Investment in Italy

Investment in ItalyShareholders of an SpA can be either natural or juridical persons, and Italian or foreign. Atleast one shareholders’ meeting must be held each year, to approve the company’s annualfinancial statements, no later than 120 days or, in exceptional circumstances, no later than180 days after the close of the financial year.Extraordinary shareholders’ meetings must be held to approve matters such as amendmentsto the articles of association, the winding-up of the company (including the appointmentof liquidators, their substitution and their powers), and mergers or similar corporatereorganizations; whereas ordinary meetings approve matters connected with the ordinarycourse of the company’s business.The management of the company is assigned to directors, who handle all matters andtransactions necessary or advisable for the attainment of the corporate purpose. Themanagement may lie with a sole director or a board of directors; in the latter case, thenumber of directors is established by the articles of association. Their management powersinvolve a duty to take all necessary and appropriate steps to attain the corporate purpose,as well as to ensure compliance with the law, including the preparation of the draft annualfinancial statements.SpAs must also appoint a board of statutory auditors (collegio sindacale), formed of three orfive statutory auditors and two alternate auditors. The main duty of the board of statutoryauditors - as set out in article 2403 of the Italian Civil Code - is to supervise compliancewith the law and the articles of association. They also have to verify that the company’sorganization and administrative and accounting structures are adequate and work properly.Accounting controls are the responsibility of the board of statutory auditors or an audit firm.Besides the governance system described above, two further systems are available for SpAs.In the first (so-called sistema monistico or one-tier model, taken from Anglo-Saxon culture),management and control lie with a board of directors and a committee appointed fromamongst the members of the board itself. The management of the company is theexclusive responsibility of the board of directors, whilst the management control committeesupervises the adequacy of the company’s organizational structure, internal control systemand administrative and accounting system, as well as its capacity to represent the acts ofmanagement correctly. The committee also performs any additional function assigned toit by the board of directors and, in particular, liaises with the auditors or board of statutoryauditors with regard to controls on the accounts.The second (so-called modello dualistic or two-tier model) provides for two corporatebodies: a management board and a supervisory board. The management of the companyis entrusted exclusively to the management board, which must do everything necessary oradvisable for the attainment of the corporate purpose. The supervisory board is entrustedwith the functions of the board of statutory auditors and with those functions reserved, inthe traditional model, to the shareholders’ meeting.Neither model includes a board of statutory auditors: accounting controls are carried out byan audit firm.© 2012 KPMG S.p.A., KPMG Advisory S.p.A., KPMG Fides Servizi di Amministrazione S.p.A., KPMG Audit S.p.A., Italian limited liability share capital companies, and Studio Associato Consulenza legale e tributaria, anItalian professional partnership, are member firms of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.25