Operating guidelines

Companies with share capital in Italy

Procedure and Memorandum of Association

In order to set up a company in Italy it is necessary to sign a public deed ("Memorandum of Association") in front of the notary public (behind the notary, with analogue signature, or via videoconference, with digital signature), which contains not only essential information (for example: the name and registered office of the company and the identification data of the shareholders and directors), but also the rules that will govern the functioning of the company ("Bylaws").

The Memorandum of Association must indicate:

  1. the surname and first name or denomination, date and place of birth or the State of incorporation, domicile or registered office, the nationality of each shareholder
  2. the name, containing an indication of the type of company chosen, and the Municipality where the company's registered office and any secondary offices are located
  3. the activity which constitutes the corporate purpose
  4. the amount of the share capital
  5. the contributions of each shareholder and the value attributed to credits and assets contributed in kind
  6. the participation quota of each member
  7. the rules relating to the functioning of the company, indicating those concerning administration, representation
  8. the persons entrusted with the administration and any person appointed to carry out the statutory audit (if appointed)
  9. the total, at least approximate, amount of formation expenses charged to the company.

The Memorandum of Association contains certain and reliable data thanks to the preventive legality check carried out by the notary public, who is a highly qualified public official who guarantees the compliance of the Memorandum of Association with Italian law.

The Memorandum of Association also contain the bylaws, i.e. all the rules that will govern the functioning of the company during its life. If, over time, one or more of these rules should change due to the will of the shareholders, only the Bylaws will be amended, while the Memorandum of Association will remain unchanged over time.

After the Memorandum of Association has been signed with the notary public, the notary public will file the Memorandum of Association with the Chamber of Commerce ("Register of Companies") within ten days: after a few days (from 2 to 5 business days), the Chamber of Commerce will enter the company in the public register of companies and from that moment the company can be considered to have actually come into existence.

From July 20, 2016, Innovative Start-Ups can be set up independently on the online portal of the Companies’ Register, without the need for a notary public.

Who can be a shareholder?

All EU or non-EU citizen can set up a company and be a shareholder of a company.

The operativeness of a non-EU entity in Italy, whether a natural person or a legal entity, is regulated by bilateral agreements between States on investment promotion and protection. In the absence of agreements concluded between Italy and the foreign State of reference (Bilateral Investment Treaties, or BITs), the operation is subject to the "condition of reciprocity", according to which foreign subjects can perform a legal act in Italy provided that Italian citizens can perform the same act in the foreign State.

Contributions and assets

Contributions constitute the shareholders' contributions to the formation of the initial assets and share capital of the company for the performance of the business activity.

In general, any asset that has an economic value (although with specific rules depending on the case) may be contributed by shareholders, but money is always and in any case the most used contribution in practice.

It is always possible, during the life of the company, to increase the company's assets and increase the share capital.

It is possible to set up a company with a single shareholder (società unipersonale).

The company object

The business activity that the company intends to carry out represents the corporate object and must be determined in the Memorandum of Association. It may be modified during the life of the company only in compliance with the Articles of Incorporation and the Bylaws.

Why set up a company?

There are various types of companies to carry out business activities: the choice depends not only on the nature and quality of the people who want to set up the company but also on the circumstances that may determine its creation. The aims pursued and the appropriate assessments of risks and advantages, including those of a fiscal nature, are taken into account.

First of all, it is necessary to distinguish between corporations and partnerships.

The main differences concern:

  • Liability: in corporations, the company's obligations (and, as a consequence, its debts) are the sole responsibility of the company and not the shareholders: the shareholder has a liability limited to the capital contributed, not assuming any personal liability, not even subsidiary, for the social obligations. In partnerships, on the other hand, the obligations of the company are also the responsibility of the partners (with some exceptions provided for by law).
  • Administration: in corporations it is possible to assign the administration of the company, and therefore also legal representation in dealings with third parties, both to shareholders and “external” parties; in partnerships, on the contrary, the administration of the company must be assigned to one or more partners.
  • Company structure: the company structure of a corporation may also be formed by a single person, either natural or legal. In partnerships, on the other hand, the company must be formed by at least two persons.

The main reason why it may be considered appropriate to set up a corporation is the willingness to undertake a stable entrepreneurial initiative in a given territory, enjoying the limitation of liability for social obligations, for which the company will be solely responsible with its own assets.

For these reasons, partnerships are not recommended by most and are not among the options offered by Eteria.

The most important types of corporations are:

  • Traditional limited liability company (S.r.l)
  • Simplified limited liability company (S.r.l.s.)
  • Innovative Startup
  • Joint-Stock Company (S.p.A.)

The system of corporations has recently been reformed by the Italian legislator with the aim of increasing their competitiveness on domestic and international markets. For this reason, the centre of the company's life has been shifted to private autonomy, in particular in the drafting of the Memorandum of Association and the Bylaws, which regulate not only its birth but also the performance of its future activities.

The shareholder does not have direct power of administration and control over the company, but he may vote at the shareholders' meeting and contribute to the appointment of directors and statutory auditors. This does not prevent him from being appointed as a director, assuming the relevant responsibility.

Companies operate by means of two bodies:

  • the shareholders' meeting, with jurisdiction limited to the decisions of greatest importance for the company
  • the directors, who are entrusted with the management of the company and the implementation of the company object.

A third body is compulsory only in S.p.A. and, if certain special conditions laid down by law are met, also in traditional S.r.l.: this is the Statutory Auditor, that has powers of auditing the accounts and supervising the activities of directors. In any case, also the S.r.l. (traditional or Innovative Startups) may always set up, on an optional basis, the Statutory Auditor.

Traditional limited liability company (S.r.l.)

The traditional limited liability company (S.r.l.) is the most widespread company type in Italy.

Traditionally used for smaller companies, today it is also used for companies of considerable size, as it is characterised by great organisational flexibility, low costs (of establishment and operation) and important advantages from a tax point of view.

The S.r.l. has perfect asset autonomy and the shareholders are not personally liable for the company's obligations, even if they have acted in the name and on behalf of the company.

The minimum share capital of the S.r.l. is equal to euro 1.00:

  1. In S.r.l. with share capital equal to or greater than euro 10,000.00, at the signing of the Deed of Incorporation:

    • if there are two or more shareholders, at least 25% of the total share capital must be paid in (the rest of the share capital may be paid in subsequently
    • if the company has got a single shareholder, the full amount of the share capital must be paid in. 

    2. In S.r.l. with the share capital determined to be less than euro 10,000.00, the share capital must be fully paid-in upon signature of the Deed of Incorporation, even if there are two or more shareholders. In this case, the company is obliged to set aside a sum (legal reseve) to be deducted from the net profits resulting from the financial statements equal to at least one fifth of the same, which remains until the reserve and capital have reached the amount of euro 10,000.00. The reserve may only be used for capitalisation and to cover any losses with the obligation to replenish it if it has decreased.

In the limited liability company:

  • the creation of categories of shares with different rights is allowed, even in derogation from the law (for example, shares without voting rights, or with non-proportional voting rights, or limited, or subject to certain conditions)
  • it is possible, under certain conditions, to carry out transactions on its shareholdings (if carried out as part of employee incentive and remuneration plans)
  • it is possible invite the public to subscribe by issuing minibonds (similar to bonds) which, unlike the latter, can only be initially subscribed by professional investors (banks, companies with special legal requirements).

It is also possible to make the solicitation of investment through crowdfunding. The term crowdfunding describes a technique for collecting resources, mainly by exploiting the Internet, which was initially developed in an Anglo-Saxon environment to support a variety of projects - often in the artistic, musical, philanthropic fields - thus configuring almost a web-based collection, on a potentially worldwide scale (collection of small amounts from many investors).

Usually, the several initiatives are offered through a website (called portal or platform) and three different types of crowdfunding can be distinguished. The first is relating to donation-based platforms, which collect voluntary contributions, generally for philanthropic initiatives. The second is carried out through reward-based crowdfunding platforms: people who make a donation for a project receive a reward or an award in return, whether material (e.g. the pre-order of the product to be funded) or more intangible (e.g. a thank you on the website). The third method, the so-called equity-based method, involves the raising of risk capital and therefore has as its object the solicitation of investment (today qualified as an offer of financial instruments to the public). This phenomenon has been explicitly regulated in the field of financing innovative start-ups and Italy is the first country in the world to have a complete legislative and regulatory framework on the subject. The Italian legislator has introduced the figure of the manager of portals for the raising of capital: subjects who exercise professionally, on an exclusive basis, the service of managing portals for the raising of capital for the s.r.l. (i.e. they organise a sort of online "showcase").

Administration and controls

The flexibility and greater simplicity of the limited liability company is reflected, among other things, in the rules governing its administration: it is possible to choose between the appointment of a single director or a board of directors and, within the latter, between forms of joint administration (where directors must operate jointly), disjoint administration (where each director may operate alone) or mixed administration (joint administration for certain acts and/or categories of acts indicated and disjoint administration for all the others).

Moreover, with the exception of certain particularly important resolutions, a shareholders' meeting resolution is no longer mandatory: the company's Bylaws may, in fact, provide for alternative methods of formation for shareholders' decisions, such as consultation or written consent (the same document relating to the resolution circulates among the various shareholders who sign it at different times and places).

The Statutory Auditing Body is compulsory only for S.r.l. of a certain size, evaluated on the basis of a series of parameters established by law.

Dissolution and liquidation

The limited liability company is dissolved in the following cases provided for by law:

  1. expiry of the term
  2. achievement of the company object or if it becomes impossible to achieve it, unless the shareholders' meeting convened without delay resolves on the appropriate amendments to the Bylaws
  3. impossibility of functioning or continued inactivity of the shareholders' meeting
  4. reduction of the share capital below the minimum amount provided for by law, subject to the provisions of Articles 2447 and 2482-ter of the Civil Code.
  5. in the cases provided for by Articles 2437-quater and 2473 of the Civil Code
  6. by resolution of the shareholders' meeting
  7. for the other reasons provided for in the Memorandum of Association or the Bylaws.

In the cases provided for under numbers 1, 2, 3, 4 and 5, the dissolution shall take effect as from the date on which the resolution of the board of directors ascertaining the cause of dissolution is registered with the Companies Register's office. In the case provided for under number 6, the dissolution shall take effect from the date of registration of the relevant resolution by the notary who drew up the deed.

When the Memorandum of Association or the Bylaws provide for other causes for dissolution (7), they must determine the competence to decide or ascertain them and to carry out the required publicity requirements.

Simplified limited liability company (S.r.l.s.)

The simplified limited liability company (S.r.l.s.) is a form of S.r.l. which has a particularly rigid structure and several limitations.

There is no maximum number of shareholders, but the shareholders must necessarily be natural persons, with consequent exclusion for companies or other entities that cannot be part of the company structure.

The share capital must be equal to or greater than euro 1.00, but lower than euro 10,000 and must be paid in full at the time of incorporation by means of cash payments, regardless of the multiple or single-member presence in the company structure.

Finally, the Memorandum of Association and the Bylaws must be drawn up by a notary public in accordance with a standard model provided for by law, which can never be amended: shareholders have no power to regulate independently the rules of the company, which are fixed by the legislator, and it is for this reason that, in many cases, it is necessary to "transform" the S.r.l.s. into ordinary S.r.l. (bearing the related costs).

The Certificate of Incorporation must indicate:

  1. the company name containing the indication of a simplified limited liability company and the Municipality where the company's registered office and any secondary offices are located
  2. the activities that constitute the company object
  3. the amount of the share capital - which must be at least euro 1.00 euro and less than the amount of euro 10,000.00 and must be subscribed and fully paid up at the date of incorporation - and the shares subscribed by each shareholder
  4. the appointment of directors, who are responsible for the general representation of the company
  5. the provision that the shareholders' meeting, when required, shall be chaired by the sole director or the chairman of the board of directors, as the case may be.

Innovative Startup

Entrepreneurs wishing to set up a company to develop high-tech products or services have at their disposal another form of company, the Innovative Startup, introduced by the government to encourage the commercialisation of research and development (R&D) activities.

The essential element of the Innovative Startup is the activity carried out, which must consist, exclusively or prevalently, in the development, production and marketing of innovative products or services with high technological value.

The status of Innovative Startup is granted - on a temporary basis (for a maximum period of five years) - to joint-stock companies, cooperatives or European companies meeting certain requirements, from which derive special benefits (in the tax and labour law field), as well as some exceptions to the rules of common law.

The qualification is obtained by registration in a special section created in the Companies' Register.

These companies can be set up autonomously on the online website of the Register of Companies, without the obligation to have recourse to the support of a notary public and without having to bear the costs incurred by ordinary S.r.l. for registration with the Chamber of Commerce.

In order to qualify as such, the Innovative Startup must meet certain cumulative and alternative requirements.

Among the cumulative requirements, the Innovative Startup:

  • must have been established for no more than five years (and must be registered as active in the Register of Companies)
  • must be resident in Italy, or in another EU country if it has a production site or branch in Italy
  • starting from the second year of activity of the Innovative Startup, it must have a total turnover, as resulting from the latest approved balance sheet, not exceeding 5 million euros
  • does not distribute and has not distributed profits
  • is not the result of a merger, demerger or transfer of a branch of business
  • must have, as its exclusive or prevailing corporate purpose, the development, production and marketing of innovative products or services with high technological value.

In addition to the requirements set out above, the Innovative Startup must meet at least one of the following alternative requirements:

  • Research and development expenses must be equal to or greater than 15% of the higher value between cost and total production value of the Innovative Startup.Expenses for the purchase and rental of real estate are excluded from the calculation. On the other hand, expenses relating to pre-competitive and competitive development, such as experimentation, prototyping and business plan development, expenses relating to incubation services provided by certified incubators, gross costs of internal personnel and external consultants employed in research and development activities, including partners and directors, legal expenses for the registration and protection of intellectual property, terms and licenses of use, are to be included.
  • employment as employees or collaborators in any capacity, in a percentage equal to or greater than one third of the total workforce, of personnel holding a PhD or a PhD at an Italian or foreign university, or holding a degree and who have been carrying out certified research activities in public or private research institutes in Italy or abroad for at least 3 years, or, in a percentage equal to or greater than two thirds of the total workforce, of personnel holding a Master's degree. The calculation must be made for heads
  • The Innovative Startup must be the owner or depositary or licensee of at least one industrial property right relating to an industrial or biotechnological invention, a semiconductor product topography or a new plant variety, or it must be the owner of the rights relating to an original computer program registered with the Special Public Register for Computer Programs, provided that such rights are directly related to the corporate purpose and the business activity.

The status of Innovative Startup gives access to particular benefits: reduction of initial charges, tax and labour law advantages. Exceptions to the corporate rules of common law are also allowed:

  1. deferral by one year of the terms provided for by law in the event of loss of share capital
  2. in the matter of company crisis, it is provided for the removal from bankruptcy proceedings and the application of the over-indebtedness discipline, normally reserved to those who are not subject to bankruptcy proceedings.

Joint Stock Company (S.p.A.)

The joint-stock company (S.p.A.) is the preferred company model for companies of significant size and if it is appropriate to have a larger share capital, also in relation to the volumes and sector of activity in which the company operates. The joint-stock company could appear, to third parties and creditors, as the most reliable company, able to offer a more solid capital guarantee. Moreover, it is possible to facilitate the circulation of shareholdings, in the context of a company structure generally characterised by a plurality of shareholders.

The S.p.A. is incorporated by public deed (Memorandum of Association) before the notary, who registers the deed and enters the company in the relevant Company Register.

A minimum share capital equal to euro 50,000.00 is required for its incorporation, of which at least 25% must be paid into the bank. For certain companies, the law provides for a higher minimum share capital, depending on the peculiarity of the activity carried out (e. g. for securities brokerage companies or banking or financial companies).

If the company is formed with a single shareholder, the full amount of the share capital must be paid in.

Joint stock companies can be of two types: open, which have recourse to the risk capital market (listed companies and companies with widespread shares) and closed, which do not have recourse to it. In closed companies, the auditing of the accounts may be entrusted, by virtue of a specific clause in the Bylaws, to the same Board of Statutory Auditors; in open companies, on the other hand, the auditing of the accounts is necessarily carried out by an auditing firm.

It is not necessary that the stake in the share capital of the company corresponds to the contributions of each one: the shareholders may, for example, freely decide to "reward" with a greater shareholding a shareholder whose participation they consider strategic or fundamental the contribution made.


The two main features are the limited liability of all shareholders and the division of capital into shares.

Only the company is liable for debts and expenses with its own assets. Shareholders are not obliged to pay debts from their personal assets and are not obliged to lend their money to the company. In case of economic trouble and therefore "insolvency", the company may go bankrupt, but the shareholders or the sole shareholder do not go bankrupt and only lose the value of their shares and therefore the money they have invested to participate in the company.

The capital is divided into shares of a value fixed in the Memorandum of Association ("nominal value"), usually the minimum amount is 1 euro per share. Shares are fully transferable shareholdings. The issue of shares is normal but not essential, as they may not be materially issued; in listed companies, shares may no longer be represented by paper documents, but by simple accounting records, defined as "book-entry shares" or "dematerialised shares".

The administration

Since 2004, the administration of joint stock companies can be organised according to three distinct models: traditional, one-tier (Anglo-Saxon-derived) and dualistic (German-derived).

Under the traditional model, the S.p.A. is managed by several persons forming the "Board of Directors" but may also be managed by a sole director. Sometimes the directors are not shareholders, but persons experienced in the administration and in the activities carried out by the company. The person who signs for the company is the sole director or the Chairman of the Board of Directors. The directors have the task of managing the company and their competence includes all acts necessary to achieve the corporate purpose. The number of members of the Board of Directors is established in the Memorandum of Association, which, however, may be limited to a minimum and a maximum number of directors; in this case, it is up to the ordinary shareholders' meeting to concretely determine the number of directors.

In the dualistic system, on the other hand, the administration is entrusted to a Management Board, elected by the Supervisory Board, which in turn is elected by the Shareholders' Meeting: the specific rules laid down by law and, residually, the general rules on administration and control apply to these bodies.

In the one-tier system, the administration and control are entrusted to a Board of Directors and to an internal committee; therefore, the rules relating to the functioning of the Board of Directors are the same as those provided for in the traditional model, except for certain requirements of the members of the Board itself. On the contrary, the control system is very different from the traditional model. This Anglo-Saxon model is by far the least widespread in our legal system.

The Audit Board

The Board of Statutory Auditors is the control body of joint-stock companies adopting the traditional system: it is entrusted with the task of controlling the company's administration and supervising compliance with the law and the Bylaws. The control activity of the statutory auditors concerns not only the feedback of purely formal data, but also the substance of the administration, without, however, being able to enter into the merits of the directors' management and their market assessments.

In companies adopting the dualistic system, the control on management and legality is carried out by the Supervisory Board, which also has some of the main responsibilities of the ordinary shareholders' meeting (appointment of management directors, exercise of the related liability action and approval of the financial statements).

In the companies that have elected the one-tier system, in fact, the control is carried out by a special management control committee elected within the board of directors, which is also responsible for the appointment, revocation and replacement and therefore has additional powers with respect to the traditional model.

The Shareholders' Meeting

The Shareholders' Meeting, which is composed of the shareholders, has no administrative tasks, but must convene at least once a year to approve the financial statements. The shareholders' meeting is also convened by the directors to take important decisions, for example to amend the Bylaws or to increase the share capital, and the relevant resolution must be recorded in the minutes by a notary public, who requests its registration in the Company Register at the Chamber of Commerce of the place where the company has its registered office. The Company Register office, having verified the formal regularity of the documentation, enters the resolution in the register. If the notary considers that the conditions laid down by law have not been met, it notifies the directors who may appeal to the court to have the resolution entered in the Company Register.


The company is dissolved in advance by a resolution of the shareholders' meeting minuted by the notary public or when one of the causes for dissolution indicated by law occurs, such as the expiry of the term, the achievement of the corporate purpose or the impossibility of achieving it, the impossibility of operation or the continued inactivity of the shareholders' meeting, the reduction of the share capital below the legal minimum.

The dissolution shall take effect on the day on which the declaration of assessment made by the administrative body or the shareholders' resolution in the event of voluntary dissolution is entered in the Companies' Register.

A liquidator (usually a previous administrator of the company or an expert in administration and accounting) must be appointed to deal with the settlement of debts, receivables and all outstanding accounts. The liquidator will then directly request the cancellation of the company from the Commercial Register (without any further notarial deed).

It is permissible to revoke the liquidation status to be adopted with the majorities required for the amendment of the memorandum of association or the articles of association, if the cause for dissolution has to be removed.


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