Mercing Companies Rome

Merging with another company in Rome

There are two types of merger under Italian law:

merger: a new company is set up and substitutes existing ones, which have been combined; merger by incorporation: one or more companies are absorbed by a company which already exists. In this case, rather than forming a new company the old one continues to operate within a larger perimeter.

A merger is a private act . On a legal level, therefore, the Italian civil code and Italian tax regulations are applied.

An acquisition, in contrast, consists of taking over an existing and structured business and can be a very profitable transaction for those who want to expand their business.

A foreign entrepreneur wishing to take over a business in Rome can contact the company directly or seek intermediaries (investment banks, law firms, etc.). Once the parties have decided to merge, they enter into the due diligence phase. This is a process aimed at investigating and verifying the companies' activities so as to allow an economic evaluation of the business. It aims to evaluate the feasibility of the operation, through a legal and a fiscal analysis of the companies involved, and helps managers to assess the soundness of the merging companies (or, in the case of mergers by incorporation, of the companies which are absorbed into an established one).

At this point the managers of the companies in question have to define the merger plan which fixes the guidelines, terms and procedures of the merger. The merger plan has to be approved by the shareholders' board and has to include, among other information, the share exchange ratio, which defines the ratio between the shares or shareholdings of the merging businesses. The merger plan must be registered in the Business Register of the Chamber of Commerce of Rome (if companies are both registered in Rome).

The second step is the merger resolution, which consists in the approval of the merger plan by the shareholders' boards of the companies involved in the merger. The resolution too must be registered in the Rome’s Business Register.

The merger act, which is the third and final step, is carried out in the presence of a notary and drawn up as a deed (which has legal value). It marks the final step which makes all other resolutions effective. This act must be registered in the Rome’s Business Register. Starting from the last registration the legal effects of the merger come into force and the companies are legally united into one.

Tax relief is available for the setting-up of new businesses as well as for the expansion of existing ones. Financing consists of forgivable loans and subsidised mortgages aimed at supporting investment, management, training and technical assistance. The National Agency for inward investment promotion and enterprise development provides information and assistance and helps businesses explore the various financing opportunities.