Benefits of Making Business in San Marino | Buy & Sell Business

1. BENEFITS OF MAKING BUSINESS IN SAN MARINO WWW.MERGERSCORP.COM

2. At MergersCorp M&A International we help our clients confidentially buy and sell privately held businesses, aligning the interests of all parties for mutual success and satisfaction. It is our goal to make the process of either buying a new business or selling your current business as smooth and efficient as possible. We know how important confidentiality is to our sellers and we treat it with the utmost importance. WWW.MERGERSCORP.COM

3. BENEFITS OF MAKING BUSINESS IN SAN MARINO WWW.MERGERSCORP.COM

4. Country Overview Landlocked San Marino is one of the world's smallest countries. Surrounded by Italy, it is an echo from an era when city-states proliferated across Europe. Mount Titano, part of the Appennine range, dominates San Marino's landscape. Three defensive fortresses perch on Titano's slopes, looking out to the Adriatic coast. San Marino is said to be the world's oldest surviving republic. Tourism dominates the economy of the 61 square kilometre (23.6 square miles) republic, which plays host to more than three million visitors every year. Postage stamps and coins - keenly sought by collectors - are important sources of revenue. San Marino's constitution provides for a parliamentary style of government. The 60- member Great and General Council is elected every five years. It is headed by two captains-regent, who are elected by the council every six months and act as heads of state for that period.

5. Executive Summary San Marino, officially the Republic of San Marino, one of Europe’s five microstates located in Southern Europe, it is a landlocked enclave in north eastern Italy. The country covers an area of 61 km², making it the third smallest country in Europe, about one fifth the size of Malta, or about one-third the size of Washington, DC. San Marino consists of one small city and smaller settlements clustered around Mount Titano, one of the peaks of the Apennine mountain range. The republic has a population of 33,100 (in 2016), capital is the city of San Marino. Spoken language is Italian. San Marino an enclave in north-east Italy dominated by the Apennines is the third smallest state in Europe (after the Holy See and Monaco) San Marino claims to be the world's oldest republic, its constitution is dated from Oct. 1600.According to tradition, it was founded by a Christian stonemason named Marino in 301 A.D. San Marino's foreign policy is aligned with that of Italy. Social and political trends in the republic also track closely with those of its larger neighbor.

6. Introduction – Doing business in San Marino San Marino is ranked 92 among 190 economies in the ease of doing business, according to the latest World Bank annual ratings. The rank of San Marino deteriorated to 92 in 2019 from 88 in 2018. San Marino almost exclusively trades with Italy and is therefore linked to the changes in Italian economy. Its landlocked status results in a high cost of transportation, which acts as a considerable trade barrier. Washing and bottling industries have the highest share of exports, followed by packaged medicine. Electricity and gas are traditionally the largest item of imports. San Marino's trade structure is traditionally positive owing to the exports of high-value machinery. Exports were broadly unchanged in 2017, at EUR 1.732 billion, against EUR 1.731 billion a year earlier, whereas imports edged up slightly to EUR 1.66 billion from EUR 1.65 billion in 2016.Exports were estimated to grow by 2.8% against 2.4% for imports in 2018, according to data from San Marino Office of Statistics.

7. Conducting business in San Marino The amount of capital should not be less than EUR 25,500 for limited liability companies and 77,000 euros for corporations. San Marino laws indicate that at least half of the initial capital contribution must be made within sixty days off after the registration date and if you pay in cash, to be deposited in a credit institution in San Marino. If society is unilateral, all contributions must be in cash and paid within sixty days after the registration date. In all cases, payment of all contributions must be requested by the directors within three years from the date of registration of the company. Main Types of foreign Companies in San Marino: - Limited company (SP, SPA) -International business company. Companies are subject to a general income tax. Social security contributions are also due by companies. There is no VAT system, but a tax on the import of goods is applied.The currency is the euro.

8. Taxation in San Marino IGR is the general income tax that, for employed persons is called I.G.R.L. (tax for physical persons and withholding tax system) and for companies, IGRP (tax for legal entities). General Taxes in San Marino is 17% of net income and applied to the profits of legal persons. Only income made ​​in San Marino is taxable and those that are or are not residents are taxed on the basis of tax brackets and progressive tax calculations. This tax is to trade and is a form of indirect taxation, is applicable only when the goods are imported in San Marino. The standard rate in this type of import is 17% of the tax base as this is considered an import, is recognized as equivalent to the VAT (value added tax).In San Marino income tax applies on corporate profits of resident companies. However, their distributed dividends are exempt from both withholding tax and income tax.

9. Trade San Marino is the 181st largest export economy in the world. In 2017, San Marino exported $126M and imported $289M, resulting in a negative trade balance of $162M. In 2017 the GDP of San Marino was $1.63B and its GDP per capita was $63.4k. The top exports of San Marino are Washing and Bottling Machines ($35.8M), Packaged Medicaments($11.5M), Woodworking machines ($9.5M), Other Edible Preparations ($4.29M) and Frozen Vegetables($3.41M), using the 1992 revision of the HS (Harmonized System) classification. Its top imports are Electricity ($28.5M), Cars ($20M), Other Footwear ($18.2M), Coated Flat-Rolled Iron ($14.2M) and Planes, Helicopters, and/or Spacecraft ($11.5M). The top export destinations of San Marino are Romania ($13.3M), France ($12.2M), Germany($11.5M), Austria ($11M) and Brazil ($9.6M). The top import origins are Germany ($49M), Italy ($39.9M), Poland ($28.5M), Romania ($20.8M) and France($20.8M).

10. Banking in San Marino The Central Bank of the Republic of San Marino (CBSM) is a private legal entity with public and private shareholders. Based on its Articles of Association the CBSM has the functions of: • Supervisory Authority of the banking, financial and insurance sector, and of guarantor of the protection of the investors; • managing, governing and supervising the payment system; • managing the Treasury and State Tax Department services on behalf of the State, Public Authorities and Autonomous Undertakings; • depositary of the financial resources of the State and Entities and Authorities of the Extended Public Sector; • institutional reference point for International Organisations, central banks, foreign financial supervisory authorities and similar entities; • State agent for the management of national debt certificates; • consultancy services to the State as regards to economic issues, specifically with reference to the financial sector and the public finance.

11. Our M&A Process NEGOTIATION & CLOSE POST MERGER INTEGRATION (PMI) INTEGRATION (PMI) POST MERGER TARGET APPRAISAL APPROACH DUE DILIGENCE Key Areas  Target & market analysis;  Initial assessment of synergies & value drivers;  Indicative valuation;  Go or No-Go decision;  Preparation of transaction documents (NDA – Non- disclosure Agreement/LOI- Letter of Intent);  Select Transaction team;  Appoint advisors;  Consider funding ability.  Initial approach letter;  Signing of NDA;  Prepare & share initial information requests;  Formulation of LOI (Letter of Intent) & possible negotiations;  Initial meeting and Q&A;  Circulate information on the Target to the Transaction team.  Set scope of due diligence;  Set up VDR (virtual data room);  Coordinating of due diligence, further meetings and Q&A sessions;  Consider points relevant to the Post-Merger (PMI) phase;  Revisit indicative valuation & prepare detailed valuation based on due diligence findings;  SPA negotiations with the seller;  Development of final structure (share/asset deal) and final valuation;  Approvals;  Signing of SPA & Close.  Consider the extent of integration;  Development of 100 Day PMI Plan;  Consider short & long term objectives;  Estimate requirements to capture synergies;  Determine resource needs & optimal allocation. Parties Involved  CFO;  Head of M&A;  Accountants;  Corporate finance advisors;  Consultants.  Senior management;  CEO, CFO, CTO;  Strategy director;  Head of M&A;  Head of Business Development;  Consultants.  Company general counsel;  Lawyers;  Senior management.  Company general counsel;  Lawyers;  Senior management/HR. 11 © Midaxo 2018 www.midaxo.com

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