Italy gives a great variety of corporate and investment instruments. If you are an entrepreneur and want to start a business in Italy, depending on the business objectives, the level of capitals to be committed, the desired extent of liability for shareholder and founders, you may choose among a wide set of corporate organisations schemes.
As clarified by VGS lawyers, Italian Company Law has been profoundly renovated in the last decades. The company law reform Italy has been through had the objective of improving competitiveness of Italian companies while enhancing their capacity to grow in an increasing competitive environment. However, a crucial point of such competitiveness was also given by the legal system in which companies operate. Based on this, the following legislations represent the main coordinates of Italian Company Law:
- The Italian Civil Code;
- The Italian Legislative Decree 231/2001 regarding administrative responsibilities of companies and their entities;
- The Italian Legislative Decree 14/2019 (Code of Crisis and Insolvencies);
- The Italian Legislative Decree 58/1998 regarding disclosure and compliance obligations;
- The Italian Legislative Decree 6/2003 regarding corporate governance and groups;
- The Italian Legislative Decree 385/1993 (Consolidated Act on Banking)
There are two main types of incorporated entity: the Società per Azioni (SPA) – a company limited by shares – and Società a Responsabilità Limitata (SRL)- a company limited by “quotas”. For their establishment, both company schemes require a deed of incorporation signed before a public notary and the adoption of a by-law a set of rules that will govern company’s operation named Statuto. Generally speaking, a relevant difference between previous corporate scheme is to be found in their governance structure. In fact, SPAs present board of directors, shareholders’ meeting and a board of statutory auditors. On the contrary, in the context of SRL we find the quota holder meeting and the management body.
In providing consultancy to clients, VGS lawyers always highlight the main elements that should drive the choice of establishing a SPA or a SRL. In details, these elements involve the incorporation, contributions, shares/quotas, registration, transfer of shares/quotas, et cetera. The following are just some of many other elements to take into consideration:
THE SPA
Incorporation
- The capital amount cannot be lower than €120,000.00 (This is also the minimum amount of the subscribed capital)
- The intended duration of the company
- The rules governing the distribution of profits
Registration
- In order to make the company a full legal person, a formal registration within the company registry is required
Shares
- The participation in the company’s capital is given by the shares;
- All shares must have identical value;
- Shares can be assigned (under certain limits) to employees
Meetings of shareholders
- In general, ordinary meetings deal with the appointment of the Collegio Sindacale (Board of Statutory Auditors), appointment or removal of directors, approval of financial statements, resolution about responsibility and liability of the directors. An ordinary meeting has to be held once a year;
- Extraordinary meetings deal with the appointment, revocation and powers of liquidators, changes of company’s article, issue of share or other financial instrument.
THE SRL
Incorporation
- The capital amount cannot be lower than €10,000.00 (This is also the minimum amount of the subscribed capital);
- In presence of more than one shareholder, the subscribed capital to pay in is €2,500.00;
- The quota of capital paid by each partner;
- The value of contributions made by each partner;
- The intended duration of the company
Capital Contributions
- At least 25% of contributions shall be paid before the incorporation
- The list of assets that can contribute to the capital now includes cash, goods, intangible assets, including labour, services and know-how;
Quotas
- Quota holders’ rights may not necessarily be proportional to the value of the quotas;
- Quotas may not necessarily be proportional to capital subscriptions;
Company Governance
- A minimum of one director, which also must be partner of the company (Unless specified by company By-laws)
- In case of more directors, there will be a board of directors. (Usually, directors will carry out all the operation according to what they consider necessary for company’s business).
VGS lawyers always undertake personalised advisory activity in order to frame the most appropriate corporate instrument for their clients. In this sense, it is crucial that entrepreneurs have a clear business objective so that professionals will be able to legally support their choices.