Italy: Company formations procedure
Article

Italy: Company formations procedure

29 April 2013

International corporations from all over the world use Italian corporate entities for their subsidiaries operating in Italy.

Italian Limited Liability Companies are commonly used as SPVs in transactions of different natures, ranging from real estate projects to merger and acquisition (M&A) and restructuring.

In Italy, there are different types of corporate entities that may be incorporated depending on the size and features of the business intended to be carried out as well as the wishes of the participants in relation to their personal liability for the obligations of the company and the mechanics for the management thereof.

The two most popular forms of corporate bodies are:

a) "Societe per Azioni" (SpA) - Joint Stock Company (equivalent to a plc in the UK)

b) "Societe a responsabilita limitata" (SRL) - Limited Liability Company

Provided that it is a common intention of the majority of the entrepreneurs to operate using a limited liability corporate entity, a SpA is usually more appropriate for a medium to large business venture that typically provides for a large number of participants and needs rigid and comprehensive organisational structure and regulation. An SRL would be used for small to medium-sized businesses.

The incorporation of an SRL in Italy involves a relatively straightforward process, it is quite inexpensive (the minimum share capital is 10,000, out of which only the 25% has to be paid up front and may be returned to the company once incorporated) and the participants may benefit from a flexible organisational structure to be shaped depending on their own needs. Also, the Italian law does not require for the SRL to comply with administrative activities and procedure to be carried out periodically (other than the submission of the Balance Sheet and Profit and Loss report).

The main steps involved in a company formation process in Italy involve:

  • Obtaining the Italian fiscal code of the participants
  • Payment of the prescribed share capital from a temporary bank account
  • Drafting the relevant corporate documents (Articles of Association and By-Laws)
  • Completion of the incorporation process before an Italian Notary Public
  • Application for the company's IVA number (equivalent to English VAT)
  • Registration of the deed of incorporation at the competent Italian Registry of the Entrepreneurs.

The timeframe likely to be involved for the incorporation of an SRL. - starting from the registration in the Public Registry of Entrepreneurs when the company will be 100% operative - is three to four weeks. The incorporation process of an SpA is likely to involve a little more than that.

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