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Limited Liability Company - Società a responsabilità limitata

Joint-Stock Company - Società per Azioni


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.

Liability of incorporators / shareholders

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

In the case the S.p.A. has a sole shareholder, the same provisions will apply, provided that specific conditions are met and, in particular: (i) the corporate capital must be fully paid-up and (ii) the company must fulfil certain disclosure duties at the Companies’ Registry (“Camera di commercio industria artigianato e agricoltura”) regarding 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 incurred during the time in which the shares were owned by the latter.

(Governing) bodies

The necessary corporate bodies of a S.p.A. are the following: (i) The Shareholders’ Meeting (ordinary and extraordinary, according to Italian law) (“Assemblea degli Azionisti”); (2) The Managing Body (“organo amministrativo”); (3) The Board of Statutory Auditors (“collegio sindacalerevisore legale”).

Other particularities

With respect to the companies that (i) are not obligated to report the consolidated financial statements and (ii) do not operate within the security market, the articles of association can also delegate the legal accounting audit to the Board of Statutory Auditors. In such a case, all its members must be registered in the legal accounting auditors’ registry.

Please note that this presentation will take into consideration the traditional model of a S.p.A only. Therefore, the monistic and dualistic model, as well as the listed companies (apart from the few required answers) will not be analysed.


Can this type of entity be involved in international transactions and restructurings (e.g. cross border mergers, asset acquisitions, equity acquisitions, 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 demergers of all or a portion of its assets and liabilities (with universal succession of title to the relevant assets) and conversions (changing into another form of legal entity without ceasing to exist).

International restructurings like the above are possible, however, only pursuant to 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?

Yes, it can. The S.p.A. is entitled to have access to the risk capital market (i.e., becoming a listed company). It can also be publicly held.


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:

According to Italian law, we can distinguish two different processes of incorporation: (i) the “ordinary” incorporation procedure and (ii) the incorporation for public subscription (“costituzione per pubblica sottoscrizione”). Since the procedure referred to no. (ii) above is extremely rarely implemented, our analysis will be limited to 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 the Italian language. The deed can be executed by virtue of a notarized and legalized power of attorney of the incorporator(s).

Directors and shareholders’ ID documents and tax codes are required for the purposes of registration.

Involvement of notary, company register, governmental authorities

The S.p.A. must be registered with the Companies’ Registry and come into existence from the registration date.

Timing (estimate)

The registration formalities, which are fulfilled by the Italian notary public, require about 5 -7 days starting from the date of incorporation.

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 objects / purpose 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 incorporator upon incorporation of the company. No residency conditions are required for incorporators. However, in case 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 director upon incorporation of the company.

No residency conditions are required for directors for legal purposes. However, in case 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 5 statutory auditors (3 standing + 2 substitute) shall be appointed. Apart from the professional competence and reciprocity requirements, no residency conditions are required in this respect as well.

 

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

The minimum share capital required is EUR 50,000. An exception is made for those companies for which special laws require a higher amount (such as, for example, investment and banking companies and saving management companies).

In case of incorporation of the company or increase of share capital, an amount corresponding to at least 25% of the corporate capital shall be paid-up if the company has more than one shareholder. In the case of a sole shareholder, the entire corporate capital must be fully paid-up.

Upon incorporation, the share capital must be paid on an escrow account (“conto decimi").

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

The physical presence of the shareholders/incorporators is not required, since the execution of the notarial deed of incorporation may be carried out by virtue of a power of attorney. 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:

 

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



  3.  


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)
  • Activities carried out by the company
  • 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.)

Legislation regarding the publication of 'beneficial ownership' is not yet in force in Italy at the time of writing but is expected in the near future.



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

As to the management body, the Shareholders’ Meeting of the company may choose to have it consisted of a sole director (“amministratore unico”) or a Board of Directors (“consiglio di amministrazione”). The number of the Board of Directors is usually provided for by the articles of association.

The management body has the widest powers for the ordinary and extraordinary management of the company and has the power to perform all actions it deems necessary to achieve the corporate purpose, excluding only those powers that are mandatorily reserved by law to the Shareholders’ Meeting’s competence.


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

The directors are originally appointed upon incorporation of the company pursuant to the deed of incorporation. From then on, any change to the composition of the Board of Directors shall be resolved by the Shareholders’ Meeting. Their appointment shall last a maximum of three years, unless they are reappointed.

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

  1. one or more directors cease from their office during the fiscal year, the Board of Directors may resolve upon their temporary replacement (so called “cooptazione”). The appointed director(s) shall remain in charge until the next Shareholders’ Meeting is held;
  2. due to resignation or any other reasons, the majority of the directors cease to be in charge, the appointment of the directors replacing the ones ceased must promptly be submitted to the Shareholders’ Meeting.
The appointment of the director(s) may be revoked by the Shareholders’ Meeting at any time, without prejudice to the right to obtain damages by the director if the appointment was revoked without just cause (“giusta causa”).

 


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

Yes, it is.

In case a Board of Directors is appointed, the articles of association might regulate the possibility 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 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:

  1. 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 authorizations 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, if any.
  2. 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 call

As to the ordinary Shareholders’ Meetings, the quorum is reached with the attendance of a number of shareholders, representing at least the half of the company’s corporate capital (i.e., constitutive quorum). The resolutions are taken by absolute majority (50%+1), unless otherwise provided for by the articles of association (i.e., deliberative quorum), which may require a higher quorum. As to the extraordinary Shareholders’ Meetings, the law does not expressly provide for a constitutive quorum. Furthermore, with regard to the deliberative quorum, the meeting validly resolves 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 call

The ordinary Shareholders’ Meeting is legally established regardless of whatsoever part of the corporate capital is represented and validly resolves with the absolute majority, 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 1/3 of the corporate capital and resolves with the favorable vote of at least 2/3rd of the corporate capital represented in the meeting. The articles of association may require higher majorities.

For special resolutions concerning the modification of the corporate scope and type, the anticipated winding up and the prorogation etc., the deliberative quorum is more than 1/3rd of the corporate capital.

With regard 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)?

There are no special governance regimes applicable depending on the company’s size.

However, specific governance regimes may be required by the applicable special laws with respect to (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, according to which, by way of an example, they shall appoint an “adequate” number of independent non-executive directors (usually two) and create several internal committees charged with specific management or controlling tasks.


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 (adopted) financial statements must be 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 obliged 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 the Shareholders’ Meeting.


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 the supervision on the management. It consists of professionals (mainly chartered accountants or lawyers) who must be independent from the company, even if they are appointed by the Shareholders’ Meeting. The members of such Board of Statutory Auditors must consist of at least 5 professionals, of which 3 shall be appointed as Effective Statutory Auditors (“sindaco effettivo”) and the others 2 as Substitute Statutory Auditors (“sindaci supplenti”). Furthermore, at least 1 of the Effective Statutory Auditors and 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 control that the management body carries out its activities in compliance with the law, the articles of association and the principles of proper management. Generally, the Board of Statutory Auditors does not carry out the legal accounting audit, the function of which is delegated to 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, 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 include the examination on the correspondence of these documents to the accounting records.

Furthermore, please note that with regard to the companies that (i) are not obligated to report the consolidated financial statements and (ii) do not operate within the security market, 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 participation in the corporate capital of a 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 (and its following amendments) 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 following fulfilments (see next answer).


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:

  1. endorsement of the shares (authenticated by an Italian notary public) and the related registration of the endorsement in the shareholders’ register. In case of a sole shareholder, the disclosure duty must be fulfilled, for the purpose of liability (please see “General Principles” section above); or
  2. transfert”, which consists of (i) the simultaneous registration of the purchaser’s name in the share certificate or the issuance of the new certificate in favour of the purchaser and (ii) the registration in the shareholders’ register. Both fulfilments shall be executed 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 resolved by the extraordinary Shareholders’ Meeting of the company, 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, it is also required to proceed with the registration in the shareholders’ register.


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 shares can also be issued by means of 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 shall 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 shall revise the appraisal. Until such valuations have not been verified, the shares corresponding to contributions in kind are non-transferrable and shall remain deposited in the company. Only under specific cases set forth by the Italian Civil Code, contributions of property in kind or receivables may be carried out without such experts’ report.

Upon the occurrence of certain cases expressly provided for by law (for instance, in case of capital increase to be executed by means of contributions in kind or with the exclusion of pre-emption rights), shares must be issued with share premium.

Equity contributions can be executed 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 except to the extent of the profits available for distribution and of available reserves, as shown in the last approved annual financial statements. Only the fully paid-up shares (and not if merely subscribed) can be purchased. Such purchase must be authorized by the Shareholders’ Meeting of the company.

Should the purchase of shares be executed in breach of the abovementioned limitations, they shall be sold within 1 year from the date of such purchase or, otherwise, cancelled with reduction of the company’s corporate capital as a consequence. These limitations do not apply should the purchase of own shares (“azioni proprie”) occur pursuant to a resolution of the Shareholders’ Meeting resolving upon the corporate capital reduction, which is to be executed via redemption/cancellation of shares.

Reduction of the corporate capital

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 in losses higher than 1/3rd of the corporate capital:

  1. 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 recapitalization, 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 do not diminish below 1/3rd of the corporate capital, the losses shall be covered through a recapitalization.
  2. 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 recapitalization or, theoretically, (ii) the transformation of the company in 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 admissible only to those companies whose balance sheet is subject by law to the legal control of audit companies.

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 shall 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 subject entrusted with the legal control over the accounting. Copies of the accounting prospectus, the directors’ report and the opinion of the subject entrusted with the legal control over the accounting shall 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.

The opinion on these documents of the subject entrusted with the legal control over the accounting must be obtained. Copies of the accounting prospectus, the report of the directors and the opinion of the subject entrusted with the legal control over the accounting shall be kept on deposit at the registered office of the company until the approval of the accounts of the current fiscal year. The quotaholders can 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 shall 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.


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