**Exhibit 1.1****BY LAWS OF THE STOCK COMPANY “NATUZZI S.p.A.****of “NATUZZI S.P.A.”****Article 1. Name**          **1**. Incorporated hereby is a stock company having the name “NATUZZI S.p.A.”**Article 2. Head Office**          **2.**The company has its legal headquarters in Bari. Secondary headquarters may be establishedor eliminated at other locations in Italy or abroad, pursuant to resolutions adopted by itsmanaging body.**Article 3. Corporate purpose**          **3.**The corporate purpose is the production and sale of sofas and armchairs, furniture ingeneral, furniture products, as well as the production, manufacture and sale of raw materials andsemi-finished products destined for such use.          The company also has, as non-prevalent purposes and with regard to the companies constitutingpart of the group, the following activities: – the management of the group’s information services, administration and commercialsystems;  – the production of software and hardware;  – the consultancy and organization related to management problems, research anddevelopment of marketing and commercial penetration, import-export and company problemsof an economic nature;  – training services for managers, executives, employees and factory workers;  – the development and creation of industrial prototypes, brand names and patents,graphics and publicity;  – the granting of financing in any form;  – foreign exchange transactions;  – the collection, payment and transfer of funds;  – financial coordination; budgetary, strategic and administrative planning;coordination of purchases, product engineering and development and marketing;  – the construction, purchase, management, licensing and leasing of industrial,commercial and production premises; and – the purchase, management, licensing and leasing of machinery, equipment and othertools.          All financial activities legally reserved to banks or investment institutions are strictlyexcluded.
 
 

 
          Furthermore the company may carry out, again within the “Natuzzi S.p.A.” group, activitiesrelated to the installation, maintenance, revision of technological plants and mechanical,hydraulic, thermal, electric systems, of telephone networks, electricity and transfer lines.          In addition, the company may acquire participations and interests in other companies orenterprises of any kind, in Italy or abroad, as a stable investment and not for the purpose ofplacement of securities, and may undertake all operations that the managing body deems necessary oruseful to the attainment of the purposes of the company, including the grant of personal guaranties(“*fideiussioni*”) and other guaranties.**Article 4. Duration**          **4.**The duration of the company is up until 31.12.2050.**Article 5. Domicile**          **5.**The domicile of the shareholders insofar as it concerns their relations with the companyshall be the one indicated in the shareholders’ ledger.**Article 6. Capital and shares**          **6.**The share capital is fifty-four million, eight hundred twenty four thousand and two hundredand twenty-seven euro (€54,824,227) and is divided into fifty-four million, eight hundred twentyfour thousand and two hundred and twenty-seven euro (€54,824,227) shares, each with a nominalvalue of one euro (€1.00).          The extraordinary Meeting held on 23rd July 2004 authorized the managing body toimplement, within five days from the registration of the resolution in the Register of Companies,an increase in the share capital without consideration (“*a titolo gratuito*”), up to a maximumamount of five hundred thousand euro (€500,000.00), and an increase in the share capital withconsideration (“*a pagamento*”), up to a maximum amount of euro three million (€3,000,000.00) toimplement the Incentive Plan that such Meeting created at the benefit of the Company’s and itsaffiliates’ employees.          The shares are represented by share certificates. Each share carries one vote in the generalmeeting of shareholders.**Article 7. Participation Certificates (“*****Strumenti finanziari*****”)**          **7.1**The company may issue participation certificates (“*strumenti finanziari*”), having attachedeconomic or administrative rights, *vis-à-vis*contributions by shareholders or third parties,including activities or services.          **7.2**The participation certificates shall be issued by the extraordinary meeting ofshareholders.          **7.3**The resolution issuing the participation certificates shall establish the characteristicsof the certificates thereof with regards to the contribution by each holder, specifying the rightsattached to the certificate and the penalties in the event of failure to make the relevantcontribution.
 
 

 
          **7.4**The participation certificates issued *vis-à-vis*the contribution of services andactivities are not transferable.          **7.5**The participation certificates are represented by registered credit instruments.**Article 8. Bonds**          **8.1**The Company may issue bonds, which may be convertible or non **-**convertible into shares.          **8.2**The bondholders must choose a common representative. Article 29 of these by-laws shallapply, where compatible, to bondholders meetings.**Article 9. Segregated Assets**          **9.1**The company may segregate one or more pools of assets for the carrying out of a specificbusiness in accordance with articles 2447-*bis*and subsequent articles of the civil code.          **9.2**The resolution segregating the relevant pool of assets shall be adopted by theextraordinary meeting, in accordance with article 16 of these by-laws.**Article 10. Loans**          **10.**The company may obtain from its shareholders loans free of charge or against payment, withor without the obligation to reimburse, in compliance with applicable rules, with special referenceto the rules regulating the collection of public savings.**Article 11. Shares and domicile of shareholders**          **11.1**The shares are registered and freely transferable.**Article 12. Withdrawal**          **12.1**Each shareholder not approving resolutions in connection with the following subjectmatters shall have the right to withdraw from the company by tendering all or part of their shares: a) amendment of the clause of these by-laws concerning the corporate purpose, in theevent that such amendment entails a material change in the activities carried out by thecompany;  b) transformation of the company from a stock corporation into another legal entity;  c) transfer of the legal headquarters abroad;  d) revocation of the state of winding up; e) modification of the rules determining the value of the shares in case ofwithdrawal;  f) modifications of the by-laws related to the voting rights attached to shares orthe rights to attend the meetings;  g) elimination of one or more triggering events for withdrawal pursuant to theseby-laws.
 
 

 
          Should the company be subject to direction and coordinating powers pursuant to articles 2497and subsequent articles of the civil code, shareholders shall have the right to withdraw from thecompany by tendering their shares in the events set forth in article 2497-*quater*of the civil code.          **12.2**The shareholder must notify his or her intention to withdraw in writing, by registeredmail, to the managing body.          The registered mail must be sent within fifteen days from the registration in the register ofcompanies of the resolution triggering the right of withdrawal, and include the details of thewithdrawing shareholder, his or her elected domicile in relation to this procedure, the number andthe class of the shares for which the right of withdrawal is exercised.          If the event triggering the withdrawal does not arise from a resolution by the shareholders’meeting, the right of withdrawal shall be exercised no later than thirty days from the date inwhich the shareholder has become aware of such event.          The shares for which the right to withdraw is exercised may not be transferred and therelevant certificates, where issued, must be deposited at the registered office of the company.          The exercise of the right to withdraw must be recorded in the shareholders’ ledger.          Withdrawal rights may not be exercised and, if already exercised, shall cease to have effect,in the event that the company revokes the resolution that triggers such withdrawal rights.          **12.3**Shareholders shall have the right to liquidate the shares for which withdrawal isrequested.          The value of the shares shall be established by the directors, having heard the opinion of theboard of statutory auditors and the external auditor, taking into account the equity and financialposition of the company and its perspectives in terms of income, as well as the market value of theshares, if any.          The managing body must prepare and deposit at the registered office of the company, withinfifteen days prior to the meeting and addressing the subject matters triggering the right towithdraw, the documentation necessary to determine the value of the shares in accordance with theabovementioned criteria.          Each shareholder shall have the right to inspect the documentation related to the evaluationindicated above and obtain a copy at his or her own expense.          In the event that the shareholder that intends to withdraw, in the notice for exercising theright of withdrawal, opposes the liquidation value determined by the managing body, the liquidationvalue shall be established, within ninety days of the exercise of the right of withdrawal, througha sworn report by an expert nominated by the President of the Tribunal in whose jurisdiction thecompany has its offices, who shall also decide on the procedural costs, upon the request made bythe most diligent party. Article 1349, first paragraph of the civil code shall apply.          **12.4**The directors shall offer on a preemptive basis the rights to acquire the shares of thewithdrawing shareholders to the other shareholders, pro-rata with the number of shares they hold.
 
 

 
          If convertible bonds are outstanding, such preemptive rights shall also pertain to the holdersof convertible bonds, together with shareholders, on the basis of the relevant exchange ratio.          The offer of the abovementioned rights must be deposited with the register of companies withinfifteen days from the final determination of the value for the liquidation, with a term for theexercise of such right of no less than thirty days from the deposit of the offer.          Those who exercise such rights, so long as they make a specific request, shall have the rightof pre-emption for the acquisition of the shares for which the relevant rights have not beenexercised (art. 2437-quater, 3°paragraph, of the civil code).          The shares for which the relevant pre-emptive rights have not been exercised may be placed bythe managing body with third parties.          In case the shares of the shareholder that has asserted the right to withdrawal remain unsoldthe shareholder shall be reimbursed, if available reserves exist, through a repurchase by thecompany of its own shares, that may also occur in prejudice of the prescriptions set forth byarticle 2357, third paragraph, of the civil code.          Should no reserves be available, an extraordinary meeting of shareholders must be called inorder to resolve either upon the reduction of the share capital, or the winding up of the company.          The prescriptions set forth by article 2445, second, third and fourth paragraphs, shall applyto the resolution reducing the share capital; should the creditors’ right of opposition beaffirmed, the company shall be wound up.**Article 13. Sole Shareholder**          **13.1**If the shares belong to a sole shareholder or if the sole shareholder, changes, thedirectors, in compliance with article 2362 of the civil code, shall deposit, for registration inthe register of companies, a statement indicating, if an individual, the first name and the familyname, the date and place of birth, the domicile, and the nationality of such shareholder, or, ifnot an individual, the entity name, its date of organization, and its office.          **13.2**Whenever the plurality of shareholders is established or re-established, the directorsmust deposit a statement describing such event for the registration in the register of companies.          **13.3**The sole shareholder, or the person ceasing to be the sole shareholder, may fulfill thepublicity obligations pursuant to the previous paragraphs.          **13.4**The statements set forth in the previous paragraphs must be deposited with the Registerof Companies within thirty days from the relevant registration in the shareholders’ ledger and, inany case, must indicate the date of such registration.**Article 14. Subjection to management and control powers**          **14.**The company must indicate if it is subject to management and coordination powers exercisedby other entities in all acts and correspondence, as well as through the registration within therelevant section of the register of companies as indicated by article 2497-*bis*, second paragraph,of the civil code.
 
 

 
**Article 15. Powers of the ordinary meeting**          **15.1**The ordinary meeting shall resolve upon the subject matters provided for in theapplicable laws and in these by-laws. In particular, the ordinary meeting may approve a regulationconcerning the functioning of the meeting.          **15.2**The following powers shall strictly be reserved for the ordinary meeting: a. approval of the financial statements;  b. appointment and revocation of directors; appointment of statutory auditors andof the chairman of the board of statutory auditors and, when required, of the externalauditor;  c. determination of the compensation for directors and statutory auditors, withoutprejudice to the prescriptions set forth in the following article 39;  d. determination of the responsibilities of directors and statutory auditors.**Article 16. Powers of the extraordinary meeting**          **16.1**The extraordinary meeting shall resolve upon: a. the amendments to the by-laws, with the exception of article 31.2 of theseby-laws;  b. the appointment, revocation and determination of the powers of liquidators;  c. the issuance of participation certificates pursuant to article 7 of theseby-laws;  d. the creation of segregated pools of assets pursuant to article 9 of theseby-laws;  e. the distribution of profits to the company’s employees or to the employees of thecompany’s affiliates by way of issuance of shares or of special classes of shares;  f. the distribution of profits to the company’s employees or to the employees of thecompany’s affiliates by way of issuance of participation certificates;  g. all the other subject matters provided for in the applicable laws and in theseby-laws.          **16.2**The empowerment of the managing body to resolve upon certain subject matters that,according to applicable laws, fall within the powers of the meeting of shareholders, such as thesubject matters set forth in article 31.2 of these by-laws, but not to the prejudice of the main competence of the shareholders’ meeting, which shall maintain itspowers to resolve upon such subject matters.
 
 

 
**Article 17. Call of the meeting**          **17.1**The meeting must be called by the managing body at least once a year, within one hundredand twenty days from the end of the fiscal year or within one hundred and eighty days from suchdate, should the company prepare consolidated financial statements or should particular needs orcircumstances occur in relation to the structure and the corporate purpose.          **17.2**The meeting represents the totality of shareholders and its resolutions, made incompliance with applicable laws and with these by-laws, shall bind all shareholders, includingabsent or dissenting shareholders.          The meeting may also be called outside of the company’s registered office or abroad.          **17.3**In the event the directors cannot call a meeting or in the event that they fail to call ameeting, the meeting may be called by the board of statutory auditors, or through a decree by thecompetent tribunal upon request of shareholders representing at least one tenth of the sharecapital.          **17.4**The notice convening the shareholders’ meeting must include: – the place in which the meeting shall be carried out as well as the places inwhich it may be connected through telecommunication devices;  – the date and time of the meeting; – the items on the agenda;  – any other item prescribed by law.          **17.5**The meeting shall be called by publication, at least fifteen days before the meeting, ofthe relevant notice of call in one of the following newspapers: “*Il Sole 24 ore*”; “*Corriere dellaSera*” or “*La Repubblica*”.**Article 18. Call of second and subsequent meeting**          **18.1**The notice of call may include the date, time and place of a second call, and also of asubsequent call, if the previous meetings do not reach the quorums prescribed by the law. Thesecond and the subsequent call may be held within thirty days from the date indicated for the firstcall.**Article 19. General meeting**          **19.1**Even in the absence of a formal call, the meeting is duly established when the entireshare capital is represented and when the majority of the members of the managing body and of theboard of statutory auditors are present.          In this hypothesis each participant may oppose the discussion (and the resolution) of any itemfor which he or she considers that he or she has not been sufficiently informed.**Article 20. Ordinary meeting: definition of the quorum**          **20.1**On first call, the ordinary meeting is duly established with shares, present orrepresented, amounting to at least half of the share capital.          **20.2**On second or subsequent call, the ordinary meeting is duly established regardless of theportion of share capital represented.
 
 

 
          **20.3**On first, second and subsequent calls the resolution of an ordinary meeting is passed bythe absolute majority of the shares present or represented at that meeting.          However, the resolution renouncing the bringing of suit against the directors or authorizing asettlement of a suit previously brought against the directors cannot be validly adopted when atleast one fifth of the share capital is dissenting.**Article 21. Extraordinary meeting: definition of the quorum**          **21.1**On first call resolutions of the extraordinary meeting are passed by a majorityrepresenting more than half of the share capital.          **21.2**On second call the extraordinary meeting is duly convened with at least one third of theshare capital and its resolutions are passed by two thirds of the share capital present orrepresented in that meeting.          However, the resolutions on the following subject matters shall be carried out by a majorityof at least one third of the share capital: a. amendment of the corporate purpose;  b. transformation of the company into another legal entity, mergers, de-mergers, inhypotheses other than the ones contemplated by article 31.3, letter a);  c. early winding up;  d. extension of the duration;  e. cancellation of the state of winding up;  f. transfer of the registered office abroad;  g. issuance of preference shares.**Article 22. Rules for the calculation of the quorum**          **22.1**Shares without voting rights shall not be included in the calculation of the quorumsnecessary to validly establish the meetings.          **22.2**Treasury shares and company’s shares held by subsidiaries are included in the calculationof the quorum necessary to validly establish the meeting, as well as for the calculation of thequorum required to validly pass the resolution, and do not have any voting right attached.          **22.3**Shares whose voting rights cannot be exercised are included in the calculation of thequorum necessary to validly establish the meeting; the same shares (without prejudice to anydifferent provision provided for by applicable laws) and shares whose voting rights have not beenexercised, further to a statement made by the shareholder asserting his or her conflict of interestin the relevant resolution, are not included in the calculation of the majority necessary for theapproval of the relevant resolution.
 
 

 
**Article 23. Postponement of the meeting**          **23.**Intervening shareholders, representing at least one third of the share capital, have theright to request a postponement of the meeting for no longer than five days, if they state thatthey have not been sufficiently informed of the subject matters specified in the agenda.**Article 24. Eligibility to attend the meeting and to vote**          **24.1**Shareholders that are going to attend the meeting (in accordance, *inter alia*, with thefulfillments indicated in paragraph 3 of article 2370 of the civil code) must deposit their shares(or certificates), at least five days before the date of the meeting, at the registered office orat one of the banks indicated in the notice of call, in order to give proof of their right toparticipate and to vote at the meeting. The shares must be immediately collected after the deposithas been made.          **24.2**Each share entitles to one vote at the meeting.          **24.3**Holders of shares that do not carry voting rights have the right to receive the notice ofcall.**Article 25. Shareholder representation at a meeting****Proxies**          **25.1**Without prejudice to the prohibitions set forth in article 2372 of the civil code, eachshareholder may appoint proxies, by means of a written proxy. The company shall maintain thewritten proxy on its records.          **25.2**The proxy may be issued for several meetings; it may not be issued without indication ofthe name of the representative and it shall always be revocable, notwithstanding any contraryagreement. The representative may only be replaced by a person specifically indicated in the proxy.          **25.3**If a shareholder has conferred a proxy to a company, the legal representative of suchcompany shall represent the shareholder during the meeting.          Alternatively, the company may delegate one of its employees or collaborators.          **25.4**Proxies may not be issued to employees, statutory auditors, members of the managing body,or the external auditor.          **25.5**Proxies may not be issued to subsidiaries, nor to their employees, statutory auditors,members of the managing bodies and external auditors.**Article 26. Chairman and secretary of the meeting.****Recording of the minutes**          **26.1**The meeting is chaired by the sole director, by the chairman of the board of directorsor, in his absence, by a person nominated by the intervening shareholders.
 
 

 
          **26.2**Those present at the meeting shall appoint a secretary, not necessarily a shareholder,and, if necessary, one or more scrutinizers, not necessarily a shareholder. The support of thesecretary shall not be required if the report is arranged by a notary public.          **26.3**The chairman of the meeting shall be in charge of ascertaining that the meeting isvalidly established, of ascertaining the identity and right to participate of the shareholderspresent, of regulating the carrying out of the meeting and announcing the results of theresolutions.          **26.4**With regards to the carrying out of the works of the meeting, the order for interventionsand the methods to discuss upon the items on agenda, the Chairman shall have the power to proposeprocedures that may nevertheless be modified by an absolute majority of the intervening holders ofshares carrying voting rights.          **26.5**The minutes of the meeting must be prepared in a manner consistent with the duties inconnection with their timely deposit and publication and must be undersigned by the chairman, thesecretary or the notary public.          **26.6**The minutes must indicate: a) the date of the meeting;  b) the identity of the participants and the share capital that they represent (eventhrough an exhibit/addendum);  c) the procedures adopted for the resolutions and results thereof;  d) the identity of the voters with an indication as to whether they have voted for,against or they have abstained from voting, even through an addendum;  e) upon the specific request of the participants, a brief summary of theirdeclarations with regards to the items on the agenda.**Article 27. Meeting procedures****Carrying out of items on the agenda**          **27.1**The meeting must be carried out with such procedures so that all of those who have theright to attend may be aware, in real time, of the **transactions**for which they have been calledupon to resolve.          **27.2**Meetings may be carried out in the presence of audio-video conferences as long as: – all people attending the meeting may be identified and their right to take partin may be verified; – the Chairman of the meeting, even through the chairman’s office may regulate thehearings and may ascertain and announce the results of the votes;  – all the participants are allowed to follow the discussions, intervene in realtime in the discussions and take part simultaneously in the vote;  – the person in charge of recording the minutes must be able to understand/hear theevents to be indicated in the report;  – the notice of call indicates the places from which an external link has beenprepared in order to allow shareholders to participate.
 
 

 
          With the fulfillment of the requirements above, the meeting is deemed to be established in thelocation in which the Chairman of the meeting, together with the secretary, is located, in order toproceed with the preparation and undersigning of the minutes in the relevant book.**Article 28. Method of voting**          **28.1**Secret voting is not permitted. Any vote which is not connected to any shareholder isconsidered unexercised.**Article 29. Special meetings**          **29.1**If more than one class of shares or participation certificates exists, each holder hasthe right to attend the relevant special meeting.          **29.2**All provisions indicated in these by-laws with regards to the meeting and shareholders,with reference to the meeting procedure, shall also apply to special meetings, to bondholders’meetings and to meetings of holders of participation certificates.          **29.3**The special meeting shall appoint and remove the common representative.          **29.4**Apart from any initiative by the common representative, the call of the special meetingmay occur upon the initiative of the company or upon a specific request by members representing atleast one twentieth of the votes which may be exercised in the relevant special meeting.          **29.5**If the Company holds treasury shares or bonds, it cannot participate to the relevantspecial meeting.          **29.6**Directors and statutory auditors have the right to attend the special meeting withouthaving the right to vote.          **29.7**Resolutions of the meeting may be challenged in accordance with articles 2377 and 2379 ofthe civil code. Those having the right to vote shall also have the right to act individually, inthe event that the special meeting has not resolved upon the relevant subject matter.          **29.8**Articles 2417 and 2418 of the civil code shall apply to the common representative.          **29.9**The rules governing the extraordinary meetings shall apply with regards to theformalities and the majorities prescribed for the special meetings.**Article 30. Annulment of the resolutions of the meeting**          **30.1**The legal action for the annulment of the resolutions may be commenced by the directors,by the board of statutory auditors or by dissenting, absent or abstained shareholders, holding,even collectively, at least five percent of the share capital having voting rights in thechallenged resolution.
 
 

 
**Article 31. Duties and powers of the managing body**          **31.1**The management of the company belongs exclusively to directors, who shall carry out allthe actions necessary for the achievement of the corporate purpose, it being understood that forcertain actions specific authorization from the shareholders’ meeting shall be required pursuant tostatutory prescriptions.          **31.2**Furthermore, the managing body shall also be in charge of the following: a) the resolution approving a merger in the cases indicated in articles 2505,2505-bis, 2506-ter last paragraph of the civil code;  b) the setting-up and cancellation of secondary offices;  c) the indication of directors who are legal representative of the company;  e) the transfer of the registered office to another location within the nationalterritory.          The minutes of the directors’ resolution that increases the share capital shall be drafted bya notary public and shall be deposited and registered within the register of companies inaccordance with article 2436 of the civil code.**Article 32. Non compete**          **32.**Directors are prohibited from competing with the company pursuant to article 2390 of thecivil code.**Article 33. Composition of the managing body**          **33.**The company is run by a sole director or by a board of directors composed of seven toeleven members.**Article 34. Appointment and replacement of the managing body**          **34.1**The ordinary meeting shall establish the number of members of the managing body and shallresolve upon their appointment.          **34.2**Directors shall be appointed for the period established at their appointment and, in anycase, for no longer than three fiscal years and they may be re-appointed. Their term in officeshall expire on the date of the meeting called for the approval of the financial statementsrelating to the last fiscal year of their office.          **34.3**If, during the fiscal year, one or more directors are to retire, the others may replacethem through a resolution approved by the board of statutory auditors, so long as the majority ofthe board of directors is composed by directors appointed by the meeting (or indicated in the deedof incorporation). Directors who have been appointed by the board shall remain in the office untilthe subsequent shareholders meeting is held.
 
 

 
          **34.4**If the majority of the directors appointed by the meeting (or indicated in the deed ofincorporation) were to retire, the remaining directors shall call a shareholders meeting in atimely manner in order to replace the retired directors.          **34.5**The term of office of the Directors appointed pursuant to paragraph 4 above shall expireat the same time of the preexisting directors.          **34.6**If the sole director or all of the directors cease to be in office, a meeting for theappointment of the director or of the entire board must be called in a prompt manner by the boardof statutory auditors, which shall be in charge of carrying out the activities related to theordinary course of business.**Article 35. Chairman of the board of directors**          **35.1**During the first meeting after its appointment, the board of directors may designate achairman and a vice chairman among its members, if such designation has not been already done atthe shareholders’ meeting.          **35.2**The chairman of the board of directors shall call the board of directors, shall establishits agenda, shall coordinate the works of the board and shall ensure that all the directors areduly informed about the items mentioned in the agenda.**Article 36. Delegated members**          **36.1**The board of directors may delegate, within the limits set forth in article 2381 of thecivil code, all or part of its powers to one or more of its members, establishing the boundaries ofsuch powers and the compensation for the relevant director.          **36.2**The board shall have the right to control and arrogate (to itself the) operations thatare included in the delegation of powers, as well as the power to revoke such delegation.          **36.3**The delegated members shall not bear the duties indicated in article 2381,fourthparagraph, of the civil code.          **36.4**The delegated bodies shall report to the board of directors and the board of statutoryauditors, at least every one hundred and eighty days.          **36.5**The managing body may appoint chief executives and define their powers.**Article 37. Resolutions of the board of directors**          **37.1**Meetings of the board shall be held in the location indicated in the notice convening themeeting, in the registered offices or in any other location, at any time the chairman may considerit necessary.          **37.2**Notice must be sent at least five days before the date of the meeting by means of aletter sent by fax, telegram or e-mail.          **37.3**In case of emergencies, notice may be sent by fax, telegram or e-mail at least two daysin advance.          **37.4**The board is validly established with the presence of the majority of appointed directorsand shall resolve through a favorable vote of the absolute majority of present directors. In caseof tie, the vote of the Chairman shall prevail.
 
 

 
          Directors who have abstained or have declared a conflict of interest shall not be consideredin the calculation of the majority necessary for the resolution to be adopted.          **37.5**The board may be called and may validly resolve, even through the use of means oftelecommunications, as long as the guarantees and the methods indicated in article 27, points 1 and2, of these by-laws are met.          **37.6**The board of directors is validly established when, even in the absence of a formalnotice, all of appointed directors and the board of statutory auditors are present.          **37.7**The meetings of the board shall be chaired by the chairman, by the vice chairman and intheir absence by the oldest director.          **37.8**Votes cannot be given by proxy.**Article 38. Company representation**          **38.1**The representation of the company is the responsibility of the sole director or thechairman of the board of directors.          **38.2**Furthermore, representative powers may also be given through power of attorney attributedby the board, within the boundaries provided for thereto.          The managing body, to which representation is granted, may appoint, within the limits granted,attorneys-in-fact either for general purposes or for specific transactions or categories oftransactions.          In any case, when the attorney-in-fact appointed by the board does not belong to such body,the representation of the company shall be governed by the general provisions concerning power ofattorney.          **38.3**The representation of a company to be wound up shall be granted to the liquidator or thechairman of the board of liquidators and to any other possible part of the board of liquidatorswith the methods and terms defined during appointment.**Article 39. Directors compensation**          **39.1**Members of the board of directors shall be refunded all the expenses borne during theiroffice and shall receive a compensation determined by the shareholders’ meeting that appoints them.The meeting may determine an aggregate sum as a cap for the remuneration of the all directors,including those with special duties.          **39.2**The amount to be paid to directors with special duties shall be defined by the board ofdirectors, after hearing the opinion of the board of statutory auditors, in compliance with the capdefined by the meeting.
 
 

 
**Article 40. Board of statutory auditors**          **40.1**The board of statutory auditors shall control the observance of the prescriptions of thelaw and of these by-laws, shall make sure that the company is run in accordance with principles ofcorrect management having particular regard to the suitability of the organizational,administrative and accounting systems adopted by the company. The board of statutory auditors shallhave the responsibility of auditing the company’s accounts when such duties are not fulfilled by anexternal auditor.          **40.2**The shareholders’ meeting shall appoint the board of statutory auditors, which shall becomposed of three permanent auditors and two temporary auditors, and it shall appoint the chairmanfor the entire duration of their office and shall resolve upon their compensation.          **40.3**For the entire duration of their office the statutory auditors must meet the requirementsindicated in article 2399 of the civil code. The loss of such requirements shall imply theimmediate removal of the statutory auditor and his or her replacement by the oldest temporaryauditor.          **40.4**Statutory auditors shall remain in the office until the date of the meeting called forthe approval of financial statements relating to the third fiscal year of their office. Expirationof their office shall take place from the date of the appointment of a new board of statutoryauditors.          **40.5**The board of statutory auditors shall be convened at least once every ninety days uponthe initiative of its chairman. The board shall be validly established with the presence of themajority of the board of statutory auditors and shall validly resolve through a favorable majorityvote of its members.          **40.6**Meetings may also be held by the use of telecommunication means, in compliance with themethods indicated in article 27 of these by-laws.**Article 41. The external auditor**          **41.1**The external auditor or the audit firm in charge of the auditing the company’s accounts,whether appointed pursuant to legal requirements, shall have the following responsibilities: – to audit the regular book-keeping and the correct entering of management eventsduring the financial year, at least once every three months;  – to control that the financial statements and, if drawn up, the consolidatedaccounts of the group correspond to the results of the entries and with checks whichhave been carried out, and if they comply with the relevant applicable provisions;  – to deliver an opinion upon the truth and accuracy of the financial statements ofthe company and, if any, of the group.          **41.2**The audit activity on the company’s accounts shall be registered in a book to be kept atthe registered office of the company.          **41.3**Upon the appointment of the external auditor, the shareholders meeting must alsoestablish its compensation for the entire duration of its appointment, which in any case may notexceed three fiscal years.
 
 

 
          **41.4**For the entire duration of their office the external auditor or the auditing company mustmeet the requirements indicated in article 2409-quinquies of the civil code. If they do not meetsuch requirements, they shall step down from office and it shall not be possible to re-appointthem. In case of forfeiture of the external auditor, the directors must promptly call a meeting inorder to appoint a new external auditor.          **41.5**The external auditor shall remain in office until the date of the approval of financialstatements relating to the third fiscal year of their term in office, and they may be re-appointed.**Article 42. Financial statements and dividends**          **42.1**Each fiscal year shall end on December 31.          **42.2**The net profit resulting from the financial statements — after a deduction of at least 5%(five per cent) intended for the legal reserve until such legal reserve reaches one fifth of theshare capital — shall be distributed between shareholders in proportion to the shares held by eachshareholder, unless the meeting resolves to provide for some extraordinary reserves.**Article 43. Termination and winding up**          **43.1**The company shall be dissolved upon the occurrence of the following events: a) expiration of the duration provided for in these by-laws;  b) achievement of the corporate purpose or unexpected impossibility of achieving it,unless the meeting, called in case of necessity, resolves upon a relevant amendment tothe by-laws;  c) impossibility to function or the continued inactivity of the shareholders’meeting;  d) reduction in the share capital below the minimum threshold provided for by-law,without prejudice to the prescriptions set forth in article 2447 of the civil code;  e) the hypothesis contemplated by article 2437-quater of the civil code;  f) any resolution of the extraordinary meeting; expressly providing for thedissolving of the company; and  g) any other event provided for by law.          **43.3**In all the cases of termination, the managing body must fulfill the publicityrequirements prescribed by the law within thirty days from the date of the event triggering thetermination.
 
 

 
          **43.4**The extraordinary meeting, called by the managing body, shall appoint one or moreliquidators and shall establish: a) the number of liquidators;  b) in the case that more than one liquidator is appointed, the rules governing theoperations of the liquidators, referring to the rules governing the operations of theboard of directors when possible;  c) the parties with the responsibility of legally representing the company;  d) the standards according to which the winding up should be carried out; and  e) any possible limitation on the powers of the liquidators.**Article 44. Jurisdiction**          **44.1**Any dispute that may arise between the Company and its shareholders, directors,liquidators pursuant to these by-laws, shall fall within exclusive jurisdiction of the Tribunal ofBari.