What is the main source of law authorising this entity form?

Italian Civil Code, Book 5, chapter 5 (Codice Civile, Libro V, Capo V).

Give a brief summary of the entity form:

Does the entity possess separate legal personality?

The S.p.A. has legal personality.

(Maximum) period of existence

There is no maximum period of existence. The shareholders may agree to incorporate the company for a fixed or indefinite period.

Governing document(s)

The S.p.A. is governed by the: (i) deed of incorporation, (ii) Articles of Association and (iii) shareholders' agreement (if any).

Liability of incorporators / shareholders

The S.p.A. is liable for the company's obligations exclusively with its own assets.

(Governing) bodies

If the S.p.A. has a sole shareholder, the limited liability still applies, provided that: (i) the corporate capital must be fully paid-up and (ii) the company must discloe with the Companies' Registry (Camera di commercio industria artigianato e agricoltura) the details of the sole shareholder. Furthermore, in case of insolvency, the breach of such rules would entail the unlimited liability of the sole shareholder for the company's obligations .

The required corporate bodies of a S.p.A. are the following:

• Shareholders' Meeting (ordinary and extraordinary, according to Italian law) (Assemblea degli Azionisti);
• Managing Body (organo amministrativo);
• Board of Statutory Auditors (collegio sindacale); and
• External Auditor (revisore legale).

With respect to the companies that (i) are not obligated to report the consolidated financial statements and (ii) are not listed on an exchange, the Articles of Association can authorize the Board of Statutory Auditors to complete (instead of the External Auditor) the annual accounting audit to confirm compliance with the applicable rules and accounting principles. In such a case, all Auditors must be registered with the legal accounting auditors' registry.

Other particularities

Please note that listed companies might be subject to different rules.

Can this type of entity be involved in international transactions and restructurings (e.g. cross border mergers, asset acquisitions and divestitures, equity acquisitions, conversions etc.)?

Under Italian law, the S.p.A. can enter into legal mergers (whereby the company ceases to exist by operation of law and its assets are acquired under universal succession of title) and sale of all or a portion of its assets and liabilities (with universal succession of title to the relevant assets and liabilities) and conversions (changing into another form of legal entity without ceasing to exist).

International restructurings like the above are possible, only in accordance with specific legislation (cross border mergers EU regulations within the EU) or pursuant to Italian international private law.

Can this type of entity be publicly listed or held, or its securities be issued to members of the public?

Yes, it can. A S.p.A. can be publicly listed.

Can this type of entity be used for a non-profit or charitable organization?

No, it cannot. The S.p.A. can only be a profit-making entity.

Give a brief summary of the process of incorporation, formation, or organization, including:

Under Italian law, there are two (2) different processes of incorporation: (i) the ordinary incorporation procedure and (ii) the incorporation for public subscription (costituzione per pubblica sottoscrizione). Since the public subscription procedure is seldomly used we will discuss the ordinary incorporation procedure only.

Main documents required

The notarial deed of incorporation, together with the company's Articles of Association, must be executed before an Italian notary public in Italian. The deed can be executed by virtue of a notarized power of attorney of the incorporator(s). Depending on the country of notarization the power of attorney might be subject to legalization by means for example of apostille.

Involvement of notary, company register, governmental authorities

Directors and shareholders' must apply for Italian tax codes (this is an identification number alike the US Social Security Number) for incorporation purposes.

The S.p.A. must be registered with the Companies' Registry and it comes into existence from the registration date. The registration formalities, which are fulfilled by the Italian notary public, require about five (5) to seven (7) days starting from the date of incorporation.

Timing (estimate)

No governmental authorisation is required, unless the S.p.A. carries out specific activities (e.g. insurance, banking etc.).

Main costs, including registration and similar fees (excluding legal fees)

The main costs are the (i) legal/notarial fees, (ii) duties and stamps related to the incorporation deed, and (iii) registration costs at the Companies' Registry.

Is a description of the anticipated business or purpose of the entity required for incorporation, formation or organization?

The corporate scope must be stated in the Articles of Association and filed with the Companies' Registry

Minimum number of incorporators / shareholders and residency requirements

There must be at least one (1) incorporator upon incorporation of the company.

No residency conditions are required for incorporators. However, in cases of foreign incorporators (other than those from the EU or other States that signed a bilateral agreement with Italy), certain reciprocity conditions must be met.

Minimum number of directors (or other applicable officers) and residency requirements

There must be at least one (1) director upon incorporation of the company.

No residency conditions are required for directors for legal purposes. However, in cases of foreign directors (other than those from the EU or other States that signed a bilateral agreement with Italy), certain reciprocity conditions must be met.

As to the other corporate bodies, please note that at least five (5) statutory auditors (three (3) standing plus two (2) substitute) must be appointed. Apart from the professional competence and reciprocity requirements, no residency conditions are required in this regard.

Minimum share capital, or equivalent, and payment requirements (including opening a bank account)

The minimum share capital required is EUR 50,000 but may be higher for companies in regulated industries, such as, for example, investment and banking companies, as well as saving management companies.

In connection with incorporation of the company or an increase of share capital, an amount corresponding to at least 25% of the corporate capital must be paid-up if the company has more than one (1) shareholder. If there is a sole shareholder, the entire corporate capital must be fully paid-up.

Upon incorporation, the share capital must be paid into an escrow account (conto decimi). When the company has been duly registered with the Companies' Registry, the company must open a bank account, in to which the share capital (originally paid into the escrow account) must be credited.

Is the physical presence of incorporators/directors/shareholders required in the jurisdiction for incorporation, formation, or organisation?

The physical presence of the shareholders/incorporators is not required since the execution of the notarial deed of incorporation may be carried out by power of attorney (see above under question 8, §2).

The presence of the directors is not required at all for the incorporation of the company.

Is a tax identification number, or equivalent, required? If so, how is it obtained?

Yes, it is. In particular –

• the company has a tax identification number (codice fiscale) and VAT number, which are issued by the Italian Revenues Agency (Agenzia delle Entrate) by means of a specific application submitted upon incorporation of the company;
• the directors must have a tax identification number, which is obtained in a few days through a specific application submitted to the Italian Revenues Agency. The tax number must be obtained before the incorporation of the company.

What is the title of the applicable company registry?

Companies' Registry (Camera di commercio industria artigianato e agricoltura).

What types of information must be filed at the (company) register, and which of them will it be publicly available, e.g.:

The information listed below must be filed at the Companies' Registry and is publicly available:

• Articles of Association;
• Date of incorporation;
• Name and address details of the company (including the local units and branches);
• Corporate scope;
• Share capital (issued and paid-up);
• Liens and encumbrances on the shares;
• Liens and encumbrances on the ongoing concerns of the company;
• Directors and their representative authority, including birth and address details;
• Statutory auditors, including birth and address details;
• External auditor, including address details;
• Sole shareholder (if applicable)/shareholders and their address details, group or entities that exercise direction and coordination over the company;
• Information regarding insolvency procedures;
• Annual accounts (i.e. annual financial statements);
• Amendments to the company's Articles of Association (e.g. mergers and demergers, liquidation, capital increase etc.); and
• Joint Stock Companies are required to disclose their ultimate beneficial owner with the Register of the Enterprises. Under Italian law the Ultimate Beneficial Owner (“UBO”) is defined as:
• the individual who owns +25% of the corporate capital of the Joint Stock Company, directly or through subsidiaries, trustees or an intermediary (“ownership criterion”); or if the ownership criterion does not apply
• the individual controlling the Joint Stock Company pursuant to the provisions of Italian Civil Code (“control criterion”), i.e. the individual who:
• holds the majority of voting rights in the ordinary shareholders’ meeting;
• holds a sufficient number of voting rights to exercise a leading influence in the same shareholders’ meeting;
• exercises a leading influence over the Joint Stock Company as a consequence of special contractual rights.
• If none of the above criteria allows the identification of the UBO, the same is identified with the individual granted with legal representation authority or managing powers over the Joint Stock Company (“management criterion”).

A Joint Stock Company should disclose the following information with respect to its UBO(s):

• identification data and citizenship of the natural person(s) identified as ultimate beneficial owner(s), and the information related to the relevant Joint Stock Company (e.g., corporate name, date of incorporation, etc.);
• the criterion pursuant to which the individual(s) are identified as ultimate beneficial owner(s) of the Joint Stock Company;
• a certified e-mail address to which the Register of Enterprises may send any communications re: ultimate beneficial ownership.

What is the title of the executive body and its members? What are their main duties, tasks and responsibilities?

The shareholders of the company may, at a meeting of the shareholders, decide to appoint a sole director (amministratore unico) or a Board of Directors (consiglio di amministrazione) for the purpose of managing the company. The number of the Board of Directors is usually provided stated in the Articles of Association.

The management body has the power to perform all actions it deems necessary to achieve the corporation’s purpose(s), excluding certain powers that are expressly reserved at law by the shareholders acting at a meeting of the shareholders.

How are the members of the executive body appointed, dismissed and replaced?

The directors are appointed at incorporation by the deed of incorporation. From then on, any change to the composition of the Board of Directors shall be decided upon by the shareholders. Directors shall serve a term of a maximum of three (3) years, but could be reappointed.

In case of the appointment of a Board of Directors, should:

• one or more directors vacate their office during the fiscal year, the Board of Directors may fill that vacancy (so called cooptazione). The appointed director(s) shall then remain in charge until the next Shareholders' Meeting;
• a majority of the directors vacate their offices, the directors still in office must call a shareholders’ meeting to resolve upon the appointment of new directors.

The appointment of the director(s) may be revoked by the Shareholders' Meeting at any time. Directors might seek damages if their appointment is revoked cause (giusta causa).

Is it possible to appoint corporate directors or must all directors be natural persons?

Yes, it is. An entity appointed as director is required to designate an individual as “representative.” The “representative” will speak on behalf of the entity at board meetings.

In case a Board of Directors is appointed, the Articles of Association can provide for the management body to delegate part of the operations to (i) an executive committee (composed of some members of the Board of Directors) or (ii) one (1) or more of its members, commonly known as managing directors (amministratori delegate).

Is there a requirement to have non-executive directors? How are they appointed, dismissed and replaced? Do non-executive directors serve on a separate body (two-tier structure) or can a one-tier board (with executive and non-executives) be appointed, or is some alternate structure used?

The Board of Directors of the company may consist of non-executive directors. However, from an operative point of view, it is highly advisable to have at least one executive director.

It is not required to have the non-executive directors appointed in a separate body.

What is the title of the body of owners / shareholders / members, and what are the main tasks / responsibilities / powers of that body?

According to Italian law, the Shareholders' Meeting may be held in ordinary or extraordinary form.

In particular, the ordinary Shareholders' Meeting of a S.p.A. is entrusted with the powers to –

• approve the annual financial statements;
• appoint and dismiss the directors;
• appoint the members of the Board of Statutory Auditors and the External Auditor;
• fix the remuneration of the directors, members of the Board of Statutory Auditors and External Auditor;
• resolve upon the liability of the directors and the members of the Board of Statutory Auditors;
• resolve upon those matters reserved by law to the Shareholders' Meeting as well as on the authorisations that might be required according to the Articles of Association with respect to the specific activities to be carried out by the directors, without prejudice, in any case, to their liability; and
• approve the Shareholders Meeting's regulation (i.e. the document controlling the voting and discussion procedures of the meeting), if any.

The extraordinary Shareholders' Meeting of a S.p.A. is entrusted, inter alia, with the powers to amend the Articles of Association, to resolve upon the appointment and replacement of, and to grant powers to, the liquidators and any other matter expressly attributed to them by law.

What are the majority and quorum requirements for decisions by the shareholders? Can they be varied or changed?

First meeting:

• For an ordinary Shareholders' Meetings, a quorum is reached with at least half of the company's corporate capital represented (i.e. constitutive quorum). The resolutions are taken by absolute majority (50%+1) of the votes represented at the meeting, unless otherwise provided for by the Articles of Association (i.e. deliberative quorum), which may require a higher quorum.
• For an extraordinary Shareholders' Meetings, the law does not expressly provide for a constitutive quorum. Furthermore, with regard to the deliberative quorum, the meeting may validly act with a majority of more than half of the corporate capital, unless otherwise provided for by the Articles of Association, which may require higher majorities.

Second meeting:

• The second ordinary Shareholders' Meeting is established regardless of what portion of the corporate capital is represented and validly resolves with the absolute majority (50%+1) of the votes represented at the meeting, unless otherwise provided for by the Articles of Association, which may require higher majorities, except for resolutions concerning the approval of the yearly financial statements and the appointment and dismissal of directors.
• The extraordinary Shareholders' Meeting is legally established with the attendance of more than one-third of the corporate capital and resolves with the favourable vote of at least two-thirds of the corporate capital represented in the meeting. The Articles of Association may require higher majorities.
• For special resolutions concerning matters such as modification of the corporate scope and type, an anticipated winding up and prorogation, etc., the deliberative quorum is more than one-third of the corporate capital.

With respect to any calls subsequent to the second one, special provisions apply.

Any special governance regimes (e.g. depending on size, being listed at a stock exchange, or other criteria)?

Special governance regimes depend on the company's size.

Specific governance regimes may be required for (i) publicly held companies or (ii) companies pursuing a certain corporate purpose (e.g. insurance companies or banks).

Special governance regimes may also apply to listed companies that are invited to comply, on a voluntary basis, with the Self-ruling Code (Codice di autodisciplina) adopted by the national competent authority.

What are the periodic accounting obligations incumbent upon the entity? To whom must those accounts be submitted?

The company must maintain accounting records that are sufficient to determine the financial position of the company at any moment.

Within 120-days (with possible extension to 180-days) from the end of the company's financial year, the annual financial statements must be drafted by the Board of Directors and subsequently adopted by the Shareholders' Meeting.

The (approved) financial statements must be then filed with the Companies' Registry.

Is the entity permitted to determine its own financial year?

Yes, it is.

Is the entity subject to any statutory (external) auditor obligations?

A S.p.A. is generally required to appoint an external auditor (see next answer), in order to have its financial statements externally audited each financial year. The auditor is, in principle, appointed by at a meeting of the shareholders.

Requirements to appoint other persons (officers, secretary, internal auditor / accountants). If so, what are their functions? Are there any residency requirements?

The Board of Statutory Auditors is the body in charge to carry out the internal control of the company and its main function is to ensure the board acts in compliance with the applicable regulations. It consists of professionals (mainly chartered accountants or lawyers) who must be independent from the company, even if they are appointed by the Shareholders. The members of such Board of Statutory Auditors must consist of at least five (5) professionals, of which three (3) shall be appointed as Effective Statutory Auditors (sindaco effettivo) and the other two (2) as Substitute Statutory Auditors (sindaci supplenti). Furthermore, at least one (1) of the Effective Statutory Auditors and one (1) of the Substitute Statutory Auditors must be registered with the legal accounting auditors' registry (Registro dei revisori legali).

The Board of Statutory Auditors must ensure that the management body complies with the law, the Articles of Association, and the principles of proper management. Generally, the Board of Statutory Auditors does not carry out audit the company’s records, that is the function of an External Auditor (an independent expert person or an auditing firm registered with the specific registry).

There are no residency requirements, only professional competence, and reciprocity requirements.

The legal accounting audit mainly entails the duties to verify, on a quarterly basis, compliance with the applicable rules and accounting principles the keeping of accounts and the correct recording of operations in the accounting records and to double check the annual financial statements and the consolidated ones (if any). The legal accounting audit also includes the examination on the correspondence of these documents to the accounting records.

Furthermore, companies that (i) are not required to report file their consolidated financial statements [to whom?]with the public records and (ii) do not have their securities listed on a public exchange, the Articles of Association can also delegate the legal accounting audit to the Board of Statutory Auditors. In such case, all its members must be registered with the legal accounting auditors' registry..

What is the title designated for 'ownership interests' (e.g. shares, quota, interests, membership)?

The ownership interests of an S.p.A. is represented by shares (azioni). The shares are indivisible and are necessarily of equal value.

Are different classes of ownership interests possible? If so, what are some examples of different classes?

The shares are of equal value and grant the same rights to their owners. However, the company's Articles of Association may provide for different categories of shares, such as –

• shares issued in favour of the company's employees (azioni a favore dei prestatori di lavoro);
• shares granting particular rights with regard to the profits of the company;
• shares with particular voting rights;
• subordinated shares (azioni postergate);
• profit shares (azioni di godimento).

What documentation is required for the transfer of ownership interests?

The corporate capital of the company is usually represented by documents (shares certificates, certificati azionari). In such a case, the transfer of the shares entails the steps discussed below.

Are there any additional formal requirements required for the transfer of ownership (notary, approvals, stamping, filings, corporate records)?

The transfer of the ownership of shares can be executed through the –

• endorsement of the shares (authenticated by an Italian notary public) and the related registration of the endorsement in the shareholders' register. In the case of a sole shareholder, the disclosure duty must be fulfilled, for the purpose of liability as discussed in the General Principles section above; or
• transferire which consists of the simultaneous (i) registration of the purchaser's name on the share certificate or the issuance of the new certificate in favour of the purchaser and (ii) registration in the shareholders' register. Both steps must be fulfilled on the basis of a deed of transfer executed before an Italian notary public.

Are there any applicable stamp duties imposed when transferring ownership interests?

Generally, a stamp duty equal to 0,2% of the value of the transaction applies (so called Tobin Tax).

How are shares issued? (including information on payment obligations, registration requirements)

Subject to the Articles of Association, the issuance of shares must be approved by an extraordinary resolution of the shareholders at a Shareholders’ Meeting, to be held in front of an Italian notary public, which shareholders' resolution shall then be filed with the Companies' Registry. For any share issued, registration in the shareholders' register is also required.

Further information on equity contributions, e.g., non-cash payments on shares, (share premium) contributions without issuances of shares, can partially paid shares/ownership interests be permitted and what are the restrictions on them?

According to Italian Civil Code, the company’s shares can also be issued in exchange for contributions in kind (consisting of property in kind or assignment of receivables), to be conferred upon incorporation of the company or upon increase of the corporate capital. Such contributions are subject to a specific procedure, since the contributors must submit a sworn report of an expert designated by the chairman of the Court. The directors must check the sworn report and, should well founded reasons exist, they must revise the appraisal. Until such valuations can be verified, the shares to be issued in connection with contributions in kind are non-transferrable and must remain deposited in the company. Only under specific cases set forth by the Italian Civil Code, may contributions of property in kind or receivables be carried out without such experts' report.

Subject to certain exceptions, (for instance, in case of capital increase to be carried out by means of contributions in kind or with the exclusion of pre-emption rights), shares are issued with share premium.

Equity contributions can be carried out without issuing any shares by means of contributions to capital reserves (i.e. versamento in conto capitale ).

Any requirements with respect to share cancellation, share repurchase and other capital reductions

The company cannot purchase its own shares unless profits are available for distribution and or sufficient reserves are held by the company, as shown in the last approved annual financial statements. Only fully paid-up shares (and not those merely subscribed) can be purchased. Such purchase must be authorised by the shareholders.

Should the purchase of such shares occur in breach of the abovementioned limitations, they must be sold within one (1) year from the date of such purchase or cancelled and the company's corporate capital reduced accordingly. These limitations do not apply should the purchase of the company's own shares (azioni proprie) occur pursuant to a resolution of the shareholders approving the corporate capital reduction, by way of redemption/cancellation of shares.

According to Italian law, the corporate capital can be reduced either by releasing the shareholders from the duty of making the outstanding payments still owing or by reimbursing capital to the shareholders, within the limits of the minimum corporate capital. In this respect, please note that the company's creditors have the power to oppose the related shareholders' resolution within 90-days.

Should the company incur losses higher than one-third of the corporate capital:

if such loss does not bring the share capital below EUR 50,000, the directors shall (i) convene without delay a Shareholders' Meeting in order to resolve upon "appropriate measures" and (ii) provide the shareholder with a directors' report on the financial situation of the company (substantially an updated balance sheet) together with the remarks of the Board of Statutory Auditors. The measures to be taken are the following:

• taking immediate remedial actions (e.g., by covering the losses through a recapitalisation, which means to reduce the corporate capital and to simultaneously increase it to the original amount/a different amount or by means of a capital injection); or
• postponing any decision on such remedial actions until the end of the following financial year (this frequently occurs when the shareholder is confident that the losses – or a part of them - may be covered within one year). Should the losses resulting from the financial statements of the following financial year subject to the approval of the shareholders' meeting not be less than one third of the corporate capital, the losses must be covered through a recapitalisation.

If such loss results in a drop of the share capital below the minimum threshold of EUR 50,000, the directors must convene without delay a Shareholders' Meeting before an Italian notary public in order to resolve upon (i) the recapitalisation or, theoretically, (ii) the transformation of the company into a limited liability company or partnership, or (iii) the dissolution of the company.

Any requirements with respect to distributions to shareholders?

Profits:

• The resolution upon the distribution of profits is adopted by the Shareholders' Meeting approving the annual financial statement (i.e. once a year).
• No dividends can be paid on shares except out of the profits actually obtained and shown on the regularly approved balance sheet.
• If a loss in the company's corporate capital occurs, no distribution of profits can be made until the capital is reinstated or reduced with a correspondent amount.
• The payments made in breach of the above provisions cannot be recovered if the shareholders collected them in good faith and on the basis of regularly approved annual financial statements, from which corresponding net profits result.

Payments on account of dividends:

• They are permissible only for those companies whose balance sheet is subject by law to the legal control of audit companies.
• Payments on account of dividends must be allowed by the Articles of Association and resolved upon by the directors – after receiving a positive opinion on the financial statements of the previous fiscal year and after the approval by the audit firm.
• Payments on account of dividends are not permitted when the last approved annual financial statements show losses relating to the ongoing or previous fiscal year.
• The amount of payments on account of dividends cannot exceed the amount of profits accrued as at the closing of the previous fiscal year, as reduced by the proportions to be set aside as available reserve and other reserves due pursuant to the law or the Articles of Association, whichever is lower. The directors must resolve upon the payment on account of dividends based on the accounting prospectus and a report showing that the patrimonial, economic, and financial situation of the company permits such payments.
• The opinion on these documents shall be issued by the person of group entrusted with the legal control over the accounting. Copies of the accounting prospectus, the directors' report and the opinion of the person or group entrusted with legal control over the accounting must be kept on deposit at the registered office of the company until the approval of the financial statements of the current fiscal year. The shareholders can then examine them.
• Even if the non-existence of the profits shown in the prospectus for the relevant period is subsequently determined, payments on account of dividends disbursed in conformity with the other provisions of this Section cannot be recovered if the shareholders collected them in good faith.

Can the owners or shareholders adopt a restrictive or governing agreement among themselves such as a Shareholders Agreement?

Yes, they can. The provisions set forth under the shareholders' agreement should not be inconsistent with those provided for by the Articles of Association, since only additional and/or more detailed provisions are allowed.

Furthermore, while the breach of the Articles of Association is enforceable vis-à-vis third parties, the breach of the shareholders' agreement, which is a private agreement, is enforceable between the signatories only, thus giving the right to the compensation for damages.

Which are the typical annual maintenance costs of maintaining the existence and legal good standing of such an entity (excluding legal fees)?

Each year, once the draft financial statements have been approved by the Board of Directors' meeting, the Shareholders' Meeting must adopt the annual financial statements and the applicable tax filings must be made.

What are the general corporate tax rates? (Specify if there is a national versus local distinction).

As general rule, Italian resident companies are taxed on their worldwide income and are subject to (i) national corporate income tax (IRES) at a rate of 24%; and (ii) regional business tax (IRAP) at a rate of 3.9%. This last figure may vary according to the region involved (for instance, 3,9% refers to Lombardia region).

Summary of any specific matters, e.g. recent or prospective major legal developments

None.