CHAPTER 1. AN INTRODUCTION TO ITALIAN COMPANY LAW.

Regulations governing limited liability companies in Italy are contained in the Italian Civil Code, from Article
2325 to Article 2506-quater.

1.1 A brief history of Italian Commercial Law.

The Italian Civil Code dates back to 1942. It is broken down into six sections (known as ‘books’): the rst
regards individuals and families, the second successions, the third property, the fourth obligations (and
contracts in general), the fth work and the sixth the protection of rights. The fth book therefore contains
the basic rules governing enterprises and companies.

The 1974 reform focused on the regulation of the stock market, establishing the CONSOB (Italian National
Commission for Companies and the Stock Exchange), the aim of which was to guarantee the completeness
and veracity of company information, and introducing the requirement to have an independent audit rm
certify nancial statements.

In the subsequent reform in 1998, the Italian legislator instead focused on the important role played by
professional operators and institutional investors, both Italian and foreign; despite holding minority stakes,
these operators were able to use their expertise to be active minority shareholders in listed companies.

Lastly, in the 2003 reform, the legislator granted more autonomy to the articles of association of limited
liability companies, thereby allowing them to grow and become more competitive internationally.

1.2 The Italian system and types of company.

Types of company
- Ordinary partnership (Società semplice)

Partnerships
- General partnership (Società in nome collectivo)

(Società di persone) - Limited partnership (Società in accomandita

semplice)
- Company limited by shares (SPA: Società per
azioni)

Limited liability companies

- Limited partnership with a share capital (SAPA:
(Società di capitali) Società in accomandita per azioni)

- Company limited by quotas (SRL: Societ+a a

responsabilità limitata)

- Ordinary partnerships: Non-commercial activities).

- General partnerships: Commercial and non-commercial activities, characterised by the fact that all
partners have unlimited liability for the partnership’s obligations.

- Limited partnerships: Commercial and non-commercial activities, characterised by the fact that there are
two partner categories: partners belonging to the rst category have unlimited liability for the
partnership’s obligations, while those belonging to the second category – who may not be directors –
only have liability for the capital they have contributed.

In addition to these types of company, there are also cooperatives, mutual companies and also European
public limited companies (generally speaking, these types of company are not able to meet the needs of
investors in Italy).

Entrepreneurs wishing to open a company in Italy must therefore choose from one of the types of company
provided for by law, as atypical companies are not allowed. Leaving ordinary partnerships to one side, as
these cannot carry out commercial activities, there are theoretically ve types of company left to choose
from; however, if we remove those entailing unlimited liability for all or some of the partners (thereby getting
rid of the remaining two types of partnerships and the limited partnership with a share capital), we are left
with two options: an SPA or an SRL.

There are also special laws in place for speci c categories of commercial enterprises (banks, insurance
companies, sports enterprises, asset management companies, brokers, etc.), which impose further
restrictions. For each type of company, the Italian Civil Code sets forth a number of regulations that apply,
although the shareholders/quotaholders may also decide on additional requirements; these constitute the
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 legal framework of reference. However, for each type of company, the Italian Civil Code also allows for a
number of derogations and amendments, which may be implemented in order to de ne each company’s
organisational structure in the best way possible. The regulations governing these two groups of companies
(partnerships and limited liability companies) de ne the rst type of company in each group in full (i.e.,
ordinary partnerships and companies limited by shares); for the second type of company in each group, on
the other hand, only the aspects that distinguish them from the rst type are covered. Lastly, regulations for
the third type of company in each group are de ned on the basis of what makes these companies di er
from the second type, forming a kind of ‘concentric circle’ structure. A similar approach was used for
limited liability companies. The basic rules governing SPAs formed the basis and the model for SAPAs and,
later, for SRLs. This is why there are still many articles that refer back to the previous framework, which can
be inconvenient and somewhat di cult to understand for readers. Lastly, it is also important to bear in mind
that the 2003 reform altered the regulations governing SRLs so dramatically that many legal theorists deem
them to now represent a second corporate model, separate from the SPA model.

1.3 The key role played by entrepeneurs.

‘Entrepreneurs’ applies to all entrepreneurs (regardless of whether or not they carry out commercial
activities) and, therefore, also to companies. These regulations are made up of: business rules (mainly rules
regarding business transfers); rules regarding distinguishing features (company name, trademark and
signage) and, lastly, competition rules.

‘Enterprises’ set of regulations only applies to entrepreneurs that carry out ‘commercial activities’ (and
therefore companies). These regulations govern: registration with the Companies Register, the obligation to
keep accounting records, commercial representation and, lastly, bankruptcy.

1.4 Companies register.

Italy’s Companies Register was founded in 1993 and is held by the Chamber of Commerce in each
province, managed entirely online. The purpose of the Companies Register is to provide easy access to
accurate and incontestable information about the enrolled companies.

Companies are legally obliged to record a number of documents and information. Only legally required
information may be recorded. Information is recorded in the Companies Register in the Italian province
where the company has its registered o ce (or where a foreign company has its secondary o ces in Italy).
In order to make it easier for third parties to search for information, each company is obliged to indicate the
speci c Companies Register with which it is enrolled in all of its documentation and correspondence.

The company submits a request for initial registration (this is usually done by the notary who draws up the
company’s instrument of incorporation), although companies may also be registered by the competent
judge with no need for a request from the company. In fact, all Chamber of commerce activities are carried
out under the supervision of a judge (who is appointed by the president of the court in the capital of the
relative province).

The Companies Register has an ordinary section and a number of special sections.

The ordinary section records the information required for companies. There are seven special sections,
regarding: 1 agricultural entrepreneurs; 2 professional organisations; 3 entities that carry out management
and coordination activities; 4 social enterprises; 5 company documentation in a foreign language (where
limited liability companies may publish the translation of documentation that must be registered or led.
Publishing the documentation in the foreign language is optional and does not waive the obligation to
publish the documentation in Italian); 6 innovative start-ups and certi ed incubators; 7 innovative small and
medium-sized enterprises. Each department issues certi cates and copies of the documents stored in its
computer les, which it can send by mail and electronically.

One of the most signi cant aspects of the Companies Register regards the validity of the registered
documents. In this regard, it is important to distinguish between the registration of documents in the
ordinary section and in the special sections. Registering documents in the ordinary section may make them
valid for declaratory, constitutive or legal purposes. Generally speaking, registration is only valid for
declaratory purposes, i.e., the registered documents are valid for the disclosure of information and for the
relative facts to have e ect vis-à-vis third parties. Once registered, the information and documentation that
are required to be registered shall have e ect vis-à-vis any third party from the very moment they are
registered: this is referred to as immediate ‘positive validity’. For limited liability companies, information and
documentation shall only have e ect vis-à-vis third parties fteen days after they have been registered with
the Companies Register. Failure to register any information that is required to be registered means that said

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 information cannot have e ect vis-à-vis third parties (‘negative validity’). Entrepreneurs (companies) may
nonetheless prove that the third party in question was aware of the information (for example, because said
third party had been directly noti ed thereof via a letter or email).

Registering a document with the Companies Register may also make them valid for constitutive purposes, if
said registration is a prerequisite for the document to take e ect. If registration is required in order for a
document to take e ect, both between the parties and vis-à-vis third parties, then reference is made to full
constitutive e ectiveness; if, on the other hand, this is only required for a document to take e ect vis-à-vis
third parties, then reference is made to partial constitutive e ectiveness. Registration of the incorporation of
a limited liability company is an example of full constitutive e ectiveness: if the relative deed is not
registered, the company is not incorporated. Registration of a resolution to reduce the capital of a general
partnership (not elaborated on in this book), giving rise to the deadline for third parties to object, is an
example of partial constitutive e ectiveness: if the resolution is not registered, the reduction shall only have
e ect between the parties but not vis-à-vis third parties.

Lastly, registering documents may also make them valid for legal purposes if this is a prerequisite for certain
regulations to be applied (this only applies to partnerships and will therefore not be elaborated on in this
book). Registering documents in the special sections does not have any of these e ects, as this is simply
done for o cial record-keeping purposes. Registering information in the special sections does not mean
that said information shall have e ect vis-à-vis third parties; for this to happen, proof must always be
provided that the third party in question was actually aware of the information.

1.5 Organisational, administrative and accounting structures.

The general regulations applicable to entrepreneurs include an article that is also valid for companies, which
was recently amended by the ‘company crisis’ reform. This article refers to the obligation of entrepreneurs
(and companies) to ensure that a suitable organisational, administrative and accounting structure is in
place, taking into account the nature and size of the enterprise in question. This structure must be able to,
inter alia, promptly detect any early signs of a crisis and/or loss of business continuity in order to allow for
the measures provided for by Italian law to be implemented without delay, thereby overcoming the crisis
and restoring business continuity. This is a requirement of the new legislation, integrating Article 2086 of the
Italian Civil Code.

With regard to companies, Article 2086 is referred to by Article 2380-bis – Management of the company and
Article 2409-novies – Management board, thereby adding to the obligations of the administrative body.

1.6 Partnerships.

After setting forth the regulations governing individual entrepreneurs, the Italian Civil Code moves on to
de ne companies and provides the set of rules applicable to partnerships. The regulations governing
partnerships (where an economic activity is carried out) state that partners shall always have unlimited and
joint liability, which is why Italian entrepreneurs rarely opt for this type of enterprise and why foreign
entrepreneurs never do.

The Italian Civil Code de nes partnership agreements as follows: “Through a partnership agreement, two or
more people contribute goods or services in order to carry out an economic activity for the purpose of
sharing the relative pro ts”. This de nition is valid for all types of company, with the exception of the
requirement to have several partners, as this now only applies to partnerships. In fact, with regard to limited
liability companies, two EEC directives made it possible to incorporate single-member SPAs and SRLs.

1.8 Autonomy with regard to assets and legal personality.

Upon incorporation, each company has its own set of assets, normally created through the contributions
made by its shareholders/quotaholders/partners. These assets provide a guarantee that the company is
able to pay its debts and therefore represent the main guarantee for the company’s creditors. Partnerships
have no minimum capital requirements and do not need the equivalent of a share capital in order to be
established, considering that the partners’ unlimited and joint liability provides a su cient guarantee for
creditors; in this case, the partnership’s capital is therefore a secondary guarantee that does not necessarily
need to be approved.

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 A partnership’s assets are nonetheless separate from the partners’ own assets and, in fact, the
partnership’s assets are used to satisfy the enterprise’s creditors rst. This means that a partner’s personal
creditors cannot make any claim on the partnership’s assets (at the most, it may exercise protective rights
over the stake held by the partner in question).

In the case of a limited liability company, on the other hand, the company’s assets are completely
autonomous with respect to the assets of its shareholders/quotaholders, creating a new legal entity – a
legal person – that is separate from its shareholders/quotaholders. In fact, it is said that the company’s
assets have ‘perfect autonomy’. Under no circumstances may a company’s creditors claim anything from
the shareholders/quotaholders personally. The shareholders/quotaholders may never be liable for the
company’s obligations, only being responsible for the capital that they have contributed (or pledged, if the
relative contributions have not yet been made); the share/quota capital therefore represents the only
guarantee for the company’s creditors.

1.9 The ‘Gazzetta U ciale’.

Historically, the Gazzetta U ciale della Repubblica Italiana (O cial Journal of the Italian Republic) derives
from the Gazzetta Piemontese, which was the o cial journal of the Kingdom of Sardinia.

The Gazzetta U ciale della Repubblica Italiana is the o cial means to disclose the regulations in force in
Italy. It discloses, provides information on and formalises legislative texts and public and private deeds of
which all citizens must be made aware in a certain way (for example, please refer to the provisions of Art.
2366 of the Italian Civil Code regarding how to call shareholders’ meetings in SPAs). Laws approved by
Italy’s two chambers of parliament and signed by the President of the Republic are published in the
Gazzetta U ciale and come into force on the fteenth day thereafter. On 1 January 2013, in accordance
with the Italian Ministry of Justice and with the support of the ‘Istituto Poligra co e Zecca dello Stato’, the
Italian Ministry of Economy and Finance began making the various releases of the Gazzetta U ciale
available in digital format, free of charge.

1.10 The Consob.

The CONSOB (Italian National Commission for Companies and the Stock Exchange) is a public body whose
role is to supervise the capital market; it was established by Italian Law no. 216 of 07/06/1974. CONSOB is
currently a legal entity governed by public law which is fully independent within the limits established by the
law. It is headquartered in Rome and also has operational o ces in Milan. T

he CONSOB’s duties have been gradually extended over time. It was established as a supervisory authority
for the stock exchange and for companies with shares listed on the stock exchange and has gradually
become a supervisory authority for the entire securities market, for those operating in it and for all
transactions that call upon the public to invest by issuing and distributing nancial instruments on regulated
markets.

The CONSOB plays a key role in ensuring that information on the securities market is adequate and truthful,
in order to allow investors to make better informed choices.

1.11 Borsa Italiana S.P.A.

Borsa Italiana (the Italian Stock Exchange) was established in 1998 when the stock markets were privatised
in the form of an SPA, owned by Italy’s main banks. In 2007, it became part of the London Stock Exchange
Group. In October 2020, it was sold to Euronext N.V. (short for European New Exchange Technology), which
is the largest stock exchange in Europe, operating markets in Amsterdam, Brussels, Dublin, Lisbon,
London, Oslo, Paris and now Milan.

Borsa Italiana S.p.A. ensures fair trading, de nes the requirements and procedures for issuers to be
admitted and remain on the market, de nes the admission and operating requirements for brokers and
manages information about listed companies. It organises and manages the Italian market using a fully
electronic trading system to complete trades in real time. It also regulates and manages the markets.
Supervision, on the other hand, is carried out by the CONSOB and Banca d’Italia (Bank of Italy).

1.12 Companies that resort to the risk Capital Market.

Companies that resort to the risk capital market or open companies, are companies with shares that are
listed on regulated markets or that are widely-held among the public. These include companies with over
500 shareholders (other than the controlling shareholders) who together hold at least 5% of the share
capital, or companies that have issued bonds for a total value of at least Euro 5 million and with more than

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500 bondholders (for the precise de nition of the requirements to identify these companies, please refer to
the criteria established by the CONSOB under Article 2-bis of CONSOB regulation no. 11971/1999.

The reform of limited liability companies was also characterised by the fact that it provided a di erentiated
set of regulations of a more mandatory nature for all companies that resort to the risk capital market (see
Art. 2325-bis). The latter include listed companies (which are nonetheless subject to special regulations in
many respects) and companies with shares that are widely held among the public.

Based on Article 2325-bis of the Italian Civil Code, it is therefore possible to distinguish between:

- Llisted SPAs, which are rstly subject to the regulations dictated by Italian Legislative Decree no. 58/1998
(Italian Consolidated Law on Financial Intermediation, ‘TUF’) and, secondly, to the provisions of the Italian
Civil Code.

- SPAs with a widespread shareholder base, which are rstly subject to the provisions of the Italian Civil
Code with regard to companies, secondly, to the speci c provisions of the Italian Civil Code for
companies that resort to the risk capital market and, lastly, to Articles 114 and 115 of the TUF regarding
communications to the public and to the CONSOB (with the latter being in charge of supervising also this
type of company.

- So-called ‘closed’ SPAs, which do not resort to the risk capital market, and which are subject to the
provisions of the Italian Civil Code.

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