CLASSES OF SHARES AND SHARE REDEMPTION IN ITALIAN AND UK COMPANY LAW: THE PECULIAR CASE OF THE REDEEMABLE SHARES

Matteo L. Vitali


The aim of this work is to describe and compare the UK and Italian approaches to equity finance with particular reference to these nations’ respective regimes concerning the issue of classes of shares. This topic merits discussion for the following reasons: (i) equity investments have recently been the target of several studies; (ii) a number of authors have frequently focused on the rules governing the financing of companies; and (iii) these rules have been the subject of complex law reforms and of a great deal of criticism and evaluation. One important cause of this renewed attention for the financial structure of companies is market globalisation.

This article takes into account statutory rules governing shares in comparing two important member states of the European Union: the UK and Italy. In the UK, the capital structure of companies has always been very flexible and statutory rules, generally speaking, allow the issue of a variety of shares. The Italian context is quite different. Historically, the Italian Civil Code—which includes the rules governing companies—provided companies with only a few classes of shares. The financial system for both listed and closed companies was rigid and companies were frequently constrained to issue debt instruments—such as bonds or banking loans—to finance their investments. Furthermore, the scarcity of equity instruments was not attractive to new investors. But the Italian situation has changed: recent Italian company law reforms (in force from 1 January 2004) now allow companies to choose from a number of options and even build a sophisticated equity structure. In this article, the author aims to verify whether the UK system is really as flexible as it appears to be and if and to what extent the two systems converge.


Cite as: Matteo L. Vitali, Classes of Shares and Share Redemption in Italian and UK Company Law: the Peculiar Case of the Redeemable Shares, vol 10.2 ELECTRONIC JOURNAL OF COMPARATIVE LAW, (October 2006), <http://www.ejcl.org/102/art102-2.pdf>.

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