A reasonable time estimate for paying a dividend is approximately two weeks, but it depends on the modalities by which dividends are paid (cash/in kind), as well as on the Company's proactivity in implementing the necessary corporate formalities and steps.

Under Italian law only certain limited type companies (e.g. listed companies and financial sectors’ entities) are entitled to distribute interim dividends; ordinary joint stock companies or limited liability companies cannot declare interim dividends.

Distribution of dividend can take place only simultaneously with the shareholders' meeting approving annual financial statements.

In addition, an Italian Company can distribute at any time its available and distributable equity reserves as shownin its latest approved and filed annual financial statements.

To proceed with the distribution of equity reserves - since the law prohibits the distribution of reserves in presence of accrued losses - it is common practice (and advisable) for the Board of Directors to draft (i) an interim unaudited assets and liabilities statement ("stato patrimoniale") showing that there are no interim losses preventing the distribution or that said interim/accrued losses are can be covered by the remaining equity reserves without impacting on the stated corporate capital. Also a cash flow statements (in case of payment in cash) would be advisable.

Since under Italian law only certain limited type companies (e.g. listed companies and financial sectors’ entities) are entitled to distribute interim dividends, for ordinary joint stock companies and limited liability companies the accounts required to support payment of a dividend will be the annual financial statements of the fiscal year being approved by the shareholders' meeting resolving upon the distribution. Such accounts do not need to be audited if the company does not meet the criteria set by Italian law for mandatory auditing of the company's accounts.

Not all accrued profits can be distributed, but only:

i. fiscal year net profits remaining after deduction of an amount equal at least to 1/20 of such profits (to be allocated to the so-called "legal reserve" until such reserve has reached 1/5 of the Company's corporate capital) and of any other "voluntary reserve" that the shareholders' meeting decide to set; and
ii. carried forward profits accrued but not distributed in the course of the previous fiscal years (i.e. equity reserves).

Please refer to point 2 above with respect to restrictions in case of losses.

Distribution of untaxed profit reserves (so called "riserve in sospensione d'imposta") is subject to corporate income tax at ordinary rate in the end of the distributing company.

COVID related legislation provides for conditions under which Italian companies may have access to certain financings backed up by State guarantee through a State-owned agency called SACE ("SACE financing") . A company benefiting from the SACE financing shall undertake not to approve any dividend distributions or shares buy-back during year 2020. The same restriction applies to any other Italian company of the same group to which the company benefitting of the SACE financing belongs to.

An increase of the company's reserves may occur as a consequence of:

i. allocation of the fiscal year profit to the company's equity reserves instead of distributing dividends (at the time of the approval of the annual financial statements);
ii. a contribution made by the shareholder(s). In this latter case, depending on the nature of the assets being contributed (which may require an independent valuation of the same), timing may significantly vary from a few days to a few weeks;
iii. the election for asset revaluations provided for by special laws for limited period of time.

Assuming (ii) or (iii) occurs during a certain fiscal year, for dividend or equity reserve distribution purposes, the equity reserves available for distribution will be deemed as increased as of the date of the approval and filing of such fiscal year annual financial statements. In fact, the rule of law for joint stock corporations and limited liability companies is that (i) annual dividends are distributable only if resulting from the approved annual financial statements (and at the time of the approval) and (ii) equity reserves can be distributed only if resulting from the latest approved annual financial statements.

No. In terms of formalities, it is required that the minutes of shareholders' resolution approving the distribution of dividends or reserves are filed with the competent Tax Office.

No

Yes. The financing of the dividends payment should be decided by the Company's Board of Directors in light of the cash flow of the Company and so as to exclude the risk for the Company's to become insolvent as a consequence.

From a tax perspective, borrowing money to fund a distribution causes interest to be deductible for corporate income tax purposes to a certain extend (i.e. entirely, if falling under the threshold of active interests and assimilated incomes and, for the remaining amount, up to 30% of the EBITDA relevant for tax purposes). In any case, the deduction of interest expenses coming from leveraged distribution must be carefully analyzed from an anti-abuse perspective, since in the past cases law exists that disallowed the interest deduction for lack of inherence.

The payment of interests is subject to withholding tax that could be avoided or reduced if the requirements provided for the applicability of the EU Interest and Royalty Directive or the tax treaty are met.

Dividend in kind is possible. If the distribution in kind is made through the assignment (pro-soluto) of receivables, there are no special requirements. In case of distribution in kind of other assets (such as real estate, business/line of business, etc.), an independent valuation of said assets is recommendable for corporate benefit purposes.

Distribution of dividend in-kind (i) entails the taxation of any hidden capital gain/loss on the asset in the hand of the distributing company and (ii) is subject to withholding tax in the hand of the parent company.

No

No, there are no restrictions from a corporate law perspective on lending funds intra-group but cross-border other than general rules in the terms of corporate benefit and Company's by-laws restrictions.

From a tax perspective, remuneration of intra-group loans shall be arm's length.

The payment of interests is subject to withholding tax that could be avoided or reduced if the substantive requirements provided for the applicability of the EU Interest and Royalty Directive or the tax treaty are met.