, in order to carry out a preliminary test of the reasonable feasibility of the recovery, without yet having a business plan, one can limit oneself to examining the indebtedness and the data of the current economic trend, excluding non-recurring events from the latter (e.g. effects of the lockdown, extraordinary contributions achieved, non-recurring losses, etc.).
The answers to the questions contained in the checklist in the second section of the decree constitute the operational guidelines for the drafting of a reliable recovery plan. The checklist will then be used by the expert for the consistency analysis of the plan. The drafting of the recovery plan is a ‘process’ that involves: (a) the presence of minimum organisational requirements; (b) the availability of an up-to-date economic and financial situation; (c) the realistic identification of intervention strategies to remove the causes of the crisis; (d) the determination of cash flows, which in smaller companies can be estimated through a simplified process; and (e) the identification of the type of debt restructuring proposals to be made to creditors and other interested parties. In the case of a group of companies, account should be taken of the mutual interdependencies between the companies in the group.
The section on the protocol for the conduct of the negotiated settlement provides the operational implementation of the legal requirements contained in the ‘Pagni’ Decree; moreover, it transposes the best practices for an agreed solution of the crisis, which are therefore to be understood as good practices and not as absolute precepts. Among other things, the protocol deals with the verification of the independence and acceptance of the expert’s appointment, the practical test for the verification of the reasonable feasibility of the reorganisation, the analysis of the consistency of the reorganisation plan with the check-list, the formulation of proposals by the entrepreneur and the interested parties, the renegotiation of contracts and the estimate of the liquidation of the entire assets.
The fourth section contains guidelines for a uniform training of all professional categories and managers: it indicates the topics that should be the subject of specific training of experts, whatever category they belong to. It provides for: the number of training hours (55), the detailed content of the topics covered, the type of teacher, based on the subject matter. The training must also be provided by means of distance learning so that it can be more easily used. Checks on the effective and efficient use of the training must be provided for. Previous training, as evidenced by the curriculum vitae, or subsequent participation in one or more courses for further study of the topics covered in this section, are relevant in the identification of the expert by the person appointed.
The last section, in addition to a general description of the so-called ‘platform’ (represented by an internet portal that makes available the IT tools of the practical test, the control panel and the protocol and the functions for the submission of the online application, the insertion of the acceptance of the expert’s appointment, the expert’s final report and the determination of the latter’s remuneration), explains its requirements for the use, management and processing of data. It also explains what functions are available in the public area, the secret area for the submission of bids, the virtual data room and the emergency procedures in case of computer problems for the entrepreneur.
The decree also contains three annexes concerning, respectively, the indications for the formulation of proposals to the interested parties, the online application and the declaration of acceptance of the appointment of negotiated settlement expert.
Constitutionality profiles of the liquidation of the so-called Veneto banks.
By order of 12 July 2021, the Court of Florence raised a question on the constitutionality of Decree-Law no. 99/2017, concerning the liquidation of Veneto Banca S.p.A. and Banca Popolare di Vicenza S.p.A.
As is well known, the decree in question regulated the solution to the crisis of the two Veneto banks, through a complex operation that provided for, on the one hand, their subjection to the compulsory administrative winding-up procedure; on the other hand, the sale to Banca Intesa San Paolo S.p.A. of the business units consisting of the banking activities of the two banks.
Since the very beginning, the provision contained in the decree-law and in the contract for the sale of the business unit, which excluded from the scope of the sale the receivables claimed by the shareholders of the two banks, either by way of refund of the shares, or by way of compensation for damages for breach, at the time of the purchase of the shares, of the provisions on investment services, or for mis-selling conduct, raised a debate.
In this regard, the Tribunal of Florence submitted several questions of constitutionality to the Constitutional Court. In particular, the Court lamented the unequal treatment of the creditors in question in respects of two aspects: (i) in general terms, with respect to the other creditors whose positions were instead transferred to the purchaser; (ii) in specific terms, for having been assimilated to the holders of shares and subordinated bonds, “even though the situation of those who made an investment with the awareness of assuming certain risks is radically different from that of those who hold a claim arising from the unlawfulness of the Bank’s conduct”.
Moreover, according to the Court of First Instance, the rules in question are unreasonable and vitiated by an excess of legislative power, since there is no justification for such a difference in treatment.
In light of these complaints, the Constitutional Court, if it admits the question, will have to carry out a careful analysis of the complex legislative process, both European and domestic, which led to the bailout of the two banks and the related balance between the public interests protected and the private interests sacrificed.
To this end, it may be useful to refer to the decision of the Austrian Constitutional Court in relation to the bailout of the Hypo Group Alpe Adria bank. In that case, it was not denied that the legislator could choose the way to resolve the crisis, even at the sacrifice of certain creditors. However, it was held that the failure to protect certain positions, whose rights had been wiped out, was disproportionate and unreasonable in relation to the public interest that was to be protected.
The Supreme Court returns on the issue of the legitimacy of defensive controls.
On 22 September, the Supreme Court returned on the issue of “defensive controls”: this term generally refers to controls carried out by the employer on its employees to protect itself from possible damages or following the discovery of an offence.
In its judgment no. 25732/2021, the Supreme Court ruled that: “Controls, including technological controls, carried out by the employer in order to protect assets unrelated to the employment relationship or to prevent unlawful conduct, are permitted where there is a well-founded suspicion that an offence has been committed, provided that a proper balance is struck between the need to protect the interests and assets of the company, which are related to the freedom of economic initiative, and the essential protection of the dignity and privacy of the employee, and provided that the control concerns data acquired after the suspicion arose”.
The case started in a company after a virus spread, following which the employer decided to access an employee’s computer and found that the virus had spread from that device. Furthermore, the employer discovered that the employee often surfed on sites for private needs during working hours. This led to his dismissal for just cause. The dismissed employee, after the first instance ruling, appealed, but the Court rejected the appeal, on the basis that the controls on the company computer was necessary to verify the origin of the virus that had infected the computer system.
The Supreme Court overturned this ruling, since the indispensable condition for the legitimacy of defensive checks is the presence of a well-founded suspicion that an employee has committed an offence. Consequently, controls can never start before the suspicion arises.
Otherwise, in fact, the company could, without any authorization and information under both labor law and, above all, data protection legislation, acquire without any temporal and continuous determination any type of data, and then invoke its justification at a later date on the basis of a defensive check. The Court of Cassation therefore upheld the appeal, given that the second instance judgment had not assessed whether the check had been carried out before or after the suspicion arose.
The Supreme Court, therefore, ruled that checks are possible, as an exception both to the Workers’ Statute and to the obligations under Article 13 GDPR (or, in this case, Article 13 of the former Privacy Code) and therefore without information, only on data collected after the onset of suspicion of unlawful activity.
Consequently, in all other cases, both the limits imposed by the Workers’ Statute and the obligations under the GDPR and the Italian Privacy Code apply. We would also like to point out that the judgment concerned facts prior to the entry into force of the European regulation, and therefore during a period when privacy legislation was less stringent than it is today.
In conclusion, we recommend that all employers carefully assess any controls to be carried out on workers, in order not to incur in very serious violations of law.
The contribution of a going concern followed by the transfer of participations cannot be recharacterized as a transfer of going concern.
The Court of Cassation confirmed that the contribution of a going concern followed by the transfer of participations cannot be recharacterized as a transfer of going concern for registration tax purposes. Therefore, whereas the tax authorities intend to recharacterize the deed of contribution followed by the transfer of the participations, they will have to resort to the general anti-abuse rule set forth by Article 10-bis of Law No. 212/2000.
The contribution of a going concern followed by the transfer of participations cannot be recharacterized as a transfer of going concern for registration tax purposes. This was confirmed by the Court of Cassation with its recent decision no. 24647, deposited on 13 September 2021.
By applying Article 20 of Presidential Decree no. 131/1986, the tax authorities recharacterized the deed of incorporation of a company by means of a contribution and the subsequent transfer of the participations in a transfer of going concern. The taxpayer appealed the claim of the tax authorities before the tax courts, which confirmed the legitimacy of the claim both in first and second instance’s judgements.
The Court of Cassation, on the basis of the principles affirmed by the Constitutional Court with decision no. 158 of 2020 – according to which the new wording of Article 20 of Presidential Decree no. 131/1986 does not express an anti-avoidance rule rather an interpretative one – confirmed that the deeds submitted for registration must be interpreted on the basis of the sole elements arising from the (registered) deed.
Therefore, although Article 20 of Presidential Decree no. 131/1986 allows the tax authorities to recharacterize the legal qualification of the deed (“apparent form”), such requalification activity “may not go beyond the typical scheme of negotiation in which the deed can be framed, under penalty of the artificial setting up of a taxable event/case different from the one intended and involving different legal effects”, nor does such rule legitimize the research (by the tax authorities) of “presumed economic effects of the deed”.
Accordingly, the Court of Cassation concluded the case stating that – differently from the case at hand – whereas the tax authorities intend to requalify the contribution of a going concern followed by the transfer of participations, they have to resort to the general anti-abuse rule set forth by Article 10-bis of Law No. 212/2000, if applicable.
DISCLAIMER: This newsletter merely provides general information and does not constitute legal advice of any kind from Macchi di Cellere Gangemi. The newsletter does not replace individual legal consultation. Macchi di Cellere Gangemi assumes no liability whatsoever for the content and correctness of the newsletter.
TO READ OUR PREVIOUS NEWSLETTER OF 24 SEPTEMBER 2021: