Starting a business in Italy

In Italy, there is a wide range of legal forms for setting up companies, depending on its structural model, commercial objectives, the capital that can be generated to finance it, the limits of responsibility of participants, as well as taxation and accounting features.

In Italy, the most common types of companies are:

• Società a responsabllità limitata (S. rl) - a limited liability company;

• Società reg Azioni (S. pA) is a joint-stock company (with the liability of the participants within the limits of their shares).

The liability of shareholders/shareholders is limited to the amount of their contributions to the company. The memorandum of association of the company is drawn up in the presence of a public notary, and until the company is registered in the Register of Legal Entities, it is not officially considered to exist. At least 25% of the capital is paid at the signing of the Articles of Association (the rest - later), except for contributions in the form of property, which must be paid in full.

Companies of any of these types can be registered by one shareholder / shareholder, and he alone, accordingly, can own all corporate capital. In this case, in order to enjoy the benefits of limited liability, it is necessary that the entire capital of the company be fully paid up.

Article 2328 et seq. of the Italian Civil Code (for S. pA) and Article 2463 (for S. rl) set out the conditions for registering a company in Italy.

The main differences between the two legal forms are as follows:

• company capital: The law establishes certain minimum levels of capital for each type of company;

• The capital of S. pA is divided into shares.

• the minimum share capital of S. pA is: 50,000 euros;

• the size of the authorized capital is indicated in the memorandum of association. Shares are not an accurate reflection of the total investment of shareholders in a company;

• shares are freely traded on the market. It is standard practice to issue paper share certificates, although listed companies are also allowed to hold so-called "uncertificated shares", which appear only on the company's books;

• A joint stock company is the main form of trading organization, as it is best suited for significant investments made by a large number of shareholders. It is also a mandatory form for companies wishing to trade on the stock exchange;

• in S. rl the capital is divided into shares. The minimum capital of S. rl is €1;

• when establishing a limited liability company with a capital of €10,000 or more, at least 25% of the capital must be paid against an invoice pre-invoiced by the directors;

• if the capital is between €1 and €10,000, capital contributions are accepted in cash only and are payable in full on the subscription date;

• alienation of shares may be limited or even prohibited; in such cases, each investor has the right to withdraw from the company and receive compensation for the corresponding share;

• investments in capital. Contributions to the capital of both companies - S. pA and S. rl - may be made in cash or property, in the latter case - after assessing such

property by an expert. However, for S. pA, the expert is appointed by the court (except in some special cases), and the results of the assessment are verified by the directors of the company;

• voting rights and other special rights. In S. pA, voting rights are not always distributed in proportion to the percentages of share capital acquired by the shareholders; in addition, the charter may contain provisions on the issue of shares of different categories and series;

• In S. rl, voting rights are always distributed in proportion to the percentages in the capital acquired by the contributors. Even if the articles of association grant certain rights to certain contributors (for example, administrative rights or profit-sharing rights), the division of shares into different categories is not allowed;

• S. pA management can create different management models:

a. traditional system (meetings of shareholders, board of directors and board of independent auditors);

b. a one-tier system (board of directors and a management control committee appointed from among the members of the Board) and a two-tier system (management board and supervisory board).

The forms of management of S. rl are varied: you can appoint a single general director, a board of directors, or even introduce a form of government in which the directors do not form a board and can exercise their powers jointly or separately, or, depending on the corporate governance model, the same powers jointly, and others separately.

In addition, the Italian Civil Code provides for the following two subcategories of companies:

• Società a responsabllità limitata semplificata (S. rls) - a simplified limited liability company;

• Società in accomandita reg Azioni (S. ap A.) - limited partnership. Società a Responsabilità Limitata Semplificata - Simplified Limited Liability Company (S. rls)

Simplified Limited Liability Companies (S. rls) is a sub-category of "S. rl" created to promote youth entrepreneurship.

S. rls members can only be individuals and cannot be companies or other organizations. It is also possible that S. rls consists of a single member. Unlike regular S. rl, the share capital of S. rls has the following limits:

€1 – €9,999.99. All capital in cash is fully transferred to the management body of the company by the date of its registration.

The memorandum of association is drawn up in the form of a public document by a notary in the standard form prescribed by law. Therefore, the "charter" in this case as such does not exist; its function is performed by the standard provisions contained in the standard model prescribed by law.

Such companies are exempt from notary fees. Share partnership (Società in accomandita per azioni - SapA)

Limited partnerships consist of the following types of partners:

• general partners with the functions of official directors and unlimited personal liability (accomandatari);

• limited partners who do not participate in the management of the company and are liable within the limits of their investment in the authorized capital (accomandanti).

Like a joint-stock company, partnership investments are represented by shares, but a limited partnership is characterized by the fact that it is managed by directors with unlimited liability (albeit secondary) for the obligations of the company.

Along with companies, other organizations can be created.

Partnership: distinctive features and main forms

A partnership is created without forming a legal entity, although it is also a form of company (ie society, società) under Italian law. A characteristic feature of the partnership is the personal responsibility of each partner for the work of the partnership as a whole. Individual partners are personally liable for the obligations of the company (including their personal property), and each of them acts strictly in the interests of the company's business as a whole. The introduction of any limitations on the liability of individual partners is not allowed.

Main types of partnerships:

• Società in nome collettivo (S. nc) (general partnership or partnership with unlimited property liability).

The corporate name of the company must include the name of at least one of the partners and an indication of the unlimited liability of the partnership. The participants bear unlimited liability for the obligations of the partnership, and no agreement that cancels this rule is possible. In seeking debt repayment from a partnership, creditors may first make demands on the partnership and then on the partners. Partnership law applies to a general partnership; at the same time, in the event of its insolvency, all partners are subject to bankruptcy at the same time.

Typically, the management and representational powers of the partners are separated. By agreement, management powers may be assigned only to some of the participants in the partnership.

• Società in accomandita semplice (S. as) (limited partnership)

Categories of partners in a limited partnership:

• general partners (soci accomandatari), responsible for the organization of activities and management and bearing unlimited liability for the obligations of the partnership;

• contributor partners (soci accomandanti) who do not participate in the management of the company and are liable for the debts of the partnership within the limits of their investment, subject to a number of exceptions provided for by applicable law. The name (company name) of the partnership must include the name of at least one of the general partners and an indication of the limited liability of the contributors.

If the name of the partnership contains the name of the contributor partner, such partner will have unlimited liability for the debts of the partnership on a joint and several basis with the general partners.

Contributing partners do not participate in the management, do not negotiate or enter into transactions on behalf of the partnership, unless they are given a power of attorney to exercise specific powers. Any contributor who violates this prohibition will have to assume unlimited liability for the debts of the partnership, otherwise he may be excluded from the partnership.

For a free consultation on the establishment of a company and obtaining a residence permit in Italy, you can contact us.
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