annual report - FIAT SpA

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 if 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;
� as discussed previously the share in profits due to each class of share is determined by the bylaws of
Fiat S.p.A.;
� 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.
Additionally, in respect of the share capital of Fiat S.p.A., in a meeting on 3 November 2006 the Company’s Board of
Directors exercised its delegated powers pursuant to article 2443 of the Italian Civil Code to carry out an increase in
share capital reserved for employees of the Company and/or its subsidiaries up to a maximum of 1% of share capital,
being €50 million, by taking a decision to issue up to 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. The execution of this increase in capital is subject to
the requirement that the conditions of the plan are met. Following the Demerger and the corresponding reduction in
the nominal value of each Fiat S.p.A. share from €5 to €3.5, share capital may in future increase by up to a maximum
of €35 million.
During 2010, the Group reconfirmed the policy under which it intends to distribute 25% consolidated net profit
calculated on a 3-year rolling basis, with a minimum annual payout of €150 million. With the Demerger completed, on
27 January 2011, the Group confirmed that for the 2011 financial year, a year of transition, it is intended that the
dividend policy will remain unchanged, with an expected distribution of 25% of consolidated profit for Fiat Post-
Demerger and for Fiat Industrial, with a minimum payout of €50 million and €100 million, respectively. The Board of
Directors of each group will formulate a dividend policy for subsequent financial periods by the end of 2011.
For 2010, the Board of Directors is proposing to Shareholders at their annual general meeting to pay a total dividend
of €155.1 million (€151.6 million excluding the treasury shares owned by the Group at the date of publication of these
consolidated financial statements). The dividend proposal may be summarised as follows:
� €0.09 per ordinary share;
� €0.31 per preference share;
� €0.31 per savings share.
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 endeavours 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 rating.
The Group 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 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 general meeting to reduce or increase share capital or, where
permitted by law, to distribute reserves. In this context, the Group 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.
Fiat Group Consolidated Financial Statements at 31 December 2010 170