The global economic landscape in 2024, marked by geopolitical tensions and economic uncertainty, fluctuating interest rates and rising inflation, impacted the establishment of joint ventures (JVs) in Italy. The ongoing Russia-Ukraine conflict, for instance, has led to increased scrutiny of potential partners, favouring those from stable and reliable jurisdictions.

Inflation rates also have boosted JV transactions in markets and jurisdictions featuring higher demand from consumers to target higher turnovers, especially in consumer-oriented industries.

Additionally, as detailed in 3.3 Restrictions and National Security Considerations, the European Union’s response to the conflict, including the imposition of sanctions on specific sectors, has challenged the establishment of JVs with entities operating in those sectors or regions.

In the past year, JVs in Italy have been primarily established in the renewable energy, industrial manufacturing (including defence-related projects), healthcare, e-commerce and food sectors. JVs are often formed to address evolving market dynamics, leverage technological developments, pursue sustainable solutions, capitalise on regulatory incentives and combine resources and expertise to achieve greater market impact.

For example, JVs in the renewable energy sector help companies to leverage new technologies and meet environmental goals through shared expertise and resources. In the manufacturing sector, particularly in high-tech and defence projects, JVs allow the pooling of technical knowledge, the mitigation of costs, and the meeting of complex regulatory requirements. In healthcare, partnerships address the increasing demand for innovation and digitalisation in medical services and products. E-commerce JVs aim to optimise supply chains and the implementation of new technologies, while in the food sector, JVs enable partners to share distribution networks, meet consumer demand for specialised products, and enhance local market penetration.

Within Italian jurisdiction, there are two types of JV.

Contractual JVs

Contractual JVs involve the execution between the co-venturers of an agreement regulating the terms and conditions of their partnership, specifying their respective roles, rights and obligations and the expected term for the implementation of the joint project. In the context of a contractual JV, the co-venturers remain separate and distinct entities, and the establishment of an autonomous company vehicle to pursue the project is not required.

Therefore, a contractual JV enables co-venturers to avoid costs typically associated with establishing an independent entity, while retaining direct control over the development of the shared project and the resources invested in it. Additionally, contractual JVs may be easier to terminate if they do not produce positive results, avoiding complex exit processes.

However, each co-venturer retains full liability for obligations undertaken under the JV agreement, both towards the other co-venturer and towards any third party involved in the project’s development and implementation. Furthermore, limited operational integration between co-venturers may hinder the realisation of potential synergies, impacting the project’s overall success, as well as the hiring of key employees specifically dedicated to the project.

Corporate JVs

Corporate JVs involve the incorporation by the co-venturers of a legal entity, with a separate and autonomous legal personality, having as its purpose the execution of a specific joint project. The JV could be an “equal JV”, in the event that the co-venturers have an equal membership interest in the company or a “majority JV”, if one co-venturer holds the majority membership interest. The rules governing a corporate JV are typically outlined in a shareholders’ agreement entered into by the co-venturers. In addition, most of the provisions set forth in the shareholders’ agreement are also reflected into the company’s by-laws adopted for the purposes of the incorporation of the corporate JV. In fact, under Italian laws, the bylaws’ provisions are immediately enforceable against any third parties and remain effective even after the shareholders’ agreement expires.

The selection of the legal form to be used to incorporate a corporate JV depends on various factors, including the size, scope and objectives of the venture, as well as the desired level of control and liability for the co-venturers. The legal forms commonly used are:

• the limited liability company (società a responsabilità limitata, (s.r.l.)), characterised by a more flexible structure; the corporate capital required for this company form is EUR10,000 (although it is also possible to incorporate limited liability companies having a lower capital); and
• the joint stock company (società per azioni(s.p.a.)), characterised by a more rigid structure; the minimum share capital of EUR50,000 is required for this company type.

Both s.r.l.s. and s.p.a.s. grant the co-venturers, as their shareholders, a liability which is limited to the contributions made in favour of the JV.

The incorporation of a corporate JV entails that the entity itself assumes full liability towards third parties involved in the project’s development and execution. Additionally, the company’s by-laws offer a clear legal framework directly enforceable against third parties. The corporate structure also enables co-venturers to pool their resources and expertise, facilitating synergies that can drive the JV to achieve its goals more effectively. The corporate structure also facilitates the financing of the project (when, for instance, banks and financial institutions are involved) and allows the JV to issue equity and/or other debt (or mezzanine) instruments to finance its operations.

On the other hand, establishing a corporate JV requires going through a process of formal incorporation with the support of a notary, which typically comes with higher upfront costs. The structure of a corporate JV is less flexible when it comes to adapting to changes in the governance or business terms or dissolving the entity, if required. This structure can result in a partial loss of control for the co-venturers over their investment, as decision-making authority rests solely with the JV itself (however, this may be adequately addressed in the shareholders agreement and/or in the bylaws of the JV).

Further Legal Structures

Network of enterprises (rete di imprese)

The network of enterprises requires a contractual agreement, established under Article 3 of Legislative Decree 5/2009, which regulates collaboration between two or more independent businesses on specific projects or initiatives, without the need to establish a separate legal entity. This structure allows companies to share resources, expertise and knowledge while maintaining their autonomy and market presence.

While a network of enterprises shares certain similarities with a contractual JV, there are also significant differences between them. The most notable distinction is that a network of enterprises requires the adoption of a network programme to be executed by the network itself. This type of structure it is also used when businesses are interested in monitoring and ensuring standards of the production process, leading to specific certifications (eg, “Made in Italy”).

Temporary association of enterprises (associazione temporanea di imprese)

The temporary association of enterprises is an aggregation of two or more companies formed to carry out a specific activity, having a duration limited to the period necessary for its completion. Each company participating in the association gives a collective mandate to one of them, the so-called group leader company, that acts on behalf of the association to reach the common aim.

The primary purpose of temporary associations of enterprises is to participate in public tenders and private contracts. Italian regulations do not provide a comprehensive framework for temporary associations of enterprises, but set forth sector-specific rules, specifically in the context of public procurement projects.

When deciding between a contractual JV and a corporate one, it is important to consider several key preliminary factors. In particular, it is recommended to:

• carefully identify the financing sources: in particular, to assess the financial needs of the project and the relevant forms of financing (equity, third-party financing, public grants, etc);
• select the appropriate liability regime: it is necessary to determine whether the JV will operate under a limited or unlimited liability regime, depending on the risks involved; 
• examine the tax structure: it is crucial to analyse the potential tax implications of the JV to ensure efficiency and compliance with applicable tax laws;
• establish the governance structure: it is advisable to agree in advance on the specific governance rights granted to each co-venturer;
• analyse the competitive profiles: review the competitive landscape to ensure the JV activities do not conflict with the partners’ existing businesses;
• define contributions: clearly identify and agree upon the contributions (financial, operational, technical, etc) that each co-venturer will bring to the JV; and
• determine the nature and duration of the project: contractual JVs are typically more suitable for short-term projects, whereas corporate JVs are preferred for longer-term ones.

Main Regulators

The key regulatory authorities are:

• the European Union, which outlines the legal framework concerning specific sectors, such as, antitrust and anti-money laundering;
• the Italian Competition Authority, endowed with broad investigative powers in relation to competition within the national market;
• the Italian government, granted with a veto power which may be exercised on transactions involving companies engaged in strategic activities or holding assets strategic to the national interest; 
• Consob, competent for regulating and supervising the orderly functioning and integrity of Italian financial products market;
• the Bank of Italy, providing appropriate regulation and supervision of financial intermediaries and overseeing their compliance to applicable laws; and
• the Italian Tax Authority, responsible for ensuring tax compliance by overseeing the collection of tax revenues.

Main Statutory Provisions

Contractual JVs are not subject to specific regulations regarding their establishment and existence. The JV agreements, as civil law contracts, are regulated by the statutory provisions of the Italian Civil Code on obligations and contracts (Articles 1173 to 1986 of the Italian Civil Code).

With reference to corporate JVs, the main statutory provisions are included under the Italian Civil Code, Articles 2188 to 2642.

Additionally, depending on the specific industry in which the JV operates, the JV may be governed by specific regulations, such as those applicable to financial institutions, healthcare providers, tech companies and critical infrastructures.

AML legislation is mainly regulated by the Legislative Decree No 231/2007, which implements the relevant EU legislation and establishes measures to prevent money laundering and terrorism financing.

Key obligations provided by Legislative Decree No 231/2007 include:

• the appointment of an AML officer;
• the reporting of suspicious transactions to the financial intelligence unit (FIU); and
• the adoption of corporate policies to ensure the compliance with the regulations and the adoption of internal control systems proportional to the company’s risk profile.

Moreover, the European Union adopted a new AML package on June 2024. This package includes:

• Directive (EU) 2024/1640 (the “Sixth European AML Directive”), that introduces stricter due diligence requirements, enhanced beneficial ownership transparency, and more robust transaction monitoring;
• Regulation (EU) 2024/1624 (“Single Rulebook”), aimed at harmonising the implementation of AML earlier directives, reducing inconsistencies between the member states’ national legislation; and
• Regulation (EU) 2024/1620 (the “AMLA Regulation”), establishing a new EU AML authority (AMLA) to oversee and co-ordinate anti-money laundering efforts across the EU.

The legislative package will be gradually implemented starting from January 2025.

Foreign Direct Investments and Golden Power Regulations

Under the Italian foreign direct investment (FDI) legislation, Law Decree No 21/2012 – known as the “golden power” regime – Italian government has the power to forbid foreign direct investments and corporate transactions concerning companies operating in strategic sectors, such as defence, national security and high technology (including fintech and insurtech). Therefore, foreign investors planning to incorporate a JV in Italy or to invest in an Italian company active within the relevant sectors have to consider the need to apply under the golden power regulations.

The intervention powers granted to the government are essentially as follows:

• opposition to the acquisition of shareholdings;
• veto on the adoption of corporate resolutions; and
• imposition of specific requirements and conditions.

At the European Union level, Regulation (EU) No 2019/452, establishes a framework for screening FDIs across the EU. This Regulation complements the existing Italian legislative framework, and it mandates member states to report FDIs to the European Commission.

Foreign Subsidies Regulation

Regulation (EU) 2022/2560 (the “Foreign Subsidies Regulation”) empowers the European Commission to investigate foreign subsidies that benefit businesses operating in the European Union. Under this Regulation, the Commission has the power to address any unfair competitive advantages resulting from these subsidies, ensuring a fair and equitable market environment within the European Union.

The Foreign Subsidies Regulation provides that acquisitions, mergers and JVs involving EU targets that meet both the criteria listed below must be notified to the European Commission:

• EU-wide turnover: the target company or JV EU-wide turnover is equal to at least EUR500 million; and
• foreign financial contributions: the parties of the transaction must have received combined financial contributions from non-EU countries totalling at least EUR50 million in the past three years ‒ these contributions can include state guarantees, equity, loans, tax benefits, project grants or revenues from sales to state entities.

Italy in Support of Ukraine

In recent years, the European Union has frequently imposed sanctions or restrictive measures both autonomously and in the implementation of binding resolutions of the United Nations Security Council.

In particular, in the current macroeconomic context, the sanctions packages enacted by the European Union against Russia and Belarus implies the restriction of business activities with Russian and Belarus partners. The sanction package provides, amongst others, the prohibition of any transactions with a legal person, entity or body established outside the European Union whose proprietary rights are directly or indirectly owned for more than 50% by an entity listed as sanctioned.

According to Law No 287/1990, establishing a JV ‒ whether through the incorporation of a new company or the acquisition ‒ can result in a concentration, triggering a merger control scrutiny by the Italian Antitrust Authority (IAA).

In particular, a corporate JV can be considered a concentration if it operates as an independent economic entity. To determine if a JV qualifies as a “full-function” entity, the following factors should be assessed:

• whetherthe JV has sufficient resources to operate independently in the market, without excessive reliance on the parent companies;
• if the market relationship between the JV and the parent companies is substantial but limited to an initial start-up period, which should not exceed three years; and
• whetherthe JV is engaged in activities beyond a single function of the parent companies on a lasting basis.

The creation of a full- function JV requires prior notification to the IAA under the following circumstances:

• the aggregate turnover of the involved companies in Italy exceeds EUR567 million; and
• the aggregate turnover achieved by at least two of the involved companies in Italy exceeds EUR35 million each.

Italian merger control rules transpose into national law the provisions of Council Regulation (EC) No 139/2004. Therefore, they should be interpreted in conjunction with the principles established by the European Commission and European Union courts.

Even if a JV does not trigger a merger review, it should still be assessed under the rules concerning anti-competitive agreements.

Although Italian law does not explicitly regulate listed companies participating in JVs, the general rules applicable to listed companies still apply to such entities, including the rules on market abuse (preventing insider trading by requiring disclosure of price-sensitive information), and, in general, financial information disclosure.

Consequently, with reference to statutory information obligations, listed parties participating in JVs are obliged to disclose relevant information to the public and to Consob to ensure transparency for investors and for the market.

Italian legislation sets forth disclosure requirements related to the ultimate beneficial owner (UBO).

Under Italian Laws, the UBO of a company is the individual(s) that:

• directly holds more than 25% of the company’s corporate capital; or
• indirectly own more than 25% of the company’s corporate capital through controlled companies, fiduciary companies, or by an intermediary.

If the ownership structure does not clearly allow the identification of the individual with direct or indirect ownership, the UBO is identified as the individual(s) holding the majority of voting rights at shareholders’ meetings or exercising dominant influence over the company through contractual agreements or other mechanisms. Should all reasonable efforts to identify the UBO prove unsuccessful, the legal representative of the company will be considered the UBO.

The Inter Ministerial Decree No 55 of 11 March 2022 provides the establishment of the register of beneficial owners (the “UBO Register”) in Italy. According to this Decree, the information relating to the UBOs shall be communicated to the Companies Register Office of the territorially competent Chamber of Commerce by the legal representative of the company, exclusively online. Currently, such obligation has been suspended while a preliminary ruling is pending before the Court of Justice on the matter.

Significant Recent Decisions

In July 2023, the Italian Court of Cassation rendered a judgment (No 22375/2023) as having an impact on the potential solution to overcome a deadlock situation (see also 6.4 Deadlock) in companies, including JVs. The Court of Cassation stated that the “Russian roulette” clause included in a shareholders’ agreement is valid under Italian law. Indeed, this clause reflects the shareholders' interest in avoiding deadlock situations and the potential liquidation of the company that could arise from an equal exercise of voting rights by the co-venturers. The Court highlighted that the right of choice, along with the ability for one party to reverse the offeror’s initiative, establishes a balanced mechanism that makes the clause fair. Therefore, the Court stated that, when the Russian roulette clause is included in a shareholder agreement, there is no requirement to establish a fair share price, but the co-venturers have the right to freely negotiate the price for the exercise of the option.

Another recent judgment that may impact JVs has been pronounced by Trieste Court (No 241/2024), relating to the introduction of drag-along clauses in the company’s bylaws. The Court asserts that drag-along clauses can be included in the company’s bylaws by resolution adopted with the simple majority rather than unanimity, provided that the following conditions are simultaneously met:

• the concurrent transfer of all shares;
• ensuring each shareholder the payment of a price that is at least equal to the amount they would receive in the event of a formal liquidation of the company (ie, statutory fair value); and
• granting equal treatment among shareholders.

Beyond these conditions, the drag-along clause can only be included in the company’s bylaw with the unanimous consent of all shareholders.

Regulatory Developments

Law No 21/2024, which introduces measures to enhance capital market competitiveness, includes a provision that allows small and medium-sized s.r.l.s. to issue standardised quotas in book-entry form, voluntarily adopting the dematerialisation regime. For SMEs choosing to dematerialise their quotas, the obligation to maintain a quotaholder register ‒ typically not required for s.r.l.s. ‒ would be reintroduced.

Establishing a JV requires a structured and multi-stage process. To guide discussions, maintain confidentiality, and outline the essential terms and conditions of the transaction, the co-venturers typically focus on the definition of the following preliminary documents:

• mutual non-disclosure agreement, protecting the confidentiality of the information shared between the co-venturers during negotiations;
• letter of intent, term sheet, head terms or memorandum of understanding (in most cases non legally binding), setting forth the essential commercial and legal terms the co-venturers have agreed upon during the preliminary negotiations; and
• exclusivity agreement, preventing either co-venturers from engaging in parallel negotiations with other potential partners or buyers for a definite period of time, usually aligning with the negotiation timeline ‒ the exclusivity agreement may be included, as a specific clause, within one of the primary documents referenced above.

Moreover, when a corporate JV is established through investment in an existing entity or contribution of businesses or assets of the co-venturers in the JV entity, a full due diligence on the assets to be contributed may be carried out before proceeding with the signing of the final set of agreements.

Market Standard Provisions

At the pre-JV agreement stage, the co-ventures would typically negotiate and set forth the following provisions:

• clarification on the non-binding nature of the documents signed in the initial stage, identifying only those provisions which the parties have the intention to consider binding;
• definition of the structure and scope of the JV and the specific role to be assumed by the co-venturers in their implementation should be defined from the initial stages of negotiation;
• the definition of any bridge-financing to support the project in the early stage;
• mutual exclusivity clauses are commonly provided in order to grant that both co-venturers are focused on the negotiation of the transaction and to prevent them from the negotiation with third parties;
• confidentiality clauses, essential to protects confidential information shared between the co-venturers during negotiations; and
• governing law and jurisdiction clauses, ensuring that co-venturers are aware of the applicable law and of where any disputes would be litigated or arbitrated, with the aim of saving time and costs by avoiding conflicts over forum selection later.

If the co-venturers decide to establish a corporate JV, the newly incorporated JV must be registered with the Business Register within 30 calendar days following the incorporation, usually occurring on the closing date. To this end, all the main information relating to the JV (name, statute, legal seat, corporate capital, identity of the co-venturers and of the legal representatives of the company, etc) must be communicated to the Business Register. Upon registration in the Business Register, the corporate JV attains legal personality, enabling it to hold both active and passive legal rights and obligations.

No additional disclosure requirements are applicable to JVs under Italian law, unless filings are specifically burdened under FDI regulations (see 3.3 Restrictions and National Security Considerations),antitrust legislation (see 3.4 Competition Considerations), listed companies regulations (see 3.5 Listed Parties Participants) or required under other sector-specific regulations.

Typically, for listed companies, the execution of a preliminary agreement concerning a JV project, which is well detailed in its commercial and legal content, and which is not subject to substantial and material negotiation (despite being subject to condition precedents), is considered a price sensitive information and it triggers the obligation to inform the competent authorities and the market.

The JV agreement constitutes the fundamental legal instrument governing the establishment and operation of the JV.

Contractual JV

A contractual JV comes into existence upon the signing of a JV agreement, setting forth the JV’s objectives and the respective rights and obligations of the co-venturers.

Corporate JV

Upon signing of the JV agreement, outlining the terms and conditions regulating the setting up and functioning of the JV, on closing date, the co-venturers should incorporate the JV. To this end, assuming any relevant applicable condition precedent is cleared, the following activities may be required:

• the holding of a meeting before a notary public to adopt several corporate resolutions, including the adoption of the bylaws and the appointment of the management body;
• the execution of any agreed-upon capital contributions to the JV vehicle;
• within 30 days of incorporation, the registration of the company with the competent Business Register (see5.2 Disclosure Requirements and Timing); and
• depending on the nature of the business and the industries involved, the obtention of any licence and authorisation necessary to carry out the business.

Once established, the JV can begin operations according to the agreed business plan, while ensuring compliance with applicable laws and regulations.

Contractual JV

As outlined in 2.1 JV Vehicles and 5.3 Set-Up, the terms of a contractual JV are documented within the JV agreement entered into between the co-venturers.

The JV agreement usually regulate the following terms:

• clear identification of the co-venturers;
• specification of the scope of the JV and of the role of each co-venturer in developing it; usually the agreement specifies that the co-venturers do not intend to create a partnership;
• contribution obligations assumed by each co-venturers in terms of, among others, financial investments, resources, technology, and/or personnel;
• procedures and steps to make decisions impacting on the JV project;
• regulation on the allocation of profits between the co-venturers;
• licence of use of the IP right owned by one or more co-venturer(s) for the purpose of developing the JV’s scope;
• provisions concerning each co-venturer liabilities deriving from the execution of the JV agreement, both toward one another and toward third parties;
• discipline on the termination of the agreement and the related consequences; and
• selection of applicable law and election of venue competent in case of conflict.

Corporate JV

As described in 2.1 JV Vehicles and 5.3 Set-Up, the essential terms of a corporate JV are documented within the JV agreement entered into between the co-venturers, that usually includes as annexes:

• a shareholder agreement;
• the draft of the company’s bylaws (reflecting, to the maximum extent permitted by the law, the provisions of the shareholders agreement); and
• any potential commercial agreement to be entered into between the JV and the co-venturers (eg, manufacturing agreements, supply and distribution agreements and management service agreements).

The JV agreement usually regulates the essential terms of the transaction, including, mutatis mutandis, provisions equal to those set forth under the contractual JV agreement.

The shareholders agreement and the JV’s bylaws usually regulates all the rights and obligations of each co-venturer as shareholder of the JV, and specifically:

• procedures for securing additional funding and each shareholder’s obligation or right to contribute;
• governance structure;
• each co-venturer rights relating to the management of the company, including appointment rights and attribution of powers;
• the decision-making procedures and voting thresholds for major decisions;
• deadlocks and dispute resolution mechanism(s);
• rules on transfer of shares, including limitations on transfer, right of first refusal, drag along and tag along mechanism;
• exit strategy;
• discipline on distribution of dividends;
• control rights; and
• regulation on the winding up and liquidation of the JV.

The Italian regulatory framework (including, for instance, the possibility to issue special class of shares, as well as grant specific rights to each co-venturer, allocate profits) offers great variety and flexibility in structuring by-laws tailored to the needs of the project.

Contractual JV

Decisions regarding the implementation and development of the contractual JV are typically made by mutual agreement between representatives of the co-venturers. The JV agreement, in defining the specific roles and liabilities of each party, may provide for certain activities to be conducted independently by one co-venturer without the need for prior approval from the other co-venturers. In such cases, the co-venturers are generally entitled to receive regular reports detailing the activities undertaken by the responsible co-venturer, to ensure transparent and continuous tracking of the project’s progress.

Corporate JV

In corporate JVs the decision-making process typically involves two levels: the shareholders’ level and the administrative body’s level.

Specifically, regardless of the company form assumed by the JV, the shareholders, as investors and owners of the membership interest in the JV, have the power to adopt key decisions, impacting to their position, through the shareholders’ meeting.

In particular, the shareholders, while not having a managerial role, may resolve certain approval rights over the following decisions:

• the approval of the financial statements and distribution of profits;
• the appointment of directors and the determination of their consideration;
• the appointment of statutory auditors and the determination of their consideration;
• amendments to the bylaws, including decisions to substantially amend the corporate purpose and introduction or amendment of special rights (ie, diritti particolari) or class of shares (ie, categorie di quote/azioni) granted to specific shareholders;
• authorisation to proceed with the purchase by the JV, for consideration equal to or greater than one-tenth of the share capital, of assets or receivables from co-venturers or directors within two years from the company’s incorporation, (so-called hazardous purchases, ie, acquisti pericolosi);
• waiver or settlement of liability claims brought against directors (which, requires the “consent” of a majority of shareholders representing two-thirds of the share capital); and
• reduction of share capital due to losses.

Generally, the resolutions mentioned above are adopted with the favourable vote of the shareholders representing the majority of the corporate capital. However, in order to protect minority shareholders, it is possible to (i) provide in the company’s bylaws that resolutions concerning certain matters are adopted with higher quorums, or (ii) grant minority shareholders a veto power on specific resolutions. It is also possible to allocate voting rights on certain matters on a non-proportional basis.

The administrative body, instead, has the exclusive power to manage the JV and to adopt any decision relating to the execution of the business. The shareholders’ meeting may decide to appoint a sole director, having all the management powers, or a board of directors.

In the case of appointment of a board of directors, as detailed in 7.2 The JV Board, the decisions are usually taken by majority vote and every director has one vote. The JV’s bylaws may provide that a decision on specific relevant matters will be adopted with:

• unanimity of consent;
• an enhanced quorum; or
• with the favourable vote of at least one director appointed by the minority shareholder (so called veto power).

In the event of a tie within the board of directors, the chairperson or another member may be granted the right to cast a deciding vote (commonly known as a “casting vote”).

JVs can be financed through various methods.

Firstly, the JV may be financed through equity, by means of shareholder’s contributions. Unless otherwise specified in the JV’s bylaws, contributions should be made in cash. If the bylaws permit non-cash contributions, such contributions should be supported by an independent valuation report certifying the assets fair market value. This valuation report ensures that the contributed assets are appropriately valued and their value is aligned with the corresponding share capital issued to the contributing shareholder.

Moreover, the JV may be financed through debt, involving borrowing funds from financial institutions or individual lenders. These loans should be repaid, along with interest (if due), according to the agreed-upon terms.

JV entities can also receive loans from their shareholders. Under Italian law, these loans may be considered subordinate to other debts of the JV and repayments made within a year of bankruptcy may be subject to claw-back provisions.

Depending on the corporate structure of the JV, it may be also envisaged the issuance of bonds or of other debt (or quasi-debt) instruments to finance operations.

As referred to in 6.1 Agreement Documentation, the JV agreement usually sets forth specific mechanisms to resolve deadlock situations, that can be generally classified into three different categories.

• Negotiation clauses, consisting in mechanisms aimed at resolving the deadlock through procedures that preserve the contractual/corporate relationship: this includes the attribution of the casting vote to one shareholder or board member or the appointment of an independent third-party expert, acting as an arbitrator, entrusted to take the decision on behalf of the competent corporate body.
• Buy-sell provisions involve solutions that address the deadlock through the transfer of shares, resulting in the exit of one or all co-venturers. Among the commonly used by-sell provisions are:
1. the Russian roulette clauses, providing that one co-venturer can propose to purchase the shares of the other co-venturers for a predetermined price ‒ the co-venturer receiving the offer has the option to accept it or counter with the same offer price;
2. the Texas shootout clause, providing that each co-venturer can deliver to an independent expert an offer concerning the purchase of the shares owned by the other co-venturers for a predetermined price, initiating a sort of auction; the independent expert will analyse the offers and the co-venturer making the higher offer will have the right to buy the other co-venturers shares; and
3. the put or call options, providing that one of the co-venturers is obliged to sell or to acquire the other co-venturers shares for a predetermined price.
• Exit clauses are constituted by mechanisms regulating the global exit procedure concerning the sale by the co-venturers of their entire shareholdings to a third party or the liquidation of the company.

To manage the commercial and operational aspects of the JV, besides the JV agreement, one or more of the following ancillary agreements may be executed, depending on the company’s activity:

• shareholders agreements;
• directorship agreements or employment agreements;
• intellectual property assignments or licence agreements;
• asset transfer agreements;
• manufacturing agreements;
• supply and distribution agreements or agency agreements;
• management service agreements or service level agreements;
• real estate lease agreements; and
• shareholders or third parties loan agreements.

Usually, a draft of these agreements agreed upon between the co-venturers is attached as an annex to the executed version of the JV agreement.

Under Italian law, the shareholders’ meeting appoints the board of directors through a majority resolution. However, the company’s bylaws may provide specific rights to each co-venturer regarding the appointment of one or more board members (even on a non-proportional basis), as well as the designation of the chairperson, vice-chairperson and executive directors. Additionally, the bylaws can set forth the minimum and maximum number of board members and the duration of their charge, which in any case cannot exceed three years for S.p.A.s.

Both individuals and legal entities can be appointed as directors, although it is more common to appoint individuals. Details on decision-making mechanisms can be found in 6.2 Decision-Making.

To ensure board control, it is possible to grant one or more directors with the casting vote on specific matters agreed between the co-venturers and, usually, detailed in the bylaws.

The primary duty of the board of directors and its members is to manage the company and to carry out any activities necessary to fulfil the corporate purpose. Specifically, the board of directors has the duty to provide the company with an adequate organisational and accounting structure (also aimed at promptly detecting any potential business crisis), make strategic decisions, approve the business plan and budgets, and oversee their implementation in carrying out the ordinary business activities.

Except for the specific duties listed below, the board of directors may delegate its functions to executive directors or executive subcommittees, which will have the authority and responsibility to manage the company within the scope of the powers granted to them, and to ensure that the organisational, administrative, and accounting structure is appropriate to the nature and size of the business.

In any case, the following duties and powers cannot be delegated by the board:

• issuance of convertible bonds and capital increases, if such power is provided under the company’s bylaws;
• preparation of the draft annual financial statements;
• actions related to the reduction of share capital due to losses exceeding one-third of the corporate capital and convening of the shareholders’ meeting if corporate capital is reduced below the legal minimum; and
• preparation of merger and demerger plans.

Directors are bound to execute their office with the utmost diligence, acting in the company’s best interest, and to safeguard the company’s assets. Therefore, in the case of a conflict of interest between the company's interests and the interests of the co-venturer appointing them, the directors have to act for the exclusive benefit of the company, as better detailed in 7.3 Conflict of Interest.

In addition, the directorship agreements between the JV and the director typically include non-compete clauses designed to prevent the director from engaging in competition with the company. Under Italian law, non-compete clauses shall be limited in terms of scope, timing and territory and shall provide equivalent compensation to the director in order to be valid.

Under Italian law, co-venturers are allowed to appoint directors to the JV. However, notwithstanding their appointment by a specific co-venturer, the directors must act in the best interests of the JV.

The Italian Civil Code distinguishes between the regulation of conflicts of interest in S.p.A.s. and S.r.l.s.

In S.p.A.s., directors are required by law to disclose any personal or third-party interests in company transactions to the board of directors and auditors. If a director with such an interest is also a managing director, they must abstain from the transaction and delegate it to the board. If they are the sole director, they must inform the next shareholders’ meeting. Decisions must be justified based on the company’s best interests.

In S.r.l.s., even though a prior information obligation is not required by law, contracts entered into by directors in conflict of interest and third parties may be voided at the company's request if the third party was aware of the conflict.

Both in S.p.A.s. and in S.r.l.s., board resolutions taken with the deciding vote of a director in conflict of interest, resulting in financial harm to the company, may be challenged within 90 days by the other directors or by the statutory auditors (if appointed).

Critical IP issues, such as IP ownership, licensing and protection, should be addressed between the co-venturers before establishing a JV.

Contractual JV

The JV agreement or its ancillary agreements may regulate the terms and conditions of:

• the licensing between the co-venturers of their respective IP rights needed to develop the JV’s scope (including trade names, trade marks, technology, patents, know how, trade secrets and list of clients)
• the attribution of ownership of the IP jointly developed by the co-venturers;
• the confidentiality undertakings mutually assumed by the co-venturers; and
• the consequences of the JV termination on IP rights.

Moreover, to protect their respective IP rights, each co-venturer typically agrees to co-operate with the other in preventing IP infringement. This may involve taking legal action against third parties who infringe on the JV’s IP rights or the IP rights of individual co-venturers.

Corporate JV

In case of corporate JVs, the co-venturers may consider and regulate within the JV agreement or the ancillary agreements the following issues:

• definition of the JV name and execution of any licence of use for company names or trade marks needed for this purpose;
• decision on the transfer or licensing of IP rights owned by the co-venturers to the JV;
• rules governing the attribution of the ownership of the new IP developed by the JV;
• consequences of the liquidation or winding up of the JV on the IP rights and licences (if applicable); and
• procedures and rules to prevent IP rights infringement and possible strategies for resolving disputes related to IP rights.

Licence agreements typically include the several key provisions, essential for defining the terms of the relationship between the licensor and licensee:

• royalty clauses, specifying the financial arrangements regarding payments for the use of the intellectual property;
• exclusivity provisions, addressing whether the licensee holds exclusive rights to use the licensed IP rights;
• territorial perimeter, specifying the area in which the licensee could use the IP rights;
• sublicensing rights; and
• duration clauses, outlining the term of the licence. 

In light of the scope pursued, the co-venturers should consider whether to assign or to license the use of the IP rights to the JV.

The assignment to the JV of the IP rights that may be executed through capital contribution or sale implies that the JV finally acquires the full ownership of the IP and the right to use it without any limitation. Therefore, following the assignment, the assigning co-venturer relinquishes any control over the IP rights and no longer benefits from any future profits derived from the assigned IP.

On the other hand, the IP rights licence allows the co-venturer to retain ownership and control over the IP rights and to detail the terms and conditions that govern the other party’s use of those rights. Furthermore, the IP licence provides the licensor with the right to receive compensation in the form of royalties or other fees for the JV’s exploitation of the licensed IP.

The licensor also has the ability to regain full ownership of these rights upon the termination of the JV agreement or in the event of a breach by the JV of the terms outlined in the licence agreement.

Thus, the licensing of the already existing IP is found to be the most effective solution, subject however to any relevant tax implications (for instance related to transfer pricing rules on royalties in the event of an international JV).

The concept of ESG is important because it provides a framework for assessing the sustainability and ethical impact of business, beyond economic profits. This approach has gained importance with the growing awareness that companies’ evaluation should be based also on their ESG impact.

Given the growing regulatory landscape on this topic, the co-venturer may conduct in-depth due diligence before establishing a joint venture to identify potential risks and opportunities in the light of applicable laws and to develop a detailed ESG strategy. Governance structures can also be adapted to support effective ESG implementation. By embedding ESG principles directly into the JV agreement, co-venturers may formalise their commitment to sustainability and take a proactive approach to risk management.

Main ESG Regulations

Italy, as a member state of the European Union, has adopted an extensive regulatory framework on ESG matters, based essentially on EU legislation. 

Legislative Decree No 125/2024 implemented into Italian legislation the Corporate Sustainability Reporting Directive (CSRD) introduced by the European Union, which strengthens the requirements for sustainability reporting. This Regulation requires an increasing number of companies to adopt a specific sustainability reporting, improving transparency and information on risks and corporate reliability. Specifically, starting from the financial year 2024, the CSRD Regulation requires larger companies to publish a sustainability report in accordance with the European Sustainability Reporting Standards (ESRS).

Moreover, the Corporate Sustainability Due Diligence Directive (CS3D), approved in December 2023 and to be implemented by member states by July 2026, broadens the sustainable governance obligations imposed on companies. It requires a review of internal policies, including those related to the supply chain, as well as policies addressing human rights and environmental rights.

In addition to the above, under Italian law companies pursuing purposes that extend beyond the traditional goal of profit maximisation, including social and environmental objectives, may be qualified and named as “benefit companies” with positive impacts in attracting investors and clients committed to social and environmental issues.

JVs can have either a fixed or indefinite duration. Contractual JVs, often established for specific projects, typically have a defined duration indicated in the JV agreement. Instead, corporate JVs are often created for a longer duration or for an indefinite term, providing flexibility and adaptability in the company’s operational scope. Given the above, the JV’s bylaws generally include provisions for withdrawal or exit procedures that co-venturers can activate under specific conditions.

Despite the agreed-upon duration, the JV agreement may allow for early termination under specific circumstances, such as:

• material breach by the other co-venturer of certain provisions of the JV agreement or of the ancillary agreements;
• unsolved deadlock events;
• mutual consent by the co-venturers; and
• change of control of a co-venturer.

In the case of a corporate JV, if the parties mutually decide to liquidate the company, the board of directors shall convene a shareholders’ meeting so that it may resolve on the appointment of the liquidators, conferring any power deemed appropriate, and on the criteria for conducting the liquidation procedure. The liquidators will then carry out the necessary steps to liquidate the company’s assets, pay off creditors, and distribute any remaining assets among shareholders proportionally to their membership interest. The liquidators must also prepare and submit a final liquidation report, detailing the process and financial outcomes. After all assets have been liquidated and liabilities settled, the liquidators will call a final shareholders’ meeting to present the liquidation report and seek approval for the conclusion of the liquidation process.

Following the approval of the final report, the liquidators will file for the formal dissolution of the company with the Companies Register, officially marking the end of the corporate entity.

Regardless of the duration of the JV, it is crucial to regulate in detail within the JV agreements the effects of termination, also for the purposes of minimising potential disputes between the co-venturers. Specifically, among others, the JV agreement should regulate:

• the co-venturers respective right and liabilities upon termination;
• to the extent possible, the assignment of the assets owned by the JV;
• the impact of the JV termination on the commercial agreements in place;
• if any provision of the JV agreement survives to termination (usually confidentiality provision);
• the allocation of key-employees, if the co-venturers desire to re-hire part of the work-force; and
• the allocation of relevant IP rights developed by the JV.

Alternatively, the co-venturers may also agree on a global exit transferring all of their interests in the JV to a third party.

Under Italian laws, co-venturers can freely transfer their own assets to each other without involving the JV. However, if the transfer involves assets licensed to or held by the JV, the JV’s interests may be affected.

Therefore, prior to any asset transfer, the transferring co-venturer should conduct a comprehensive review of all relevant agreements with the JV, considering that these agreements may include provisions regarding the transferability of assets and the potential need for the JV's consent.

In addition, the transfer agreement may also specify how existing agreements between the JV and the transferor will be affected by the transfer, and, potentially, regulate the transfer of these agreements to the transferee.

Transfer of assets from the co-ventures and the JV, if made within 24 months from its incorporation, are subject to approval from the shareholders meeting and require a sworn appraisal certifying the value of the assets. In any event, in the transfer of assets involving the co-venturers and the JV, it is often advisable to prepare an appraisal to certify the fair value of the sale.

If the JV transfers assets to a co-venturer, potential conflicts of interest may arise, regardless of whether the assets were initially contributed by the co-venturers or developed by the JV. To mitigate these risks, it is crucial to establish a fair market value for the assets, ideally supported by independent auditor valuation (as mentioned above). Additionally, if the purchasing co-venturer is also a legal representative of the JV, the transaction may be considered self-dealing. In such cases, the conflict-of-interest procedures outlined in 7.3 Conflicts of Interest should be followed.

As specified in 10.1 Termination of the JV, in the event of termination of the JV, any and all assets owned by the company (whether originally contributed to the company by the co-venturers or originating from the joint venture itself) will be liquidated to pay off the creditors (if any). Any remaining assets will be then distributed among shareholders proportionally to their membership interest in the JV.

Therefore, the transfer of assets of the JV does not only need to take into account the decisions of the co-venturers, but also the interests of the company’s creditors which may ultimately have claim over those assets, in the event the JV faces financial distress.