a) Simple partnership (Società semplice, s.s. – Article 2251 et seq. Civil Code), which may not carry out business activities, thus this type is not discussed here;
b) General partnership (Società in nome collettivo, s.n.c. – Article 2291 et seq. Civil Code);
c) Limited partnership (Società in accomandita semplice, s.a.s. – Article 2313 et seq. Civil Code).
- Partnerships do not have legal personality;
- Partners have unlimited liability, with the exception of the limited partners of a limited partnership. However, creditors’ claims must be first enforced against the assets of the partnership before invoking the liability of the partners (Article 2304, Civil Code);
- A Partnership is created by a contract between two or more partners (Article 2247, Civil Code). Corporate entities may be partners of Italian Partnerships;
- No minimum capital is required and partners may contribute cash, assets or their personal services;
- In the case of Limited Liability Partnerships (iii), the general partners have unlimited liability, while the limited partners are liable only up to the amount of their contribution (Article 2313, Civil Code). The general partners are entrusted with the management of the company; limited partners may manage the partnership affairs only upon express specific instructions of the general partners (Article 2318 and 2319, Civil Code). If a limited partner engages in the management of the limited partnership, he has unlimited liability (Article 2320, Civil Code).
The Partnership agreement:
- Is drafted in the form of a public deed or a private deed with notarized signatures (Article 2295, Civil Code);
- Shall be filed with the Company Registry within 30 days of the signing;
- All partners are jointly and severally liable for obligations that arise before the partnership is registered, and each of them is assumed to have the authority to represent the partnership (Article 2297, Civil Code).
A Partnership is dissolved in any of the following cases (Article 2272, Civil Code):
- Unanimous decision of all the partners;
- Achievement of the business purpose of the partnership or impossibility of achieving it;
- Expiration of the duration of the partnership as determined in the partnership agreement;
- Reduction of the number of partners to only one for more than 6 months. In the case of Limited Partnerships, the rule applies if, for more than 6 months, there are only general partners or only limited partners; and
- Any other case provided in the partnership agreement.
- Once the partnership is dissolved, the partners may decide to avoid the process of liquidation and pay all the creditors directly. If the partners do not agree on the procedure to follow, the legal liquidation procedure begins.
a) Stock corporation (Società per azioni, S.p.A.);
b) Limited liability company (Società a responsabilità limitata, S.r.l.) and Simplified Limited Liability Company (Società a responsabilità limitata semplificata);
c) Partnership limited by shares (Società in accomandita per azioni, S.a.a.).
(iv) Stock corporation
- Is the typical form of business organization used for carrying on medium-sized and large businesses;
- Its main feature is the limited liability. The corporation’s assets represent the only security for the creditors and the shareholders have no personal liability;
- The shareholders’ meeting is either ordinary or extraordinary and their role depends on the corporate governance adopted;
- The management of the company is, in principle, entrusted to the directors (one or more – need not necessarily be shareholders).
Equity and stated capital
- Must have a statutory minimum capital of EUR 50,000 (Article 2327, Civil Code). Corporations operating in certain industries (e.g. banking and finance, insurance, etc.) may be subject to higher capital requirements;
- At least 25% of the subscribed stated capital must be paid when the corporation is incorporated. In the case of a Joint Stock Corporate founded by a single shareholder, the entire stated capital must be paid;
- A corporation may issue bonds (Obbligazioni) up to an amount not exceeding twice the sum of their stated capital, the legal reserve and other disposable reserves (Riserve disponibili) as they result from the latest approved financial statements, save exceptions for articular bonds.
Formation, Management and Liquidation
Please see Sections below 2, 3 and 4).
(v) Limited Liability Company
- Normally used for small to medium-sized businesses;
- Has legal personality and no liability of the members (participation holders);
- Provides for more flexibility and autonomy for its members than the joint-stock corporation does for its shareholders (many features, e.g. the governance system, may be regulated by the members with flexibility in the Articles of association and the By-Laws);
Finally, individuals may also form a Simplified Limited Liability Company which shall adopt standardized Articles of Association that follow a model approved by the Italian Ministry of Justice.
- Is not divided in shares, while each member holds a quota (unlike shares in a
Stock Corporation, quotas need not have equal value);
- The minimum statutory stated capital is EUR 1. However, if the limited liability
company is formed with a stated capital lower than EUR 10,000, the
contributions may only be made in cash and must be entirely paid in upon
- Shall set aside each year 20% of its profits to form and increase the legal
reserve until the aggregate amount of this reserve and the stated capital reach
EUR 10,000. Once reached, the company must set aside 5% of its yearly profits
to increase the reserve until its amount is equal to 20% of the stated capital;
- If the LLC is formed with a stated capital at least equal to EUR 10,000,
contributions in kind are also allowed and at least 25% of the cash contributions
must be paid in immediately upon formation. Company must set aside 5% of ist
yearly profits to form and increase the legal reserve until the amount of the
reserve is equal to 20% of the stated capital;
- The minimum statutory stated capital in EUR 1 also for a SLLC. Upon formation,
the capital must be lower than EUR 10,000. According to the National Board of
Notary Public, the formation (and increase) of the legal reserve of an SLLC is
subject to the same rules as the legal reserve of a normal LLC having a capital
lower than EUR 10,000. If, after the formation, a member transfers its quota to
a person other than an individual (e.g. a company) or the SLLC increases ist
capital to EUR 10,000 (or more), the company becomes an ordinary LLC;
- LLC can be formed by a single member (individual, company or other entity). In
this case the whole capital must be entirely paid in upon incorporation. In the
case of contributions in kind, members must appoint an appraiser. Contributions
in kind may also consist of the contribution of member’s personal Services
(Article 2464, Civil Code);
- If the articles of association so allow, a LLC may issue debt instruments, but
only regulated qualified investors may subscribe to them.
Formation, Management and Liquidation
Please see Sections below 2, 3 and 4).
d) Partnership limited by Shares
a) Is a legal entity which has two types of shareholder:
a. Limited shareholders, who are liable only up to the amount of their
b. Unlimited shareholders, who are unlimitedly liable. Unlimited shareholders
are also directors of the entity. The regime is largely based on the regime of
The more often used type of companies in the Italian corporate law practice is Limited Liability.
No longer requires a plurality of shareholders;
Procedures involve two steps, i.e. drafting of the Articles of Association and the registration of the corporation. No Court authorization is required;
May be incorporated either by direct incorporation or by public subscription. The latter is hardly ever used.
a. Formation by direct incorporation
i. Articles of incorporation must be drawn up in the form of a notarial deed.
ii. The By-Laws are part of the Articles of Incorporation (Article 2328, Civil
iii. A notary Public must file the Articles of Incorporation (including By-Laws)
with the Company Registry within 20 days of the execution, together with
the following attachments: (i) the receipt of the payment of the required
stated capital, (ii) any authorization by public authorities that may be
necessary for the business activity that the corporation intends to pursue,
and (iii) if there are contributions in kind, the appraisal of These
contributions by an independent expert appointed by the Court.
iv. The Corporation acquires legal personality and becomes a legal entity as
soon as the aforesaid documents are recorded in the Company Registry.
Incorporation of a LLC:
- Must be performed before a Notary Public and the Articles of Association must
be executed by a notarial deed;
- The procedure to set up the Company and the contents of the Articles of
Association and the By-Laws resemble, to some extent, those provided for SC,
except for certain simplifications;
- A Simplified LLC must have standardized (and simplified) articles of association
as defined by the ministry of Justice and, even they must be executed by
notarial deeds, no stamp duties or notary fees are due.
The founders may be individuals or legal entities, residents or non-residents, Italian or foreign nationals. No particular or special procedures are requested in case shareholders are foreign, non-resident companies or individuals.
What steps are required to appoint a new director and to modify the By-laws of a limited liability company and a stock company?
Appointing a new Director
- First Directors are appointed in the Articles of Incorporation. Afterwards, it is
the shareholders’ meeting that appoints the subsequent ones. In the dualistic
system, the Supervisory Board appoints the members of the Management
- Directors’ terms cannot exceed 3 fiscal years, but can be reappointed unless By
Laws provide otherwise.
- Directors must give notice of their appointment to the Company Registry within
30 days, also indicating who has the authority to represent the corporation.
Amendments to the By-Laws
- The extraordinary shareholders’ meeting decides on the amendments to the By-
- Directors call the shareholders’ meeting by a notice of call that must indicate
the date, time, place and agenda of the Meeting.
- Different quorums for the majority requirements apply depending on whether
the company is a LLC or a CS and, if it is a SC, whether it is an open Company
or a closed company and whether the same By-Laws provide otherwise.
- Notary Public, verbalized the amendment, provide for the registration in the
Company Registry within 30 days.
Under Italian Law, the power to act on behalf of the company granted to Directors in the By-Laws or in a resolution of appointment is general with respect to the purpose of the company. Powers can be otherwise limited provided by the By-Laws.
- Model of management and control/supervision is defined by members in the By-
Laws (Sole Director, Board of Directors, Several Directors with separate
- If there is only one member, a statement indicating this circumstance and the
identity of the member must be filed with the Company Registry (under Article
2462, Civil Code). Failure to do so within the prescribed term results in
unlimited liability of the single member with respect to all acts taking place
before the disclosure;
- Both the Internal Audit (Controllo di Gestione) and the Auditing of Accounts
(Revisione legale dei conti) are mandatory for a limited liability company
(Article 2477, Civil Code) if:
- It must draft consolidated financial statements;
- It controls an entity that is subject to mandatory auditing of its accounts
(e.g. a Joint Stock Corporation); or
- It has exceeded for two consecutive fiscal years two of the three following
thresholds: (a) EUR 4.4 million of total (gross) assets, (b) EUR 8.8 Million
of gross receipts or (c) an average of 50 employees during the year;
- Unless the By-Laws provide otherwise, both the internal audit and the audit of
the accounts are performed by only one individual auditor (or auditing company).
Governance may adopt any of the following three models:
- Traditional Model: the BOD (or the sole Director) is entrusted with the
management of the corporation.
- BOD may entrust some of its powers and tasks to an executive committee
(formed by only some directors) or to one or more executive directors but
not all tasks and power can be delegated.
- Monistic model: BOD includes an Internal Audit Committee formed by
independent directors who supervise the activity of the other directors (so
called,Comitato per il Controllo della Gestione). These independent members do
not have management powers; and
- Dualistic Model: the activities of the Directors are supervised by the Supervisory
Board (Consiglio di Sorveglianza) which has certain powers that are attributed to
the shareholders’ meeting under the Traditional Model.
Unless the By-Laws expressly opt for either the dualistic or the monistic model, the corporate governance follows the traditional model.
Liquidation is the procedure through which a corporation (i) pays all its liabilities, (ii) distributes any equity left to the shareholders and (iii) is dissolved.
- If Directors fail to act when a circumstance triggering the liquidation of the
company occurs, the liquidation may be mandated by court order (Article 2485,
- Unless the liquidators are already indicated in the articles of incorporation or in
the by-laws, they must be appointed by the extraordinary shareholders’
meeting. If the shareholders’ meeting fails to do so, the liquidators are
appointed by the court (Article 2487, Civil Code);
- Directors’ office ceases as soon as the appointment and the acceptance of the
liquidators are recorded in the Company Registry;
- Liquidators, together with the Directors, must prepare a statement of the
corporation’s assets and liabilities;
- No new agreements may be entered into by the liquidators, unless their purpose
is disposal of the corporation’s assets and the payment of the creditors;
- If the proceeds of the sale of the corporation’s assets are not sufficient to pay the
creditors, the liquidators must request the shareholders to pay in any unpaid
- If the liquidation is still underway when a fiscal year ends, the liquidators must
draft the annual financial Statements;
- Once the assets of the company have been liquidated, the liquidators draft the
financial statements of the liquidation as well as a proposed distribution plan
that indicates how the remaining assets will be allocated to the shareholders
(Article 2492, Civil Code);
- After the shareholders have approved the distribution plan and the assets have
been distributed accordingly, the liquidators file the request for deregistering the
company from the Company Registry.
The Liquidation of a LLC is regulated by the same provisions as a JSC.
This information was compiled by FINPRO Commercialisti & Avvocati Associati.