Chrysler 2013 Annual Report Download - page 306

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Fiat S.p.A. Statutory
Financial Statements
at 31 December 2013
Capital management
Italian regulations regarding share capital and reserves for a joint stock corporation establish the following:
Share capital must be a minimum of €120,000
All changes in share capital must be approved by shareholders, who can give the Board of Directors the authority, for a maximum period
of 5 years, to increase share capital up to a pre-determined amount. Shareholders are also required to adopt appropriate measures when
share capital is reduced by more than one-third as a result of recognized losses and to reduce share capital if, by the end of the following
financial year, such losses have not been reduced to less than one-third of share capital. If, as a result of a loss of more than one-third, share
capital falls below the legal minimum, shareholders must approve both a reduction and simultaneous increase of share capital to a level at
least equivalent to the legal minimum or change the company’s legal form
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
In consideration of the Company’s goal to maintain an appropriate level of liquidity following acquisition of the remaining minority interest in
Chrysler Group LLC, the Board of Directors has recommended that no dividend be paid for 2013.
Fiat’s stated objectives for capital management are to create value for shareholders, to guarantee continuity of the business and to support the
development of the Group. Accordingly, the Company intends to maintain an adequate level of capital that, at the same, will enable it to achieve
a satisfactory financial return for shareholders, as well as ensuring access to affordable sources of external financing (including achievement
of an adequate credit rating).
Fiat constantly monitors its debt-equity mix, particularly in relation to the level of net debt and cash generated from the Group’s operating
activities. The Company’s objective is to continuously improve the profitability of its operating activities. In addition, it has the ability to sell assets
to reduce the level of debt or, alternatively, 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 a balanced capital structure and an improvement in credit rating.
The term capital is used to refer both to the contribution from shareholders (share capital and share premium less own shares held, for a total
value of €5,292,270 thousand at 31 December 2013 and €5,288,888 thousand at 31 December 2012), 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 €3,418,122 thousand at
31 December 2013 and €3,634,682 thousand at 31 December 2012, excluding gains and losses recognized directly in equity).
Share premium reserve
At 31 December 2013, the share premium reserve totaled €1,073,766 thousand. The €2,363 thousand increase over 31 December 2012,
reflected the premium on the new 285,000 ordinary shares issued following exercise of 285,000 options under the November 2006 stock
option plan for managers.
Legal reserve
At 31 December 2013, the legal reserve totaled €528,577 thousand and was unchanged from 31 December 2012.