Chrysler 2009 Annual Report Download - page 312

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Italian regulations regarding the share capital and reserves of 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 delegate powers to the Board of Directors,
having validity for a maximum period of five years, to increase share capital up to a predetermined amount; 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 to less than one third. If as the consequence of a loss of more than one third of capital this
then drops 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.
As discussed previously the share in profits due to each class of shares is determined by a company’s by-laws.
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 stock 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.
With reference to share capital, on 3 November 2006 the Board of Directors of Fiat S.p.A. exercised its delegated powers under Article 2443 of the Italian
Civil Code to institute a capital increase reserved for employees of the company and/or its subsidiaries up to a maximum of 1% of share capital, i.e. €50
million by issuance of a maximum of 10 million ordinary shares each of nominal value €5, corresponding to 0.78% of share capital and 0.92% of ordinary
share capital, at a price of €13.37 each, to service the employee stock option plan described in the following paragraph. Execution of the capital increase
is dependant on the conditions of the plan being satisfied.
In 2006, Fiat introduced a dividend policy under which its intention is to distribute a total dividend to shareholders of 25% of consolidated profits. Despite
the fact that Group profit for 2008 was €1,721 million and that the profit for Fiat S.p.A. was sufficient to enable a dividend to be distributed in accordance
with this dividend policy, at the proposal of the Board of Directors, Shareholders voted at the General Meeting on 27 March 2009 to limit the distribution of
dividends to savings shares only (in the amount of €24,773 thousand, as established in the Company’s By-laws), with the aim of strengthening the Group’s
capital structure and maintaining adequate liquidity. Following the normalisation of the capital markets as a source of funding for the Group and in the belief
that the Group will be able to continue to generate earnings even in a significantly different market environment, based on Fiat S.p.A.’s distributable profit for
2009, the Board of Directors will propose to Shareholders at the Annual General Meeting that they approve payment of a total dividend of €244 million (€237
million excluding the treasury shares held by Fiat S.p.A. at the date of this publication), equal to approximately 30% of the combined 2008 consolidated profit
and the 2009 consolidated loss. The proposed divided is as follows:
€0.17 per ordinary share;
€0.31 per preference share;
€0.325 per savings share.
The objectives identified by Fiat for managing capital are to create value for shareholders as a whole, to safeguard business continuity and support the growth
of the Group. As a result, Fiat endeavours to maintain an adequate level of capital that enables it to obtain a satisfactory economic return for its shareholders
and at the same time guarantee access to affordable external sources of funds, including through the achievement of an adequate rating.
Fiat constantly monitors the evolution of 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 Fiat aims at a continuous improvement in the profitability of the business in which it operates. Further, as a general rule
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 General Meeting to reduce
or increase share capital or, where the law permits, to distribute reserves. In this context, Fiat S.p.A. also makes purchases of treasury shares, without
exceeding the limits authorised by Shareholders in General Meeting, under the same logic of creating value, compatible with the objectives of achieving
financial equilibrium and an improvement in its rating.