Chrysler 2011 Annual Report Download - page 301

Fiat S.p.A.
Statutory
Financial
Statements
at 31 December
2011
Notes
300
Italian regulations regarding share capital and reserves for a joint stock corporation establish the following:
The minimum permitted share capital is €120,000
Any change in the amount of share capital must be approved by shareholders in general meeting who may authorize the Board of Directors, for a
maximum period of five years, to increase share capital up to a predetermined amount. Shareholders are also required to adopt suitable measures when
share capital decreases by more than one third as the result of verified losses and reduce share capital if, by the end of the following financial year, such
losses have not been reduced to less than one third. If as a consequence of a loss of more than one-third of capital it falls below the legal minimum,
shareholders must approve the decrease and a simultaneous increase in share capital to an amount not less than the legal minimum or change the
company’s legal form
As already noted, the right of each class of shares to share in a company’s profits is established in the by-laws
A share premium reserve is established if a company issues shares at a price above their par value. This reserve is not distributable until the legal reserve
has reached one-fifth of share capital
A company may not purchase own shares for an amount exceeding distributable profits and available reserves reported in its latest approved financial
statements. Purchases must be approved by shareholders and in no case may the par value of the shares acquired exceed one-fifth of share capital
With reference to share capital, on 3 November 2006 the Board of Directors – in exercise of its powers under Article 2443 of the Civil Code to institute a
capital increase reserved for employees of the Company and/or its subsidiaries within the legal limit of 1% of share capital – approved a capital increase
of up to a maximum of €50 million through the issue of a maximum 10 million ordinary shares with a par value of €5.00 each (corresponding to 0.78% of
total share capital and 0.92% of ordinary share capital) at a price of €13.37 per share, to service the employee stock option plan described in the following
section. That increase is subject to the conditions of the plan being met. Following the Demerger, and corresponding reduction in par value from €5.00 to
€3.50 per share, the maximum share capital increase for this purpose is €35 million.
For 2011, the Board of Directors intends to propose a dividend of €39.7 million for special shares only, as follows:
€0.217 per preference share
€0.217 per savings share
Given Fiat’s intention to maintain a high level of liquidity and restrictions on Chrysler’s ability to pay dividends to its members, the Board of Directors has
decided not to propose a dividend on ordinary shares.
Fiat’s stated objectives for capital management are to create value for Shareholders as a whole, to ensure business continuity and to support the growth of
the Group. Accordingly, Fiat intends to maintain an adequate level of capital that enables it to achieve a satisfactory economic return for Shareholders, as
well as ensuring access to affordable sources of external financing (including through the achievement of an adequate rating).
Fiat constantly monitors its debt-equity balance, particularly in relation to the level of net debt and the level of cash generated from the Group’s industrial
activities.
To achieve these objectives, Fiat aims at a continuous improvement in the profitability of its business activities. In addition, it could sell assets to reduce the
level of debt, or the Board of Directors could propose a capital increase or reduction to Shareholders or, where permitted by law, a distribution of reserves.
The Company may also repurchase its own shares, within the limits approved by Shareholders, compatible with the objectives of financial equilibrium and
an improvement in credit rating.
The term capital is used to refer both to the value contributed by Shareholders (share capital and share premium less own shares held, for a total value of
€5,258,962 thousand at 31 December 2011 and €7,261,595 thousand at 31 December 2010), and the value generated by Fiat S.p.A. in terms of results
achieved (retained profit and other reserves, before allocation of profit for the year, equal in total to €3,837,987 thousand at 31 December 2011 and
€5,444,893 thousand at 31 December 2010, excluding gains and losses recognized directly in equity).