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Introduction Italy Company Formation
Italy Company Formation Incorporation Of An S.R.L. Società A Responsabilità Limitada
Italy is strategically located at the centre of Europe and has a long tradition of trading profiting of its market economy, and of its skilled workforce. Italians have a particular gift for design and this talent is applied to produce items of everyday life. In addition they have a special ability in mechanics and in solving new problems. As a founding member of the European Union, based on the free movement of goods, workers, services and capital, Italy offers access to a wider market of approximately 500 million consumers.
The structure of business, which welcomes foreign investments, has produced encouraging results in the last decade. Furthermore, the present government policy which favours privatization of state-owned enterprises, offers foreign investors the opportunity of setting up a business in Italy through the acquisition of privatized enterprises. The reduction of state intervention compounded by privatization offers foreign investors some attractive opportunities of setting up business in Italy.
The Legal System
The sources of law and the principles of the legislative process are enshrined in the Constitution. The law is consolidated in four main Codes: the Civil Code, the Code of Civil Procedure, the Criminal Code and the Code of Criminal Procedure.
In addition to the Civil Code, there are special Acts regulating business and commerce: the Bankruptcy Act, the Banking Acts, the Trademark Act, the Patent Act, the Copyright Act, the Anti-Trust Act, etc. Some provisions relating to business activity are also laid down in ministerial decrees.
Foreign investors must be aware of the applicable EU Laws.
Incorporation Of Limited Liability Company In Italy
The company law in Italy is governed by Art. 2472 ff. and Art. 2325 ff. of Codice Civile. In general terms Italian Law prescribes two forms of companies having limited liability: (i) limited liability company or S.r.l., which stands for (società responsabilità limitata); and (ii) joint stock company or S.p.A. (società per azioni).
Nature Of Company
Both S.p.A. and S.r.l. are limited liability companies, but only in the case of joint stock company the share capital is divided into shares, which are embodied in stock certificates. In case of S.r.l. the capital is divided into "quotas", which are only recorded in the 'quota-holders' book. Naturally, quotas are also transferable by means of appropriate instruments to be recorded in the 'quota-holders' book.
Most of the regulations concerning the incorporation and management of an S.p.A. also apply to an S.r.l. In fact, although there are certain regulations, which apply specifically to the latter, broadly speaking, an S.p.A or an S.r.l can be both used to serve as a company having limited liability in Italy.
Each of S.r.l and S.p.A may be converted into the other type of company by resolution of a special quota/shareholders' meeting.
Requirements For The Incorporation Of A Limited Liability Company
The following are required for the purpose of incorporation of a Limited Liability Company:
1. It may be owned by one or more shareholders.
2. The minimum capital required for a Srl is of Euro 10,000.
3. The shareholders' contributions must be in cash, unless the deed of incorporation provides otherwise. Any type of asset which can be economically evaluated can be the object of a contribution. If a contribution is in kind, or consists of a credit, a report of an expert must be submitted. A contribution can also consist of an insurance policy or a bank guarantee.
4. The deed of incorporation must be made before a public notary. The Italian Civil Code provides a list of all the information, which must be embodied in the deed of incorporation, to which the by-laws of the company shall be joined.
Procedure For Incorporation Of Limited Liability Company (S.R.L)
For incorporating a new S.r.l. each quota-holder may appoint attorneys-in-fact in order to be represented. Such powers of attorney must be signed before a Notary, whose signature, in case of a foreign Notary, must be legalized with Apostil. It is possible to incorporate a S.r.l. with a sole quota-holder. In such case, if the company is insolvent the sole quota-holder shall be responsible for all liabilities of the company.
Name Of The Company
To incorporate a Limited liability company one need to apply for a suitable name for the company. There is no fees require to avail a name; but one needs to submit company form prescribed by the registry of company.
Deed Of Incorporation
The Deed of Incorporation of an S.r.l. consists of a Certificate of Incorporation and By-Laws. In the said documents at least the following details must be provided:
1. All data identifying each quota-holder and the part of capital subscribed by each of them;
2. The name of the company and the address of the legal office;
3. A complete description of the purposes of the company;
4. The corporate capital;
5. Name of those who have the power to represent the company and those who have to audit it;
6. The minimum capital requirement for a S.r.l. is €10,000 (ten thousand Euro)
Italian law requires that at least 25% (twenty-five per cent) of the subscribed capital be deposited with a Bank in Italy before the Deed of Incorporation is executed. However, in the case of a sole quota-holder, Italian law requires that the entire capital be fully paid-in at the time of the incorporation. The Bank will issue a certificate as to the deposit to be attached to the Deed of Incorporation. In order to avoid possible problems, in the event of non-resident quota-holders, capital should be remitted from abroad and negotiated approximately one week before the date of incorporation.
Registration with the Register of Companies is done by a Notary, who files the incorporation deed with the Register of Companies. Once the Company is registered with the Register of Companies it acquires its legal status according to Art. 2331 of the Italian Civil Code. If any transactions are carried out in the name and on behalf of the company prior to its registration, those who have so acted are unlimitedly, jointly and severally responsible.
Indeed, to effect the public registration of the S.r.l. in the Register of Companies, each director (or the sole director) must sign a Chamber of Commerce form, which should be deposited within 30 (thirty) days of the date the Notary signs the incorporation deed of the new company.
In general, both the foreign quota-holders and their legal representatives shall elect tax domicile in Italy and shall apply for a fiscal code in Italy (codice fiscale). The fiscal code in Italy functions in many respects as an ID Number of a Social Security Number.
Srl must be incorporated by means of a Notary deed: the Quota-holders shall sign personally or through a proxy the deed of incorporation before a Notary public.
The deed of incorporation will provide for the following information:
(i) the full data of each quota-holder/s;
(ii) the name of the company;
(iii) the corporate purpose of the company;
(iv) the corporate capital subscribed and paid-in by the quota-holder/s that may also contribute with receivables or other goods;
(v) the rules according to which the company shall operate;
(vi) the name of the directors which are entrusted with the management of the company and of the Board of statutory auditors, if applicable.
The initial corporate capital cannot be lower than Euro 10,000.00 (ten thousand).
25% of the corporate capital must be paid-in and deposited in a non-interest bearing account with a commercial bank in Italy prior to the incorporation. This cash deposit will be returned to the company after registration with the relevant Companies' Register.
However, should the company be incorporated by a sole quota-holder, the entire corporate capital should fully paid-in at the date of the deed of incorporation.
After the deed of incorporation is executed before a Notary public, the company must be registered with the Companies' Register where the registered office is located.
(C) Time To Incorporate
The average time required to complete the procedure (execution of the deed of incorporation, filing and registration with registration with the Companies Register) is 10 working days from the moment in which we receive the necessary information/documents.
(D) Summary Of Steps
The steps to be taken in connection with the corporate actions necessary for the incorporation of a new company are as follows:
Draft deed of incorporation; in this connection we have to be provided with the necessary information as above mentioned under A) and the relevant special power of attorney issued from each of the quota-holder(s) in case such an activity is carried out by lawyers from our firm in the name and on behalf of each quota-holder(s) and not directly by the respective legal representative of the quota-holder(s);
Deposit of the 25% of the corporate capital (or 100% in case of a sole quota-holder) in a bank account, net of bank charges;
Execution of the deed of incorporation before the Notary Public;
Request of the Italian tax code number of the new Quoda-holder(s) and of its legal representatives;
Request of the Italian tax code number of the new Directors to be appointed, in case they are foreign citizens;
Request of V.A.T. number and tax code number of the new company;
Registration of new company with the relevant Companies' Register.