Italy

Company Formation

Companies under Italian law can be classified in two groups:
• Unlimited partnerships (società di persone) in which partners in principle bear unlimited liability for the obligations of the partnership, and
• Limited business corporations (società di capitali) where the corporation only is liable for its debts and its partners/shareholders bear a limited liability in proportion to their interest or shares in the company.

Unlimited Partnerships:
There are two types of unlimited partnerships under Italian law: general partnerships (Società in nome collettivo or S.n.c.), and special partnerships (Società in accomandita semplice or S.a.s.).

In general partnerships (s.n.c.), all partners are unlimited partners: i.e. they are jointly and severally liable for the obligations and liabilities of the partnership (it can be agreed that the partnership's liabilities are allocated among its partners according to certain portions, but this agreement is not binding upon third parties/claimants). All partners, on the other side, are entitled in principle to share the management of the partnership. However, the partnership's Memorandum of Association and/or by-laws can appoint some partners as sole directors of the company. There is no required number of directors. The partnership can be managed also by a sole director. In case of more than one manager, the Memorandum of Association can provide that the decisions have to be taken by a Board of Directors, in accordance with the majority rule. The directors of the partnership are also the partnership's legal representatives, that is to say, they take the resolutions and act on behalf of the partnership entering into agreements with third parties, etc.
There are no other bodies or officers in general partnerships. In particular, there is no meeting of partners, unless it is expressly provided for in the partnership's Memorandum of Association/By-laws. The appointment or dismissal of managers, as well as any amendment to the Memorandum of Association, must be decided unanimously, unless the Memorandum of Association provides otherwise.

The minimum number of partners is two. If only one partner remains, the partnership must be wound up.
General partnerships can be registered with the Commercial Companies' Registry held by the Chamber of Commerce. If they are registered, all terms and conditions of the Memorandum of Association and Articles of Incorporation are binding on third parties. In addition, any claim against the partnership can be enforced against its partners only after it has been unsuccessfully enforced against the partnership's assets. At the end of each year, a statement of accounts must be drawn by the directors and approved by the partners, and net profits are attributed to the partners.

Special partnerships (s.a.s.) are subject to the same rules governing general partnerships except that there is a basic distinction between “Sleeping partners” (or those who are limited liability partners excluded from the management of the partnership) and “Active Partners” (or those unlimited partners entitled to act as the partnership's managers). Sleeping partners are vested with powers of control on the management carried out by the active partners; they can give their advice in this respect; they can inspect the partnership's books, and represent the partnership for single acts pursuant to a special power of attorney to be granted them by the managers.

Limited Business Corporations:
Limited business corporations may be private limited liability companies (società a responsabilità limitata or S.r.l.), share companies (Società per azioni or S.p.A.), and "corporate partnership" (Società in accomandita per Azioni or S.a.a.). They can be established only through a public deed which must be registered with the Companies Registry.

Private Limited Liability Companies
The capital is not represented by shares but is divided into portions, each one representing the contributions of the partner to the company. The portions are set out in the Memorandum of Association or, otherwise, are considered by way of inference. They can be divided and sold, and are transferred following to the death of a partner to his heirs. Company profits are distributed among partners according to their portions of the company's capital, unless otherwise provided for in the company's Memorandum of Association. It is possible to confer not only contributions in money or real assets, but also work or services.

A meeting of partners is held at least once a year with the presence of partners representing at least the majority of the capital and resolves with the majority rule on the approval of the balance sheet; on the appointment and dismissal of directors, auditors, and the president of auditors; on directors' fees, and on all other matters brought to its attention by the directors, or by partners covering at least 1/3th of the capital, or expressly reserved to it by the Memorandum of Association/By-laws. A meeting of partners resolves with votes covering at least the majority of 1/2 of the capital on any amendment to the Memorandum of Association and/or By-laws and on the appointment of liquidators. Meetings of partners are called through a letter sent to all the partners at least eight days in advance, setting out the place, date, and time of the meeting.


From 1993 (Law No. 142/1992) the company can have only one partner and in this case it is called "società a responsabilità limitata unipersonale".


Unless the Memorandum of Association provides otherwise, the management of the company is carried out by one or more partners, appointed in the Memorandum of Association/By-laws or in a meeting of partners.

If there is one director, that director would act as the company's sole director. If there is more than one director, a board of directors is set up, and the president is elected by the directors. The President of the Board of Directors or the Sole Director has power to represent the company. They can also delegate their managing powers to other Managing Directors. The resolutions of the Board are taken in accordance with the majority rule. However, private limited companies are allowed to confer the management of the company to all the partners, with conjunctive or disjunctive powers, if so provided by the Memorandum of Association.

The company balance sheet must be drawn by the directors and approved by the partners at the end of each year. Net profits are divided among the members in proportion to their portions of the capital, unless differently provided for in the Memorandum of Association/By-laws.

Share Company
The Memorandum of Association must set out the name of the shareholders; the name of the corporation; registered office, objects and purposes; amount of capital; number and nominal value of each share; value of claims or assets conferred by shareholders; profit allocation criteria; shares belonging to each shareholder; the kind of management adopted, the names of directors, the names of auditors, and the duration. Therefore, the business corporation is registered in the Business Corporation's Registry with the Chamber of Commerce which checks whether all the formalities have been complied with. Shareholders' contributions to capital must be in money, unless otherwise provided for in the Memorandum of Association. In case of contributions by way of claims or movable/immovable assets, the value of contribution is assessed by an appropriate sworn expert survey.

Shares can be only registered shares. Bearer shares are not admitted in principle, save some particular exceptions. Shares must be of equal value and confer the same rights on shareholders. However, different types of shares permitted under Italian law are:
• Dividend bearing shares (they are allotted to shareholders in exchange for shares which are eliminated pursuant to a reduction of the company's capital)
• Referred shares (the dividends are paid on them with reference to the outcome of the company activities in certain particular matters)
• Saving shares (not voting shares preferred for payment of dividends and reimbursement of capital)
• Deferred shares (they are preferred in reimbursement of capital and suffer the effect of capital reduction only after the ordinary shares are eliminated)
• Employees' shares

Moreover, it is possible now to issue not voting shares, voting shares limited to some specific subjects, or dependent on certain determined conditions.

The law reform provides the possibility for share companies not to issue shares or to issue shares without nominal value, with proportionate adjustment mechanisms.


Registered or bearer bonds (debentures) can be issued up to the double of the capital plus the compulsory reserves and the available reserves of capital, or even in excess of this total amount in some cases and in particular whenever they are subscribed by professional investors or they are secured by a mortgage.

Shareholders' meetings are called by the directors or pursuant to a request of shareholders representing 1/10th of the capital. Ordinary meetings may decide on different subjects according to the management and control system adopted by the company. Three separate systems have been provided by the law:
• The traditional one, based on the distinction between the Board of Directors (or the Sole Director) and the Controlling Body (“Collegio Sindacale”)
• The monistic one, in which the management and the control are exercised by the Board of Directors and a controlling committee internal to the board itself
• The dualistic one, characterized by two organs: the Board of Directors, with reduced powers, and the Supervision Council (“Consiglio di Sorveglianza”), whose powers include some of those pertaining to the Controlling Body at the traditional one).

In the absence of a precise resolution of the company, the traditional management system is applied. In this case, ordinary meetings of shareholders: approve the balance sheet, elect directors, auditors, and the president of auditors; determine directors' and auditors' rewards; decide whenever to start proceedings against the directors and / or the auditors; and decide on any other matters brought to their attention by directors or originally reserved to them by the Memorandum of Association/By-laws (however it must be noted that the directors bear the responsibility of their acts and actions even if so authorized by the meeting of the shareholders). If the meeting is held at the first call, the presence of shareholders representing at least one half of the capital, and approving votes covering the majority of the capital represented at the meeting, is requested. If the meeting is held at the second call, there are no particular majorities requested for the validity of the resolutions.

Extraordinary meetings decide on amendments to the Memorandum of Association; on the appointment of liquidators; and on any other matter referred to them By-law. Favourable votes covering the majority of capital are always requested if held at the first call; at the second call the presence of shareholders representing more than 1/3rd of the capital and approving votes of at least 2/3rd of the capital represented at the meeting are requested.

The resolutions of the shareholders' meeting may be declared null and void by the court upon application of any shareholder/director/auditor, if it is passed with the crucial vote of shareholders in conflict of interest with the company whenever it could cause a damage to the company. For this purpose, a judicial request is to be filed within 90 days from the meetings.

Directors may or may not be shareholders. The company can be managed by a Sole Director or by a Board of Directors. In the latter case, a meeting requires the necessary presence of the majority of directors, and resolutions are always taken with the favorable vote of the absolute majority of directors attending the meeting. Directors are appointed and dismissed by the ordinary meeting, and may represent the company. They can waive their appointment. They can also delegate some of their powers to one or more Managing Directors or to a committee. They are liable towards the company if they fail to exercise due diligence in carrying out their work.

Auditors must be three or five permanent members, plus two temporary members and have the power to control the company. Meetings of bondholders are held if the company has issued bonds. In this case, bondholders' meetings are held under the direction of a President, and resolve in respect of the conditions of bonds, the appointment of the President, etc.

Balance sheets and statements of profits and losses must be drawn by the directors in accordance with rules and criteria set out in the Italian Civil Code. They must be accompanied by a report on the management of the company and by explanation notes and must then be reported to the board of auditors at least 30 days in advance of the shareholders’ meeting. The auditors submit their comments to the shareholders meeting, which then approves or rejects the balance sheet and the statement of profits and losses within four months after the end of the fiscal year (i.e. within April 30 after the end of each year). The shareholders' meeting approving the balance may decide to distribute all or part of the profit among the shareholders or to carry it forward to the next year.

Corporate Partnership
Corporate partnerships are limited partnerships in which the capital is represented by shares. This type of company is subject to the general rules governing business corporations, if and when consistent with some specific provisions governing them only. The position of sleeping partners is totally similar to that of shareholders in a business corporation. The position of active partners is totally similar to that of active partners in a special partnership. Namely, active partners are managers of the company and bear unlimited liability, while silent partners are excluded from the management but bear a limited liability.