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How does the business transfer work in Italy?

The business transfer is an extraordinary operation which has as its object the transfer for consideration of a complex of assets organized for the exercise of the business activity (that is a “Company” pursuant to Article 2555 of the Italian Civil Code) or of a functionally autonomous joint an organized economic activity (that is a “Company Branch” pursuant to Article 2112, paragraph 5 of the Italian Civil Code).

Generally, part of the company is by way of example: licenses, machinery, warehouse goods, brands, know-how, workers, real estate, contracts with suppliers and customers, etc.

The business transfer can therefore concern joint-stock companies or partnerships and sole proprietorships. This operation is regulated by the Italian civil code and by subsequent jurisprudential interventions.

If the transferred businesses are subject to registration with the company register, the deed of sale must be drawn up by public deed or private deed authenticated and deposited in the company register by the notary, within thirty days. In any case, the deed of sale must be proven in writing (2556 italian cc).

By express provision of the law pursuant to Article 2557 of the Italian Civil Code, anyone who transfers a business must refrain, for the period of five years from the transfer, from starting a new business which, due to the object, location or other circumstances, is suitable for diverting customers of the transferred company. If a longer duration is indicated in the deed of sale or the duration is not established, the prohibition of competition is valid for the period of five years from the transfer. The object of the competition ban can be extended as long as it does not prevent any professional activity. In any case, the Parties may limit or exclude the prohibition of competition.

In the business trransfer, the transferee automatically takes over all the transferor's contracts that are not of a personal nature, except for those that the deed of sale expressly excludes.

The third contracting party has the right to withdraw from the contract within 3 months from the news of the transfer for just cause and without prejudice to the liability of the transferor (2558 of the italian civil code).

The assignment of credits relating to the transferred company, even in the absence of notification to the debtor or of debtor's acceptance, has effect, towards third parties, from the moment of registration of the transfer in the company register. However, the transferred debtor is released if he pays the transferor in good faith (2559 italian cc).

The transferor is not released from the debts inherent in the operation of the transferred company prior to the transfer, unless it appears that the creditors have consented.

In the business transfer, the buyer of the company is also liable for the aforementioned debts, if they result from the obligatory accounting books (2560 italian cc).

If the property in which the business activity takes place is leased, the transferor of the company can transfer the lease contract of the property, even without the consent of the lessor to whom the transferor must notify the transfer by registered letter with notice of receipt (Article 36 of the Law n. 392 of 27 July 1978).

Finally, in the event of a business transfer, the employment relationship with the employees of the transferred company continues with the transferee and the worker retains all the resulting rights. The transfer of a company does not in itself constitute a reason for dismissal (2112 italian cc).

Avv. Lifang Dong and Avv. Chiara Civitelli

The content of this article does not constitute legal advice, but has an informative function. For tailor made legal advice, contact the firm by e-mail to: or by phone +39 06 916505710. © Dong & Partners International Law Firm, All rights reserved



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