A Guide to Starting a Business in Italy: Public Limited Companies & Partnerships (Part 3 of 3)
Public Limited Companies By Shares – Società per Azioni (S.p.A.)
A Società per Azioni is a public limited company by shares. This form of corporation better suits the needs of large businesses requiring a significant amount of capital. It is also called a stock company.
Share Capital and Shares
The initial share capital of an S.p.A. must be at least € 50,000.00, and is divided into “shares”, that can be physically issued to the shareholders or dematerialized.
Capital can be paid up either by cash contribution or, whereby expressly provided in the Memorandum of Association, as an in-kind contribution or contribution of receivables, whose value shall be equal to the amount of capital subscribed.
In the case of multiple shareholders, subscribers shall pay up prior to the incorporation of the company at least 25% of the share capital. In the case of a single member, the entire share capital shall be paid up prior to the incorporation of the company.
Conversely, whereby paid in kind or via transfer of receivables, the share capital is to be paid in its entirety.
Is It Possible to Open a S.p.A from a Distance?
To open an Italian company, the founder(s) shall execute an incorporation deed (including memorandum and articles of association) before an Italian public notary. The incorporation process can be carried out from a distance through a power of attorney granted to Lexia. In this case the power of attorney shall be notarized and apostilled or (or notarized and legalized with a local Italian Embassy or Consulate if the country where the power of attorney is executed is not a member of the apostille convention).
Shareholders’ Meetings
The Shareholders’ Meeting is the S.p.A. ‘s sovereign corporate body, i.e. the forum within which its shareholders form their will as to the company, then implemented by the managing body. The shareholders pass resolutions collectively. Resolutions legitimately passed during the meeting are binding for all shareholders, including those absent and those who voted against the resolution passed; nevertheless, in some cases it is possible for such parties to withdraw from the company, following procedures established by law.
Corporate Governance System
S.p.A.’s can choose between three different corporate governance systems:
– Italian traditional management and control system;
– One-tier management and control system, of British inspiration;
– Two-tier management and control system, of German inspiration.
Italian Traditional Corporate Governance System
In the Italian traditional system, the management of the Company will be entrusted to a sole director or a Board of Directors (“BoD”) appointed by the shareholders’ meeting. Directors stay in office for 3 fiscal years; they may, however, be re-elected, unless otherwise provided in the articles of association. They, also, may be revoked, at any time, through a resolution of the shareholders’ meeting.
One or more directors can be appointed as Chief Executive Officer(s) (Amministratore Delegato, “CEO”) by the BoD. The BoD can also appoint an executive committee (Comitato Esecutivo).
The Board of Statutory Auditors (Collegio Sindacale), instead, is the internal supervisory body of a S.p.A. It is largely entrusted with the oversight of corporate management to ensure compliance with the law, memorandum and articles of association; compliance with the principles of sound administration, in particular the effectiveness of the organizational, administrative and accounting systems adopted by the Company, and its effective performance.
The Board of Statutory Auditors, therefore, supervises:
– the activities of the BoD, attending the board meetings;
– the activities of the shareholders’ meeting, attending the meetings with the power to challenge the resolutions adopted against the law or the articles of association.
The Board of Statutory Auditors is also appointed by the shareholders’ meeting and is composed of 3 or 5 standing members and 2 alternate members. The auditors must satisfy the requirements of integrity, experience, and independence as prescribed by law; they must be professionally independent from the company, its subsidiaries and parent companies; and must possess technical expertise.
One-Tier System
A first alternative to the traditional system is the one-tier system. The latter provides a governance system substantially similar to the traditional one, except that there is no Board of Statutory Auditors; instead, there is a Management Control Committee (Comitato per il Controllo sulla Gestione) appointed within the BoD.
Members of the Management Control Committee are directors who do not perform management functions.
As for its tasks, the Management Control Committee performs functions that are similar to the ones exercised by the Board of Statutory Auditors in the traditional governance system (and, consequently, its members must satisfy the same requirements of integrity, experience, and independence prescribed by law with respect to Statutory Auditors):
– supervisory functions related to the effectiveness of the organizational, administrative, internal control and accounting systems;
– additional tasks entrusted to it by the BoD, in particular the ones related to the relationship with the independent auditor.
Two-Tier System
In companies that adopt the two-tier system, the management function is entrusted exclusively to the Management Board (Consiglio di Gestione). The control function is, instead, exercised by the Supervisory Board (Consiglio di Sorveglianza).
The Management Board is composed of at least 2 members, who stay in office for 3 fiscal years. The members, unlike the traditional system, are appointed (and revoked) by the Supervisory Board and not by the shareholders’ meeting.
The Supervisory Board is formed by at least 3 members, appointed (and revoked) by the shareholders’ meeting, who stay in office for at least 3 fiscal years. Such Board:
– oversees and supervises the corporate management to ensure compliance with the law, memorandum and articles of association; compliance with the principles of good administration and effectiveness of the administrative system;
– exercises a significant portion of the functions that usually are held by the shareholders’ meeting (appointment, revocation and compensation of members of the Management Board, approval of the financial statements).
External Audit Requirements
A S.p.A. must have its accounts audited. This can be carried out by the Board of Statutory Auditors only if:
– all members are chosen from the register of auditors, and
– the company is not listed on a stock exchange and is not considered a “public-interest entity”, as defined by art. 16 of the Legislative Decree n. 39/2010 (which transposed European Directive 2006/43/CE) reforming the audit system, and
– the company is not required to draw up a consolidated balance sheet.
Auditors shall:
– express a judgment on the financial statements with a special report;
– carry out audits during the year.
Auditors also have the right to obtain documents and information useful to perform the audit activities and can carry out inspections, investigations and examination of deeds and documents of the company from the directors.
Auditors are appointed by the shareholders’ meeting.
General or Unlimited Partnership – Società in Nome Collettivo (S.N.C.)
The company’s business name must contain the name of at least one of the partners and an indication that it is an unlimited partnership.
The members have unlimited liability for partnership obligations and there can be no agreement to the contrary. When seeking repayment of debts owed by the partnership, creditors must first enforce them against the partnership before applying to the members. The unlimited partnership is subject to bankruptcy law with the contemporaneous bankruptcy of all partners.
The partners generally have separately exercisable powers of administration and representation. If agreed, powers of administration may be reserved to some members only.
Limited Partnership – Società in Accomandita Semplice (S.A.S.)
The limited partnership has two categories of partners:
– General partners (soci accomandatari), who handle the administration and management of the company and who have unlimited liability for the fulfillment of partnership obligations;
– Limited partners (soci accomandanti), who are not directors and will be liable for partnership debts within the limits of the investment made in the partnership, subject to certain exceptions governed by law.
The partnership name (business name) must contain the name of at least one general partner and an indication that it is a limited partnership.
If a limited partner’s name is included in the partnership name, he or she will have unlimited liability, jointly and severally with the general partners, for partnership debts.
Limited partners cannot perform acts of administration or negotiate or do business in the name of the partnership, except when granted a special power of attorney for specific business activities. Any limited partner who disregards this prohibition will take on unlimited liability for all partnership debts and may be excluded from the partnership itself.
Discover more on business partnerships.
Who Can Set Up a Company in Italy?
In principle, foreign investors (companies or individuals) may open a company in Italy subject to the condition of reciprocity (i.e. when a similar right is granted to Italians in their country of origin).
Verification of the condition of reciprocity is not necessary when the foreign investor:
– is a citizen of a Member State of the European Union;
– is a citizen of one of the States of the European Economic Area (i.e. Iceland, Liechtenstein and Norway);
– is a citizen of a country that has an international agreement with Italy (e.g. agreement governing international investment, treaty of friendship and trade, or other such agreements). It should be noted that Italy has such agreements with most countries.
– has a refugee or stateless person status.
Verification of the condition of reciprocity can be done through the “Country Reports” issued by Italy’s Ministry of Foreign Affairs (MAE).
Read more articles by Lexia Legal Services
Please keep in mind that it is important to consult with an Italian lawyer who can provide up-to-date information and guidance specific to your situation. Lexia offers expert legal assistance and has a team of experienced lawyers who are well-versed in the requirements for starting a business and can assist you during the process. Contact them using the form below for more information.
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