Vertical Reorganization of Corporate Groups: The Spin-off by Demerger

Pursuant to Legislative Decree no. 88/2025 (the so-called "corrective decree"), specifically Article 2, the Italian legislator has redrafted Article 2506.1 of the Civil Code. This intervention was designed to overcome certain interpretative and practical limitations that, under the previous wording, had reduced or discouraged the use of this legal instrument.

Unlike a standard demerger, where the shares of the beneficiary companies are distributed among the shareholders of the demerged company, in a spin-off demerger, the demerged company continues to operate—a crucial aspect to note.

The Amendments:

a)       The new provision clarifies and allows a spin-off demerger to be carried out in favor of pre-existing companies, overcoming the previous limitation to newly formed entities only.

b)      The operation can now involve not just a portion, but the entirety of the assets, allowing the demerged company to effectively transform into a pure holding company, holding exclusively the shares of the beneficiary companies.

c)       In the event of a spin-off demerger that involves the formation of new beneficiary companies and the allocation of shares exclusively to the demerged company, the legislator introduces significant simplifications: the share exchange ratio, cash adjustments, and the financial statements required by Articles 2501-quater, 2501-quinquies, and 2501-sexies of the Civil Code are no longer necessary, resulting in a reduction of burdens and operational timelines.

d)      It has been clarified that a shareholder cannot exercise the right of withdrawal solely due to the demerger, as their legal and financial position is not directly altered. The right remains exercisable only for specific causes provided by law, such as a substantial change in the corporate purpose.

Practical Implications

This legislative evolution introduces new perspectives for corporate planning, particularly for rationalization and asset segregation operations. The ability to establish a holding company through a total spin-off demerger can be particularly advantageous for managing family-owned groups or reorganizing complex ownership structures, thereby improving governance and asset protection.

Our Professionals remain available for any further clarification.