Chrysler 2013 Annual Report Download - page 187

186 Consolidated
Financial Statements
at 31 December 2013
Notes
Policies and processes for managing capital
Italian laws and regulations regarding the share capital and reserves of a joint stock corporation establish the following:
the minimum share capital is €120,000;
any change in the amount of share capital must be approved in a General meeting by shareholders who may delegate powers to the Board
of Directors to increase share capital up to a predetermined amount for a maximum period of five years; the General meeting of shareholders
is also required to adopt suitable measures when share capital decreases by more than one third as the result of ascertained losses and to
reduce share capital if by the end of the following year such losses have not fallen by at least one third. If as the consequence of a loss of
more than one third of capital this then falls below the legal minimum, shareholders in General meeting are required to approve a decrease
and simultaneous increase of capital to an amount not less than this minimum or must change a company’s legal form;
an additional paid-in capital reserve is established if a company issues shares at a price exceeding their nominal value. This reserve may not
be distributed until the legal reserve has reached one fifth of share capital;
a company may not purchase treasury shares for an amount exceeding the distributable profits and available reserves stated in its most
recently approved Financial statements. Any purchase must be approved by shareholders in General meeting and in no case may the
nominal value of the shares acquired exceed one fifth of share capital.
For 2013, the Board of Directors has proposed to Shareholders at their annual general meeting not to recommend a dividend payment on
Fiat shares, given the company’s desire to maintain a balanced level of liquidity following the acquisition of the minority stake in Chrysler on
21 January 2014.
The objectives identified by the Group for managing capital are to create value for shareholders as a whole, safeguard business continuity and
support the growth of the Group. As a result, the Group endeavors to maintain an adequate level of capital that at the same time enables it to
obtain a satisfactory economic return for its shareholders and guarantee economic access to external sources of funds, including by means
of achieving an adequate credit rating.
The Group constantly monitors the ratio between debt and equity and in particular the level of net debt and the generation of cash from its
industrial activities.
In order to reach these objectives, the Group aims at a continuous improvement in the profitability of the business in which it operates. Further,
in general, it may sell part of its assets to reduce the level of its debt, while the Board of Directors may make proposals to Shareholders in the
general meeting to reduce or increase share capital or, where permitted by law, to distribute reserves. In this context, the Group may also
make purchases of treasury shares, without exceeding the limits authorized by Shareholders in the general meeting, under the same logic of
creating value, compatible with the objectives of achieving financial equilibrium and an improvement in its rating.
In this respect, capital means the value brought into Fiat S.p.A. by its shareholders (share capital plus the additional paid-in capital reserve less
treasury shares), equal to €5,292 million at 31 December 2013 (€5,289 million at 31 December 2012) and the value generated by the Group
in terms of the results achieved in operations (retained earnings and other reserves), equal in total, before the result for the year, to €3,786
million at 31 December 2013 and €3,252 million at 31 December 2012, excluding Other comprehensive income/(losses) and non-controlling
interests.