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    Setting up a company (independent company or subsidiary of a foreign company)

    Italy offers a wide range of choices of legal forms for setting up companies depending on the company’s or- ganizational model, its commercial objectives, the level of capital to be committed, extent of liability and tax and accounting implications.
    Companies: main types

    There are two main types of companies in Italy:
    • Società a responsabilità limitata (S.r.l.) – limited liability company;
    • Società per Azioni (S.p.A.) – stockholding companies (company limited by shares).
    The liability of the shareholders/quotaholders is limited to the amount of their contributions to the company.
    The company’s incorporation deed must be signed in front of a public notary and the company does not officially exist until it has been registered with the Business Register.
    At least 25% of the capital must be paid in on the signing of the Articles of Association (the remainder may be paid later) although contributions in kind must be made in full.
    Both types of companies can be incorporated (and, successively, the relevant corporate capital may entirely be held) by a sole shareholder/quotaholder. In this case, in order to benefit of the limited liability, the corporate capital must be fully paid-in.
    Article 2328 and following of the Italian Civil Code (for S.p.A) and Article 2463 (for S.r.l.) list the information needed in order to incorporate a company in Italy.
    The main differences between the two legal forms are related to:
    • corporate Capital. The Law establishes different minimum thresholds for each kind of company;
    • in the S.p.A. the capital consists of shares. The minimum share capital of a S.p.A. is equal to € 50,000.00;
    • the amount of the share capital must be stated in the memorandum of association. Shares do not have to reflect shareholders’ overall investment in the company;
    • the shares are freely transferable. It is normal practice to issue physical share certificates although in listed companies it is also permissible for shares to be in the form of simple accounting records, defined as “dematerialized shares”;
    • the company limited by shares is the main type of trading company best suited to substantial inve- stments with a large number of shareholders. It is also the compulsory type for those companies wi- shing to be listed on the stock exchange;
    • in the S.r.l. the capital consists of quotas. The minimum capital of a S.r.l. is equal to €1;
    • when setting up limited liability companies with capital equal to or greater than €10,000, at least 25% of the capital must be paid to the directors as previously indicated;
    • when the value of the capital is between €1 and €10,000, contributions may only be in cash and must be paid up in full on subscription;
    • the transfer of quotas may be limited and even prohibited; in which case, each shareholder will be en- titled to withdraw from the company, obtaining a reimbursement for his/ her quotas;
    • equity contributions. In both S.p.A. and S.r.l., the equity contribution can be made in cash as well as in kind subject to evaluation of an expert. Whereas, in the S.p.A. the expert is appointed by the Court, except in some specific cases, and the evaluation reviewed by the company’s directors;
    • voting rights and special rights. The voting rights in S.p.A. might not be proportional to the percentage of corporate capital subscribed by the shareholders and the by-laws can be provide different typolo- gies of shares;
    • in the S.r.l. the voting rights are proportional to the percentage of corporate capital subscribed by the quotaholders. Even if the by-laws may reserve some special rights to some quotaholders (e.g. admi- nistrative rights or the right to the distribution of profits), no different categories of quotas are allo- wed;
    • governance the S.p.A. can establish different governance models;
    a. traditional system (shareholders’ meeting, Board of Directors and Board of Statutory Auditors);
    b. one tier system (Board of Directors and management control committee appointed among the members of the board) and two tier system (Management Board and a Supervisory Board).
    The S.r.l. provides different forms of management that include appointing a Sole Managing Director, a Board of Directors, or even a form of management where Directors are not appointed as a board and where they can exercise their powers jointly or separately, or, depending on the corporate governance model, jointly and others separately.
    In addition, the two following subcategories are provided by the Italian civil code:
    • Società a responsabilità limitata semplificata (S.r.l.s.) – simplified limited liability company;
    • Società in accomandita per Azioni (S.a.p.A.) limited partnership (“partnership limited by shares”).
    Società a Responsabilità Limitata Semplificata – Simplified limited liability company (S.r.l.s.)
    The simplified limited liability company (S.r.l.s.) is a form of “S.r.l.” introduced to encourage young entrepre-neurship.
    The shareholders of an “S.r.l.s.” may only be individuals (natural persons), not companies or other bodies. The
    S.r.l.s. may also be composed of a single shareholder.
    Unlike the “ordinary S.r.l.” there is a minimum share capital of €1, up to a maximum of €9,999.99.
    The capital must be fully paid in cash to the administrative body at the time the company incorporation.
    The incorporation deed must be drafted as a public deed by a notary in accordance with a standard model pre- scribed by law. Therefore, there are no “articles of association” in a technical sense; there are only standard clauses indicated in the fixed standard model (prescribed by law).
    No notarial fees are due to the notary.
    Partnership with shares (Società in accomandita per azioni - S.a.p.A)
    There are two categories of partners in a limited partnership:
    • general partners who have the responsibility of directors in law and have unlimited personal liability (accomandatari);
    • partners with limited liability who are excluded from taking part in the administration and whose lia- bility is restricted to their investment in the share capital (accomandanti).
    As in the company limited by shares, investments are delineated by shares while, like a limited partnership, the management of the company is conducted by directors with unlimited liability (albeit secondary) for the com- pany’s obligations.
    In addition to the companies, other entities can be established.
    Partnership: nature and main types
    The partnership does not have a legal personality although it is still a form of company (società) under Italian law.
    A partnership is characterized by the personal commitment of each partner to their work as a whole within the partnership. The individual partners are personally liable for the liabilities of the company (including their private assets) and each acts for the whole business. Possibilities for imposing limitations on individual partners’ lia- bility are restricted.
    The main types are:
    Società in nome collettivo (S.n.c.) (general or unlimited partnership).
    The company’s business name must contain the name of at least one of the partners and an indication that it is an unlimited partnership.
    The members have unlimited liability for partnership obligations and there can be no agreement to the contrary. When seeking repayment of debts owed by the partnership, creditors must first enforce them against the par- tnership before applying to the members. The unlimited partnership is subject to bankruptcy law with the con- temporaneous bankruptcy of all partners.
    The partners generally have separately exercisable powers of administration and representation. If agreed, po- wers of administration may be reserved to some members only.
    Società in accomandita semplice (S.a.s.) (limited partnership).
    The limited partnership has two categories of partners:
    general partners (soci accomandatari), who are responsible for the administration and management of the company and who have unlimited liability for the fulfillment of partnership obligations;
    limited partners (soci accomandanti), who are not directors and will be liable for partnership debts within the limits of the investment made in the partnership, subject to certain exceptions governed by law.
    The partnership name (business name) must contain the name of at least one general partner and an indication that it is a limited partnership.
    If a limited partner’s name is included in the partnership name, he or she will have unlimited liability, jointly and severally with the general partners, for partnership debts.
    Limited partners cannot perform acts of administration or negotiate or do business in the name of the partner- ship, except when granted a special power of attorney for specific business activities. Any limited partner who disregards this prohibition will take on unlimited liability for all partnership debts and may be excluded from the partnership itself.


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