If a business ceases to be profitable, transferring ownership may be a better option than simply closing it down.
Types of business transfer
In Italy, there are different types of business transfer:
- The sale of the entire company or one of its branches;
- The transfer of the business to another existing one or to a new one, in return for shares.
- The donation of the business to a third party.
- Other possibilities are the usufruct and the renting of the company.
In the five years following the transfer, the entrepreneur that sells his business must refrain from starting a company which is likely to become a competitor in taking over customers from the transferred business (art 2557 cc.). The new entrepreneur must respect all existing contracts, which remain in force provided they do not have a strictly personal nature (that is, those in which personal and professional qualities prevail, art 2558 cc). All the credits and the debts relating to the company, are transferred to the new owner. The transfer of credits is effective against third parties from the time of registration of the transfer in the Business Register. However, the entrepreneur is not exempted from the debts of the transferred business unless the creditors have specifically agreed to this (art 2559 cc).
Taking over an existing company is a worthwhile alternative to setting up a new business.
Formalities for transferring the ownership of a business are similar to those for setting up a new one.
Business transfer procedures
Transfers of ownership between entrepreneurs and buyers must be formalised by a notary, who then deposits the agreement in the Business Register. The agreement shall be in the form of a public or certified private deed, subject to compliance with particular forms prescribed by law for the transfer of individual assets or to the particular nature of the contract (eg donation).
All licences, bills, insurance policies and services must be registered in the new owner's name.