The Italian Civil Code provides for specific reasons upon
occurrence of which the company must be liquidated. In general
terms, the occurrence of the expire of the duration time (if the
company was set up for a definitive period of time), the reduction
of the corporate capital for losses below the minimum required by
the law or the impossibility of functioning (ie a deadlock
situation) require the directors to call a shareholders'
meeting to resolve upon the liquidation if no corrective action is
taken (such as the extension of time, a further injection of funds
to cover the losses and the like).
If no corrective action is taken the following steps have to be
taken by the directors and/or the company to wind up and liquidate
(1) Shareholders' meeting
A Shareholders' meeting must be held in front of a Notary
(a) to put the company into liquidation;
(b) to appoint the liquidator(s) and grant them the necessary
powers to carry out the liquidation activities;
(c) to establish the rules according to which the liquidation
will be implemented and carried out (with reference for instance to
management of the interim period, the sale of going concerns, the
sale of specific assets and the like).
(2) Filings of the resolutions under (1) above
Certified copies of the resolution appointing the liquidator(s)
(as well as any further act entailing a change in the person(s) of
the same) must be filed at the Companies' Register. Please note
that from the date of such registration, company's Directors
shall cease from their office. The directors shall have prepared an
updated financial situation of the Company and shall hand it over
to the liquidators upon registration of the liquidation
(3) Liquidation activities - Payment of creditors
The Liquidator(s) has to carry out all the activities useful and
necessary for the liquidation of the company.
During the liquidation phase, the liquidator(s) cannot take any
new business transactions for and on behalf of the company. This
prohibition does not include transaction specifically aimed at
liquidating the company's assets.
The liquidators also may, and indeed must, continue to fulfill
existing contractual obligations of the company until cancellation,
appear in court and enter into judicial settlements.
Finally, unless limited by the shareholders in the liquidation
resolution, the liquidators may - and in practice shall attempt to
- sell the company's assets in bulk.
The liquidators may not assign or distribute any assets to the
shareholders until either all the creditors of the company have
been paid or the sums necessary to pay them have been set aside.
This does not preclude, however, the liquidators from selling the
company's assets to the shareholders at fair market value and
setting aside the proceeds for the benefit of the creditors.
If the available funds are not sufficient for the payment of the
company debts, the liquidators shall request the shareholders to
make new capital injections (or in the alternative shall request
the shareholders to contribution that part of the corporate capital
subscribed to but not yet paid in, if any). Should the shareholders
not accept, they have to file a petition for bankruptcy with the
(4) Final balance sheet of liquidation
After completion of the liquidation, the liquidators shall draw
up a final balance sheet of liquidation reflecting each
shareholder's share of assets, if any.
The balance sheet, subscribed by the liquidators and accompanied
by the auditors' report is filed with the Registry of
Unless a shareholder files a motion in court to challenge the
balance sheet within three months of the date of its filing with
the Registry of Enterprises, the balance sheet is deemed
In order to shorten the above term, the shareholders may express
their approval in writing.
Upon approval of the final balance sheet of liquidation, the
liquidators shall request cancellation of the company from the
Registry of Enterprises.
Notwithstanding cancellation of the company from the Registry of
Enterprises, creditors whose claims have not yet been satisfied can
seek to enforce their claims against the shareholders
proportionally to the sums which have been attributed to them by
the final balance sheet.
Upon completion of the liquidation and the distribution of the
assets the company's books and records shall be filed with and
kept for ten years in the Office of the Registry of
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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