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liability shall not be limited to the value of the equity interest owned by the coordinating company in the coordinated company but will follow the ordinary liability rules. Moreover, such liability may be extended to any person who participates in the performance of the harmful act or otherwise obtains advantages by such act (within the limit of the actual benefit obtained). This latter provision further extends the number of individuals/entities that could be found liable (e.g., coordinated company’s directors, auditors, other shareholders, creditors, and the like). 3.2.2 Duty of Transparency The groups of companies are subject to a special legal regime of publicity. In particular, it is required to fully disclose to third parties the status of the coordinated company, by mentioning such status on any document and correspondence of the coordinated company. Furthermore, both the coordinating and the coordinated companies are required to be registered in a specific section of the Registrar of Companies. Directors not complying with the aforementioned duties can be held personally liable for the damages that the lack of knowledge of the coordinated status has caused to the shareholders or to any third parties (primarily the company’s creditors). Moreover, the directors of the coordinated company are further obliged to: (i) report the main financial data of the coordinating company on the balance sheet of the coordinated company; (ii) indicate in the directors’ report (to be attached to the balance sheet) all the relationships and transactions (and their relevant business and economic effects) undertaken with the coordinating company and/or any other company belonging to its
group; (iii) justify the decisions taken by the managing body of the coordinated company every time the same group is influenced by the coordinating company. 3.2.3 Rights of Withdrawal Minority shareholders of coordinated companies are granted a protection from prevailing resolutions passed by the majority shareholder expressing the will of the coordinating company and which may be prejudicial for the interest of the former, consisting in specific provisions entitling such minority shareholders to withdraw from the coordinated company. Such rights may be exercised when resolutions are passed changing the corporate purpose of the coordinated company or the actual business (and consequent financial risk) connected to its activities, or when the direction and coordination activity starts or ceases, and such circumstances determine a change of such risk. The above-mentioned causes of withdrawal cannot be excluded by the by-laws (which in turn may provide for further causes of withdrawal). The terms and conditions of the exercise of withdrawal are regulated by the general rules for withdrawal in the S.p.A. and the S.r.l. 3.2.4 Provisions Concerning the Financing from Shareholders One of the most sensitive aspects of groups of companies which may lead to abusive and fraudulent practices against creditors and third parties relate to the financial relationships among the companies belonging to such groups. The inherent risk registered in this case is the attempt to abuse the corporate veil and to resort to recourse to financing methods instead of adequately capitalizing the
ILN Corporate Group – Establishing a Business Entity Series
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