What is the main source of law authorising this entity form?
Italian Civil Code, Book 5, chapter VII (Codice Civile, Libro V, Capo VII).
Give a brief summary of the entity form:
Does the entity possess separate legal personality?
The S.r.l. has separate legal personality.
(Maximum) period of existence
The deed of incorporation may provide a determined or undetermined period of existence.
Governing document(s)
The S.r.l. is governed by: (i) the deed of incorporation and (ii) the Articles of Association.
Liability of incorporators / shareholders
The S.r.l. is liable for the company's obligations exclusively with its own assets. Quota holders are required only to pay-in the subscribed corporate capital.
(Governing) bodies
Specific rules are provided if there is a sole quota holder (e.g. fully paid-up corporate capital; certain disclosure duties have been fulfilled at the Companies' Registry (Camera di commercio industria artigianato e agricoltura) regarding the sole quota holder). A breach of such rules can trigger the sole quota holder's unlimited liability. Finally, incorporators could be liable for the transactions performed on behalf of the S.r.l., and with their consent, prior to finalisation of the registration of the entity with the Companies' Registry.
Other particularities
The necessary corporate bodies of a S.r.l. are:
- the Quotaholders' Meeting (assemblea dei soci);
- the directors or the Board of Directors (if applicable) (amministratori or Consiglio di Amministrazione); and
(upon satisfaction of certain conditions) Statutory Auditor (organo di controllo).
provisions for the voluntary Statutory Auditor can be found in the Articles of Association. Appointment of a Statutory Auditor becomes mandatory under certain circumstances.
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, an S.r.l. can be involved into international restructuring operations such as merger and acquisition, according 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, or its securities be issued to members of the public?
No, only a S.p.A. can have its securities publicly listed on a stock exchange.
Can this type of entity be used for a non-profit or charitable organization?
No, a S.r.l. can only be a profit-making entity
Give a brief summary of the process of incorporation, formation, or organization, including:
Main documents required
The notarial deed of incorporation, together with the company's Articles of Association, must be executed before an Italian notary. It must be executed in Italian. The deed can be executed pursuant to a notarised and legalised power of attorney of the incorporator(s).
Involvement of notary, company register, governmental authorities
The ID documents and tax codes of the directors and quota holders are required for the registration of the directors and quota holders.
Timing (estimate)
The S.r.l. must be registered with the Companies' Registry and is fully incorporated from the registration date. The registration procedures vary. Depending on the city in which the entity is incorporated, the process may require between two (2) to seven (7) days starting from the incorporation and are completed by an Italian Notary Public.
No governmental authorisation is required unless such authorisation is required by the law (e.g. financial intermediary).
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 purpose must be stated in the Articles of Association and filed with the Companies' Registry. Moreover, the incorporation of the S.r.l. must be communicated to the Italian Revenues' Agency (Agenzia delle Entrate). When this is done, the purpose of the S.r.l. must be disclosed in greater detail in order to receive one (1) or more codes (that refer to the activity/activities of the company).
Please note that a S.r.l. may also be incorporated in a simple form (Società a Responsabilità Limitata Semplificata), which provides, among others, a minimum value of the capital and Articles of Association fixed by law.
Minimum number of incorporators / shareholders and residency requirements
There must be at least one incorporator upon incorporation and there are no residency requirements for incorporators. However, in cases of foreign incorporators (other than 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 and there are no residency requirements for directors for legal purposes. However, in case of foreign directors (other than from the EU or other states that signed a bilateral agreement with Italy), certain reciprocity conditions must be met.
Minimum share capital, or equivalent, and payment requirements (including opening a bank account)
Minimum corporate capital value is EUR 10,000. Cash and in-kind contributions are permitted. If contributions are made in cash, and if the S.r.l. has more than one (1) quota holder, the quota holders can pay-in only 25% of the total amount of the contribution. In such cases, the directors will call for the residual contribution to be made.
In a Società a responsabilità limitata semplificata the minimum corporate capital is EUR 1 and the corporate capital cannot exceed EUR 9,999. In these entities, the contribution must be in cash and fully paid-up. A higher portion of profits must be reserved until a minimum provided by the law is met.
Is the physical presence of incorporators/directors/shareholders required in the jurisdiction for incorporation, formation, or organisation?
The physical presence of quota holders-incorporators is not required, as the execution of the notarial deed of incorporation may be carried out by virtue of a power of attorney. An attorney in fact must attend the incorporation meeting in person.
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?
The Companies' Registry issues a tax identification number (codice fiscale) and VAT number of the S.r.l. upon the registration of the company. Quota holders and directors must have a tax identification number as well. A form must be submitted to the Italian Revenues Agency (Agenzia delle Entrate). The tax identification number will be issued in a few days. Applying for an Italian tax identification number does not automatically trigger any tax liability.
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);
- The activities of the company;
- Corporate capital (issued and paid-up);
- Liens and encumbrances on the quotas of the quota holders;
- Liens and encumbrances on the ongoing concerns of the company;
- Directors and their representative authority, including birth and address details;
- Statutory auditors, if any, including birth and address details;
- Sole quota holder (if applicable)/quota holders and their address details, group or entities that exercise direction and coordination over the company;
- Information regarding insolvency procedures;
- The annual accounts; and
- Amendments to the company's Articles of Association (e.g. mergers and demergers, liquidation, capital increase etc.).
What is the title of the executive body and its members? What are their main duties, tasks and responsibilities?
Management duties may be the responsibility of a sole director (amministratore unico), separate directors (amministratori disgiunti) or a Board of Directors (consiglio di amministrazione). The number of directors is set in the Articles of Association. In the latter, decisions of the Board of Directors are made by a majority. The Articles of Association may also provide for the joint or individual power of authority for directors in relation to the management of the company.
The management body has the power to perform all actions it deems necessary to achieve the corporation’s purpose(s), excluding those powers expressly reserved by the Quota holders' Meeting at law.
How are the members of the executive body appointed, dismissed and replaced?
The directors are appointed upon incorporation of the company pursuant to the deed of incorporation. From then on, the directors are appointed by the Quota holders.
Directors can be appointed for a fixed or indefinite term.
In case of an appointment of a Board of Directors, should –
- during a fiscal year, one (1) or more directors vacate their office, the Board of Directors may provide for their temporary replacement (so called cooptazione). The appointed director(s) shall remain in office until the next Quota holders' Meeting.
- the majority of the directors vacate their offices, due to resignation or any other reason, the directors still in office must call a quota holders' meeting to resolve upon the appointment of new directors.
Moreover, the appointment of directors may be revoked by the Quota holders' 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, quota holders may resolve to appoint corporate directors.
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?
No.
What is the title of the body of owners / shareholders / members, and what are the main tasks / responsibilities / powers of that body?
The quota holders decide on the matters reserved for their approval as stated in the Articles of Association, by the Italian Civil Code, as well as on the subjects that one (1) or more directors or the quota holders representing at least one-third of the corporate capital submit to their approval.
In any case, the following are reserved for the quota holders' approval:
- the approval of the annual account and the distribution of profits;
- the appointment, if provided in the deed of incorporation, of the directors;
- the appointment, in the cases provided for by article 2477 of the Italian Civil Code, of the Statutory Auditors and the chairman of the Board of Statutory Auditors or the person appointed to carry out the statutory audit;
- any modifications to the deed of incorporation; and
- the decision to carry out transactions that involve a substantial change in the corporate purpose as determined in the deed of incorporation, or a significant change in the rights of the quota holders.
The deed of incorporation may provide that the decisions of the quota holders are to be adopted by written consent. In this case, the documents submitted by the quota holders must clearly show the subject matter of the decision and its consent (written consultation or written issued consent). The same majority requirements that apply to meetings also apply to written consents.
If the Articles of Association provide no alternative way for the adoption of the decision of the quota holders, and in any case, with reference to certain of the matters indicated above, and in the case of the fourth paragraph of article 2482 bis of the Italian Civil Code, or upon request of one (1) or more directors or a number of quota holders representing at least one-third of the corporate capital, decisions of the quota holders must be adopted by way of a Quota holders' Meeting resolution.
Quota holders are liable, jointly with the directors, for damages caused to the company due to resolutions adopted by the quota holders, in breach of law or provisions of the Articles of Association.
What are the majority and quorum requirements for decisions by the shareholders? Can they be varied or changed?
The Quota holders' Meeting is able to act with the participation of quota holders representing at least half of the corporate capital and resolutions are adopted with the consent of a majority of the corporate capital represented in the Quota holders' Meeting.
The adoption of a resolution relating to certain matters nonetheless requires the favourable vote of quota holders representing half of the corporate capital.
Any special governance regimes (e.g. depending on size, being listed at a stock exchange, or other criteria)?
No.
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 a possible extension to 180-days) of the end of the financial year of the company the annual accounts must be drafted by the Managing Directors and subsequently approved by the Quota holders' Meeting.
The (adopted) annual accounts must be filed with the Companies' Registry.
Is the entity permitted to determine its own financial year?
Yes.
Is the entity subject to any statutory (external) auditor obligations?
A S.r.l. may be obliged to appoint an external auditor (question 26 below) in order to have its financial statements externally audited each financial year.
Requirements to appoint other persons (officers, secretary, internal auditor / accountants). If so, what are their functions? Are there any residency requirements?
The deed of incorporation may provide for the appointment and powers of a Board of Statutory Auditors (Collegio Sindacale) or a sole auditor (Sindaco Unico).
The supervisory body must ensure that the management body carries out its activities in compliance with the law, the Articles of Association, and the principles of proper management. Furthermore, the supervisory body can be responsible for the accounting audit: In that case, the supervisory body must meet specific requirements (including, for example, have an independent expert person or an auditing firm registered with the specific registry).
The legal accounting audit mainly entails quarterly verification of accounts and recording in the accounting records of operations, and the annual financial statements (and the consolidated ones, if any). The legal accounting audit also includes the cross referencing these documents with the accounting records.
Furthermore, companies that are not obligated to report consolidated financial statements, 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. There are no residency requirements, only professional competence, and reciprocity requirements.
The appointment of the supervisory body or auditor is mandatory if the company –
- is required to prepare consolidated financial statements;
- controls a company that is obliged to audit its accounts; or
- has exceeded one (1) of the following limits for two (2) consecutive financial years –
- total assets in the balance sheet: EUR 4 million;
- revenues from sales and services: EUR 4 million; or
- employees employed on average during the year: 20 units.
The obligation to appoint the supervisory body or the auditor referred to above ceases to exist if the aforesaid limits are not exceeded for three (3) consecutive financial years.
In the case of the appointment of a supervisory body, even if such a body is composed of a single member, the provisions on the Board of Statutory Auditors envisaged for joint-stock companies apply.
The meeting that approves the financial statements in which the limits indicated above are exceeded must, within 30-days, provide for the appointment of the supervisory body or the auditor.
If the meeting does not so provide, the appointment is made by the Court upon request by any interested party or by the Registrar of the Companies.
What is the title designated for 'ownership interests' (e.g. shares, quota, interests, membership)?
Quota (quota).
Are different classes of ownership interests possible? If so, what are some examples of different classes?
The Articles of Association of a S.r.l. can grant specific management rights and/or specific rights over profits to named quota holders. Modification of such rights must be resolved with unanimous consent of the quota holders.
What documentation is required for the transfer of ownership interests?
Quota is transferred with a transfer deed signed by the parties. Transfer is acknowledged by the company after the registration of the transfer deed with the Registry (Camera di commercio industria artigianato e agricoltura). The deed of transfer can be filed by an Italian notary public or an accountant (the latter only in case the parties own specific electronic signatures called in Italian firma digitale).
Are there any additional formal requirements required for the transfer of ownership (notary, approvals, stamping, filings, corporate records)?
See above.
Are there any applicable stamp duties imposed when transferring ownership interests?
No.
How are shares issued? (including information on payment obligations, registration requirements)
Under the Italian law a S.r.l. does not issue Quotas. Rather, an increase of corporate capital could be resolved by the extraordinary Quotaholders' Meeting of the company, to be held in front of an Italian notary public, which quota holders' resolution must then be filed with the Companies' Registry.
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?
The value of the contributions cannot be overall less than the total amount of the corporate capital.
All asset items that may be subject to economic assessment can be transferred. Typically, contributions are made in cash. At the signing of the deed of incorporation, quota holders must pay-up at least 25% of the total value of their contributions in cash or, in the case of a single incorporator, the full amount of the contribution must be paid-up.
In lieu of payment, an insurance policy or a bank guarantee for the corresponding amount, with the characteristics determined by decree of the President of the Council of Ministers (this also applies in case the contribution, assumed by the quota holder, consists of the provision of work or services in favour of the company) is acceptable; in this case the quota holder may at any time replace the policy or the guarantee with the payment of the corresponding amount in cash.
The equity contribution consisting of goods and credits must be fully paid-up at the time of subscription.
If the quota holders are reduced to only one (1), the payments still due must be made within 90-days.
Any requirements with respect to share cancellation, share repurchase and other capital reductions
The S.r.l. cannot purchase its own quota.
Reduction of the corporate capital: The Italian Civil Code provides that the reduction of excess corporate capital can be effected either by releasing the quota holders from the duty of making outstanding payments still owing, or by reimbursing capital to the quota holders, within the limits of the minimum corporate capital. Please also note that the creditors of the company have the power to oppose the related Quota holders' Meeting resolution within 90-days.
If the company incurs losses higher than one-third of the corporate capital, where such losses do not result in the corporate capital falling below the minimum capitalisation provided by the law, the directors must convene without delay a Quota holders' Meeting which must resolve to take appropriate measures and must provide the quota holders 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, if any. 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 quota holder is confident that the losses – or part of them – may be covered within one (1) year). If at the Quota holders' Meeting approving the annual financial account of the following financial year, the losses are not less than one-third of the corporate capital, the losses must be covered through a recapitalisation.
In case the company incurs in losses higher than one-third of the corporate capital, where such losses also result in the corporate capital falling below the minimum capitalisation requirements, the directors must convene without delay a Quota holders' Meeting in front of an Italian notary public in order to resolve upon (i) the recapitalisation or, theoretically, (ii) the transformation of the company into a partnership or (iii) dissolve the company.
Any requirements with respect to distributions to shareholders?
Profits:
- The resolution upon the distribution of profits is adopted by the Quota holders' Meeting that approves the annual financial account (i.e. once per financial year).
- No dividends can be paid on quotas 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 quota holders 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 companies whose balance sheet is subject by law to legal audit control by audit companies.
- Payments on account of dividends must be authorized by the Articles of Association and are approved by resolution of the directors – after receiving a positive opinion on the annual financial account of the previous fiscal year and on its approval by the audit company.
- Payments on account of dividends are not permitted when the last approved annual financial account show losses relating to the fiscal year or the previous fiscal years.
- The dividends paid cannot exceed the annual profits, reduced by the amounts set aside as reserve(s) pursuant to law or the Articles of Association. The directors shall resolve on payments on account of dividends on the basis of an accounting prospectus and of a report showing that the company's assets, economic performance, and financial position permit such dividend payments.
- The opinion on these documents shall be issued by the person or group 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 person or group entrusted with the 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 quota holders 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 quota holders collected them in good faith.
Can the owners or shareholders adopt a restrictive or governing agreement among themselves such as a Shareholders Agreement?
Yes, the provisions in such agreement should not contradict the Articles of Association, but additional and/or more detailed provisions are allowed. While the breach of the Articles of Association is enforceable vis-à-vis third parties, the breach of the quota holders' agreement, which is a private agreement, in 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, the directors must approve the draft annual financial statements, the Quota holders' 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
S.r.l.s are required to disclose their beneficial owner with the Register of the Enterprises. Under the Italian law the Ultimate Beneficial Owner (“UBO”) is identified as:
- identification data and citizenship of the natural person(s) identified as ultimate beneficial owner(s), and the information related to the relevant 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 company;
- a certified e-mail address to which the Register of Enterprises may send any communications re: ultimate beneficial ownership.