The series of posts on the types of companies that can be set up in Italy continues. We talked about partnerships in February, this time let’s move on to corporations.

Definition

Corporations are companies characterized by legal personality and perfect patrimonial autonomy: this means that they are liable for the company’s obligations arising from the economic activity carried out and that if the company incurs debts, the personal assets of the shareholders are not affected, and the creditor can only draw on the company’s capital.

TYPES OF CORPORATIONS

Corporations can be classified in:

• limited liability company (Società a responsabilità limitata, S.r.l);
• simplified limited liability company (Società a responsabilità limitata semplificata, Srls);
• public limited company (Società per azioni, S.p.A.);
• limited partnership with share capital (Società in accomandita per azioni, S.a.p.a).

MAIN FEATURES

1. Prevalence of capital at a regulatory level concerning shareholders. In fact, it constitutes the only guarantee for third parties;
2. depending on the type of company, the capital may vary (in terms of the minimum limit) and consist of units or shares;
3. legal personality and perfect patrimonial autonomy (except for the S.a.p.a, as we will see later);
4. limited liability of shareholders with respect to corporate obligations: as mentioned above, the shareholders are liable only limited to the shares of capital conferred;
5. the setting up of the company takes place by official deed: the shareholders stipulate the memorandum of association, define the articles of association, and register the company with the competent business register. Registration in the business register is essential for the establishment of the company;
6. the shareholders do not hold administrative functions but only control and participate in profits and losses. However, they can appoint directors;
7. the law establishes the presence of specific management and control bodies: Shareholders’ meeting, Board of Directors, Board of Auditors.

The limited liability company

S.r.l. is the most common type of company in Italy (governed by articles 2462-2483 of the Civil Code), mainly due to certain organizational flexibility and limited liability.

Being a corporation, it inherits the key features mentioned above but presents the following peculiarities:

• the share capital is paid in units, not in shares;
• the minimum share capital is € 1;
• statutory autonomy and flexible administration: in practice, ordinary decisions are taken by the sole director or by the board of directors, if applicable, unless exceptions are provided for in the articles of association;
• the setting up takes place by official deed executed by the notary (S.r.l.) or with contract or unilateral deed by natural persons (Srls).

Conditions for setting up a limited liability company

• For limited liability companies with a capital equal to or greater than 10,000 EUR, 25% of the contributions must be paid in cash (the rest must be paid afterwards) and the entirety of the contributions in kind;
• for limited liability companies with a capital of less than 10,000 euros, but equal to at least 1 euro, it is necessary to pay all of the contributions in cash at the time of signing the memorandum of association;
• the contribution of the entire amount of the share capital is required even if the company is unipersonal, i.e., with a single shareholder.

The simplified limited liability company

As can be seen from the above, the simplified limited liability company is a form of S.r.l. which provides for concessions concerning the amount of the minimum share capital (below 10,000 euros), the costs to be supported and the setting up procedure (notary fees are not due).

However, the articles of association must always be drawn up by public deed, following the “standard model”.

Previously, this form of S.r.l. was only accessible to individuals up to 35 years of age, but today this limitation has lapsed.

These are the key features of Italian limited liability companies. Obviously, the topic is much broader and cannot be covered in a single article.

However, my expertise on the subject ends here: for any further information, I invite you to refer to an accountant first, who will be able to advise you on the possibility of opening an S.r.l. in Italy according to your needs; I also invite you to consult the relevant references to the legislation, which contain all the information on the subject.