Opposition to the demerger: see you in a month…actually two

A demerger represents an extraordinary operation by which all or part of the assets of a company (demerged company) are attributed to one or more existing or newly formed companies (beneficiary companies).

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The Civil Code provides for general regulations for mergers, to which the rules on demergers tend to make complete reference (of course, with the different “adaptations” with res

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pect to mergers).

In essence, the demerger is “modeled” on the regulatory framework of the merger, there being extensive reference to the latter’s rules.

As we will see, these premises have direct consequences for the issue discussed in this article.

In Art. No. 2503 of the Civil Code, it is provided in case of a merger  such an operation can be implemented only after 60 days from the last registration provided for in Art. 2502-bis of the Civil Code, This term can be reduced by half – and thus to 30 days – iif no companies with share capital participate in the merger, such as the limited liability company (Art. 2505 quater of the Civil Code ).

During the abovementioned time period, creditors of the participating companies may object.

However, for the demerger, the general reference to the merger rules does not expressly cover the rule just seen on halving the time limit (Art. 2505 quater of the Civil Code): it is therefore not explicitly referred to.

This has given rise to different interpretations by practitioners.

 

Implicit recall thesis (okay to 30 days)
Some interpreters still consider the rule on halving the time limit for creditors’ opposition to be applicable, even though it is not expressly referred to in the demerger.

This orientation is supported in particular by the Notarial Council of Triveneto, which, in maxim L.A.8, considers precisely that the 30-day time limit for opposition also applies to the demerger, if no companies with share capital participate in the transaction.

The reduced time limit for opposition, according to this interpretation, would still be applicable to the demerger for analogy, since Art. 2505 quater of the Civil Code would not be a merger-specific rule that cannot be applied to the demerger.

Ultimately, the lack of (explicit) reference would be a kind of “forgetfulness” on the part of the legislature.

Along these lines is also a ruling (Court of Vicenza of August 13, 2007) that had upheld the “halved” time limit for opposition.

 

Thesis of the inapplicability of the recall (no to the 30 days)
On the other hand, according to another thesis the lack of express reference to Article 2505 quater of the Civil Code implies that it cannot be applied extensively to the demerger.

This is certainly an interpretation inspired by greater caution, framing the rule just mentioned as special and therefore reserved exclusively for the merger operation, without analogical extensibility to the demerger.

This thesis has been accepted by some judgments on the merits (Court of Novara, decree of September 8, 2020, and Court of Prato, decree Of September 5, 2022), which have precisely seen how Art. 2505 quater of the Civil Code cannot be applied to the demerger, since it is a specific rule for the merger.

 

“State of the art”
Given the controversial application of Article 2505 to the demerger, it was found that several Chambers of Commerce apply the shorter 30-day time limit to the demerger (in the case of non-stock companies, as specified), while for others, no derogation is allowed from the “standard” 60-day time limit: the latter, moreover, would seem to be the most common solution.

 

Conclusions
Given the above, although the 60-day time limit for opposition in the demerger of non-stock corporations – if there are the requirements of Article 2505 quater of the Civil Code – seems to be most widely applied without exceptions, there is no shortage of cases in which “halving” to 30 days is deemed acceptable: it will be a matter of assessing on a case-by-case basis, at the territorial level, which framework is most widely followed, with respect to the location of the companies involved in the demerger.

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