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SPA THE SHARES Lesson 23 - Coggle Diagram
SPA THE SHARES Lesson 23
The share as a unit of participation in the capital
1) Indivisibility
represents the minimum unitary entity of participation in the company
cannot be split
the size is indicated in the articles of association
N.B. It may subsequently be changed by modification of the articles of association either by splitting or by grouping
In the case of
co-ownership
of a share
Art. 2347
2) Autonomy
each shares tends to live its own vicissitudes;
Article 2437
size of the share package
3) The value of the shares
Nominal value:
corresponds to the value of the share capital divided by the number of shares
Issue value
: corresponds to the value for which the shares are offered for subscription when the company is established or the capital is increased
Book value:
corresponds to the value obtained by dividing
shareholders' equity
by the number of shares outstanding.
Exchange (or market) value
: represents the value at which shares can actually be exchanged.
4) Standardisation
each share has the same par value
each share confers
a) the right to a proportionate share of net profits and shareholders' equity resulting from liquidation
(art. 2350, paragraph 1)
b) the right to vote (
art. 2351, paragraph 1).
But
art. 2348
provides the possibility of creating, with the articles of association or its subsequent amendments, categories of shares with different rights;
Standardisation operates, therefore, not in absolute terms, but only at the level of share classes
Social Rights
1) Social rights according to the methods of attribution
(a) rights which accrue to each action as such
right to participate in the shareholders' meeting
to report reprehensible facts to the Board of Statutory Auditors
to examine the company's books
(b) rights pertaining to a number of shares such as to reach a certain fraction of the share capital.
request the judicial annulment of invalid shareholders' meeting resolutions (threshold of 5% or 1% depending on whether the SPA is closed or open);
to exercise corporate liability action (threshold of 20% or 2.5% depending on whether the SPA is closed or open);
to report to the judicial authorities the well-founded suspicion of serious irregularities by the directors (threshold of 10% or 5% depending on whether the SPA is closed or open
(c) rights which are due proportionately.
right to vote
the right to profits
the right to liquidation in the event of dissolution of the company or withdrawal,
the right of option in the event of a paid capital increase and free assigment if the capital increase is nominal.
d) The so-called goldenshare
the right of veto on certain "sensitive" resolutions or decisions;
the power to oppose or impose specific conditions for the purchase of shareholdings in companies carrying out activities of strategic importance for the defence and national security system;
the power to impose conditions for the purchase of controlling shareholdings in companies holding strategic assets in the energy, transport and communications sectors and, in exceptional cases, the power to oppose the purchase
2) Social rights according to their content
a) administrative rights
participation in the shareholders' meeting,
voting,
the right to appeal, to denounce reprehensible facts and the suspicion of serious irregularities, to examine the register of shareholders and the register of shareholders' meetings;
to exercise liability action against corporate bodies and so on
(b) property rights
rights to profit and liquidation
rights in the event of dissolution of the company;
c) mixed rights, which have a dual component, administrative and patrimonial.
For example, the right of withdrawal implies the possibility of obtaining the liquidation of one's shareholding;
Other typical mixed rights are those of option and free assignment in the event of a capital increase (paid-in and nominal, respectively
Techniques representative of the share and its circulation
1) Share as a document and alternative techniques
the shares can be:
nominative
bearer
but
shares may not be bearer shares:
until they are fully paid up;
in the case of shares with ancillary benefits
if the Articles of Association place restrictions on their circulation
(Article 2354)
.
The shares are normally accompanied by coupons which, when detached from the share certificate, are used to exercise certain rights.
The issue of shares is not mandatory
2) Circulation of shares
Free transferability is a natural character of shares
Those who subscribe to them and make the contribution
(so-called primary market)
do not see their investment as fixed assets until the date of the company's extinction since they have the possibility of disinvesting by selling the shares
(so-called secondary market)
without causing any damage to the company, which does not see its assets diminished but simply has to deal with a shareholder other than the original one
but
could stand some restriction to the free transferability
(art. 2355bis)
1) The constraints on actions
The restrictions on shares (pledge, usufruct, seizure, attachment) are implemented in the forms provided for credit instruments or dematerialised financial instruments (
article 2352)
2) The legal limits to circulation
a) paid-up shares with contributions in kind which, until the valuation control procedure is completed, are inalienable
b) shares with ancillary services whose transfer is subject to the consent of the directors;
c) shares in trust and auditing companies which, under Law 1966/1939, are transferable only with the consent of the directors
3) Conventional limits to circulation
If the shares are nominative or have not been issued, the statute may
(article 2355- bis, paragraph 1)
:
prohibit the transfer of the shares for a period not exceeding five years from the incorporation of the company or from that in which the prohibition is introduced;
subject the transfer of the shares to special conditions.
Conventional restrictions on the transfer of shares may also result from shareholders' agreements
1) The clauses of approval (di gradimento)
These are the clauses in the articles of association that make the transfer of shares subject to the approval - usually by the board of directors - or other shareholders
The clauses of non mere approval
are characterised by the predetermination in the clause itself of the objective criteria to which the person to whom the placet is given must adhere
The clauses of mere approval
are free from the predetermination of objective criteria and, therefore, from the syndication of the reason for the refusal (or rather, the refusal may also be unjustified);
2) Pre-emption clauses
With this type of clauses, the shareholder who intends to sell (or perform other acts of disposition) his own shares must first offer them to the other shareholders in pre-emption.
3) Redemption clauses
These are the clauses which, if certain conditions are met (e.g. interruption of an ancillary service; death of the shareholder), allow the company itself or some of the shareholders the right to redeem (to purchase compulsorily) the shares of another shareholder
4) Changes to the statutory traffic regime
unless otherwise provided for in the articles of association, shareholders who do not consent to the introduction or removal of restrictions on the circulation of shares shall have the right of withdrawal (
Article 2437, paragraph 2
)
Unissued shares
In the event that the shares are not issued and the shares are not dematerialised, the transfer of the shares shall take effect on the company as soon as it is entered in the shareholders' register.
Shares incorporated in securities
Equity securities are debt securities or, at least, circulate like debt securities. Therefore, bearer shares are transferred upon delivery of the security (Article 2355(2)).
Dematerialised actions
If the shares are compulsorily or voluntarily dematerialised, the transfer shall be made by entering in the accounts intended to record movements in the financial instruments
Transactions on treasury shares
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become a member of itself
1) Subscription
the subscription of treasury shares by the company is prohibited
art. 2357 -quater).
The so-called reciprocal subscription is also prohibited
2) Buying and trading
Different from the case of the subscription is the purchase of own shares (so-called buy back)
Purchase limits
A S.p.A. may purchase its own shares (directly or through a trustee or a third party) only if the following conditions are met:
a) the purchase must take place within the limits of distributable profits and available reserves resulting from the latest regularly approved financial statements:
b) only fully paid-up shares can be purchased
c) the purchase must be authorised by the shareholders' meeting, which shall determine the terms and conditions (also duration)
d) for listed companies only if the principle of equal treatment between shareholders is also expressly provided for in accordance with Consob regulations
furthermore
for open companies only, the nominal value of treasury shares, including shares held by subsidiaries, is not allowed to exceed the fifth part of the share capital (art. 2357, paragraph 3).
The penalty for the purchase of treasury shares in relation to the above conditions is not invalidity, but obbligation to resell
In some cases, the above-mentioned purchase restrictions do not apply (art. 2357-bis).
(art. 2357 - 2357 bis)
Regulation of treasury shares in the portfolio
(art. 2357-ter
)
directors may not dispose of their treasury shares without the prior authorization of the shareholders' meeting,
the profits rights and the option rights are attributed proportionally to the other shares;
voting rights are suspended, but, in closed companies, treasury shares are nevertheless counted in the capital to calculate the majorities required for incorporation and the resolutions of the shareholders' meeting.
Treasury shares in the portfolio should not be posted to the assets in the balance sheet
3) Financial assistance on treasury shares
The
art, 2358
, today, subordinates the possibility to carry out these operations to the respect of the following conditions:
a) the prior authorization of the extraordinary shareholders' meeting (art. 2358, paragraph 2);
b) the preparation by the directors of a report that highlights the interest and risks of the transaction for the company and indicates the purchase price of the shares.
c) certification by the directors, in the report that mentioned, that the transaction takes place at market conditions and that the creditworthiness of the person financed or in whose favor the guarantees are provided has been adequately assessed
d) The total amount of the loans or guarantees may not exceed the limits of distributable profits and available reserves resulting from the latest approved financial statements