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Do capital losses relating to fiscal years prior to 2020 qualify to postpone mandatory capital reduction or dissolution of the company? The Ministry of Economic Development clarifies the impact of Sec. 6 of Law Decree No. 23/2020

The Italian Ministry of Economic Development ("MISE") (Circular No. 26890/2021) recently provided useful indications on the application of Sec. 6 of Law Decree No. 23/2020, as replaced by Sec. 1, Par. 266, of Law No. 178/2020, concerning the reduction of the corporate capital for losses suffered during the Sars-Cov-2 pandemic and the postponement of the deadline by which the loss must be reduced to less than one third of the corporate capital.

Referring to «losses arising in the fiscal year ongoing as of 31 December 2020», rather than to «events occurring in the course of the fiscal years ended before the aforementioned date» the new wording seems to clarify that only losses suffered in the fiscal year 2020 are to be considered (whether or not coincident with 2020 calendar year).

Therefore, MISE excludes that the provision may concern losses relating to fiscal years prior to the fiscal year ongoing as of 31 December 2020, so that such prior losses remain subject to the general regime, also with respect to the mandatory dissolution of the company triggered by the reduction of the corporate capital below the mandatory minimum threshold.

MISE further states that a company which decided (by resolution of shareholders' meeting) «to postpone such decisions until the end» of the «fifth financial year following» the one «ongoing as of 31 December 2020» may, anyway, resolve upon the capital reduction or the dissolution, as the case may be, prior to the above-mentioned extended deadline.

Hence such decision about a potential early dissolution of the company shall require the prior authorization of the shareholders' meeting and cannot be taken by mere resolution of the administrative body (therefore, deviating Sec. 2485 of the Italian Civil Code).

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