Partnership
Generally characterised by:
- unlimited joint and several liability of partners for company obligations;
- each partner acts as a director of the company with managing powers;
- non-transferability, either inter vivos or mortis causa, of the partner status except whereby authorised by all other partners.
Generally characterised by:
- legal personality, autonomous from company owners’ personality
- limited liability for company owners, i.e. each owner’s liability is limited to the cash or assets he/she has contributed to the company
- separation of ownership and managing powers; hence company owners are not necessarily also company directors, and directors are not necessarily company owners
- ownership as freely transferable, either inter vivos or mortis causa.
The most widespread types of companies in
Italy are: Società per Azioni – S.p.A. (companies with liability
limited by shares) and Società a responsabilità limitata – S.r.l.
(companies with liability limited by quotas).
Both types of companies are to be
established via a Memorandum of Association (or Deed of Incorporation) –
either a unilateral instrument (whereby there is one founder only) or a
contract (in the case of multiple founders). The document is
complemented with the Articles of Association (or By-Laws) of the
company, i.e. the set of rules governing the company’s operations
through its existence. Whereby company’s owners should decide to change
one or more of such rules over the years, the Articles of Association
shall be consistently amended, whilst the Memorandum of Association
shall remain unchanged over time. Accordingly, consideration shall
always be ensured to the Articles of Association currently in force.
Società per Azioni (S.p.A.)
A Società per Azioni is the primary form
of corporation, i.e. it best meets the needs of enterprises requiring
significant capital.
Share Capital and Shares
S.p.A. share capital cannot be lower than
€ 120,000.00, and is divided into “shares”, which can be even
dematerialized securities.
The share capital amount is determined at
the moment the S.p.A. is incorporated and shall be subscribed by those
establishing the company. In the event of a single founder, one
subscription only will therefore exist; in the event of multiple
founders, all shall subscribe (varying) portions of share capital until
the whole capital has been subscribed.
Via capital subscription, each
shareholder undertakes to pay the portion of capital subscribed upon
execution of the Memorandum of Association. Payment can take place
either by money contribution to the S.p.A. (to its cashier or onto a
current account in the company’s name) or, whereby expressly provided in
the Memorandum of Association, via in-kind contribution or contribution
of receivables, whose value shall be equal to the amount of capital
subscribed.
In case of multiple founding
shareholders, those paying the capital subscription in cash are not
required to pay the entire amount of their share(s) up front. They are
entitled to deposit at least 25% initially and agree to pay the
remaining 75% at a subsequent date consistently with the managing body’s
request.
Conversely, whereby paid in kind or via
transfer of receivables, the share capital is to be paid in its
entirety. In the event of a single founder, he/she shall pay the entire
share capital subscription up front, regardless of whether payment is in
cash or in kind (i.e. goods or receivables).
Any share premium the founding shareholders might wish to pay for the
shares shall be paid in its entirety upon S.p.A. establishment.
Once the Memorandum of Association has
been filed with the competent Register of Enterprises and the S.p.A.
company therefore has been incorporated, the company may issues shares
representing its own share capital.
Corporate Bodies
Shareholders’ Meeting
The Shareholders’ Meeting is the S.p.A.
sovereign corporate body, i.e. the forum within which its shareholders
form their will as to the company, then implemented by the managing
body. The shareholders pass resolutions collectively. Resolutions
legitimately passed during the meeting are binding for all shareholders,
including those absent and those who voted against the resolution
passed; nevertheless, in some cases it is possible for such parties to
withdraw from the company, following procedures established by law.
Managing Body
The managing body is responsible for
company management. In performing ordinary and extraordinary management
tasks, it is not bound to seek approval from shareholders for its
actions, except for corporate administration acts expressly subject to
shareholders’ approval as by law.
In any event, the managing body composition depends on the corporate
governance model adopted by the company, even if under the so-called
“ordinary” model (which is the more common one) the company management
is entrusted to a managing body, either composed of multiple directors
(i.e. Board of Directors) or a single director (i.e. Sole Director). The
Board of Directors may delegate some of its administrative powers to an
executive committee or to a Managing Director. The Managing Body may be
also a corporate body, unless further legal provisions setting forth
restriction or requirements related to certain type of companies.
Control Body
The control body is responsible for
overseeing company management and/or auditing its accounts, although the
latter may also be entrusted to an independent auditing firm.
Within the so-called “ordinary” model of
corporate governance management control is entrusted to a Board of
Auditors composed of either 3 or 5 statutory auditors and 2 alternate
statutory auditors, while accounts are audited by an external auditor or
auditing firm enrolled in the Register of Auditors.
Società a responsabilità limitata (S.r.l.)
A Società a responsibilità limitata
(S.r.l.) – i.e. company the liability of which is limited by quotas –
has a much more streamlined corporate structure than an S.p.A.,
particularly due to the broader freedom that Italian law grants to the
founding quotaholder(s) in establishing its functioning, organisation
and other features and adapting them to their specific needs. Indeed,
the Memorandum and Articles of Association may derogate from much of the
legislation governing an S.r.l.
Capital and Quotas
S.r.l. capital may not be lower than €
10,000.00 and is divided into “quotas”. The amount of capital is
determined at the time the S.r.l. is incorporated and (likewise S.p.A.s)
shall be subscribed in its entirety by founding quotaholder(s). Quotas
are dematerialized.
As the S.p.A.s, in the case of multiple
founders, those paying the subscription of capital in cash are not
required to pay the entire amount of their quota; they may deposit 25%
initially and agree to pay the remaining 75% at a subsequent date upon
the managing body’s request. Conversely, sole quotaholder is required to
pay its capital contribution in its entirety, likewise multiple
quotaholders intending to make in-kind contributions or contributions of
receivables. Any premium on quotas shall always be fully paid up front.
Unlike S.p.A.s, quotaholders may also
contribute the value of services to be provided to an S.r.l. by one or
more of them. The subscribed capital shall be paid in its entirety by
those quotaholders electing to contribute the value of their services;
such contribution shall take the guise of a formal undertaking by the
quotaholders to provide such services to the S.r.l.
Each S.r.l. quotaholder holds only one
quota, which represents a varying portion of subscribed capital. In the
case of sole quotaholder, his/her quota represents the whole capital.
Unless otherwise specified in the
Memorandum of Association, the value of each quota is calculated
proportionately to the value of the quotaholder’s contribution to the
company, and his/her rights (e.g. voting rights, and the right to share
in profits) are also proportionate. For instance, if a quotaholder holds
60% of an S.r.l. capital, he/she is the owner of a quota equal to 60%
of total capital, is entitled to 60% of the company’s earnings, and
his/her vote represents 60% of the quorum required for passing
quotaholders’ resolutions.
Nevertheless, quotaholders may establish –
either in the Memorandum of Association or, subsequently, in the
Articles of Association – quotas not proportionate to the value of the
contribution to the company, and may also establish special rights for
specific quotaholders.
Corporate Bodies and Governance
Quotaholders’ Meeting
Quotaholders may take decisions provided
for by law or company’s Articles of Association in the collegial manner
typical of Shareholders’ Meetings. However, the Articles of Association
may also provide for such resolutions (unless related to specified
matters) to be taken through more streamlined procedures, such as
written consultation or written consent.
Management Body
Unless otherwise specified in the
Articles of Association, S.r.l. management is entrusted to one or more
shareholders appointed by the quotaholders themselves.
As such, an S.r.l. may be managed by a
Sole Director or by multiple Directors. In the latter case, the company
may adopt one of the following administration systems: (i) Board of
Directors; (ii) Several Management; (iii) Joint Management.
The Managing Body may be also a corporate
body, unless further legal provisions setting forth restriction or
requirements related to certain type of companies. The Articles of
Association may establish that multiple administration systems be used,
each for a specific set of issues for which the managing body is called
upon to decide. In any event, all directors’ decisions shall be
documented in a dedicated corporate book.
Control Body
In S.r.l.s. management control and accounts auditing are entrusted to a Board of Auditors or a Sole Auditor. Control Body is not mandatory, except if certain circumstances occur, that is if the company:
- has got a capital equal or more than Euro 120,000.00; or
- must keep a consolidated balance; or
- controls a company obliged to statutory audit; or
- for two years has exceeded the following limits: (i) total assets of the balance sheet: Euro 4,400 million; (ii) revenues from sales and services: Euro 8,800 millions Euros; (iii) workers employed on average during the year: 50 units.
Whenever the company may got an income or
a net worth equal or higher than Euro one million, the Control Body
must be a Board of Auditors, not a sole Auditor.The Statutory Audit will be carried out
by the Control Body, unless the Quotaholders’s Meeting deliberate to
entrust it to an Auditor or an Auditor Firm; any revocation must be
approved only by the resolution of quotaholders, according by the law.
Recently, in addition to the ordinary model, other two new types of S.r.l. have been introduced:
1. Low capital S.r.l. (Società a
responsabilità limitata a capitale ridotto) – “S.r.l.c.r.”; and 2.
Simplified S.r.l. (Società a responsabilità limitata semplificata) –
“S.r.l.s.”.
The main differences among ordinary S.r.l. and a S.r.l.c.r. or a S.r.l.s. are the following:
(i) S.r.l.c.r. can be only incorporated
by individuals (a wholly-owned S.r.l.c.r. is allowed); therefore, legal
entities (such as companies) are excluded. Quotaholders of a S.r.l.s.
can be only individuals (not corporations or other entities) who are
less than 35 years old. Conversely, an ordinary S.r.l. can be
incorporated by individuals as well as legal entities;
(ii) S.r.l.c.r. or S.r.l.s. capital may
not be lower than Euro 1.00 and higher than 9,999.99. Conversely, the
capital of an ordinary S.r.l. may not be lower than Euro 10,000.00;
(iii) S.r.l.c.r. or S.r.l.s. capital
contributions can be carried out in cash only. Conversely, in the event
of ordinary S.r.l., in-kind contributions, contributions of receivables,
and contributions of services may be also made. In particular, in cash
contributions towards the S.r.l.c.r. or S.r.l.s. have to be paid-in
directly to the Managing Body when the company is being incorporated. It
implies that the Managing Body must attend the company’s incorporation
before the Notary Public in order to immediately accept its charge and
it has to formally state, before the Notary, that the corporate capital
has been paid-in. The foregoing is different from an
ordinary S.r.l., whereby in the latter case, preliminary to the
execution of the Memorandum of Association, the founders shall open a
temporary account with a bank, and shall deposit there the future
company’s capital, so that the Notary Public needs only the bank’s
receipt in order to assess the corporate capital existence and deposit.
As a consequence the directors can accept their relevant charge also
once the company has been incorporated.
(iv) Directors of S.r.l.s. should be
necessary company’s quotaholders, while Directors of S.r.l.c.r. should
be natural persons, quotaholders or less. Otherwise, Directors of the
ordinary S.r.l. may be individual or corporate entity, quotaholders or
less.
