Limited Liability Companies (LLC) in Italy: Structure, Establishment, and Management, Guide, Progetti e Ricerche di Diritto Commerciale

Scarica Limited Liability Companies (LLC) in Italy: Structure, Establishment, and Management e più Guide, Progetti e Ricerche in PDF di Diritto Commerciale solo su Docsity! Limited-liability companies (LLC) in Italy A company, abbreviated as “co.”, in legal terms is a legal-entity formed by a group of individuals to engage in and operate a business - commercial or industrial – enterprise. A company may be organized in various ways for tax and financial liability purposes depending on the corporate law of its jurisdiction. A company can be composed of a single entity (“single-member company”) or of individuals that, in a company, are known as “partners” (natural or legal persons) gathered in a general partnership and the companies are subject to ordinary company law. There are two important sub-assemblies that grouping lucrative companies: partnership and corporation and of the latter companies are part the limited-liability companies that are its sub-category where the partners’ responsibility is limited. In Italian commercial law “Limited-liability companies” are governed by Articles 2462-2483 of the Civil Code; in the past they were governed also by a law similar to the public limited company but now, as a result of the limited-liability company reforms dating from 2003, LLC. enjoy of independent discipline. As a part of the reform of LLC there was: the recognition of the partners’ independent asset management and the strengthening of the value that each partner has within the company, in particular through the application of partnerships rules. Among the main features of limited-liability companies there are: - Complete financial autonomy: for the company’s obligations the company is liable with all its assets and therefore the company’s members are not liable with their assets even if they acting in the name and on behalf of the company. All the partners enjoy the benefits of limited liability and the company’s creditors cannot make demands on the company’s partner. The benefits of limited liability remain even if there is just one partner, with a few exceptions. The Italian legislator wanted to strengthen and to increase the partner’s participation in management of the company’s activity and for this reason he adopted an organizational model halfway between capital company organization model and partnerships model. Limited-liability companies are the corporate structure mostly used in Italian economic system and, unlike the public limited companies, LLC are used for small-scale investments even if to date they are used also for large investments. - Establishment of the limited-liability company Conditions for the establishment of a limited-liability company are set out in the Italian Civil Code and, in particular, in Article 2463 entitled “Incorporation”. The said article states that the limited liability company may be incorporated by contract (shareholders’ agreement) or by unilateral act. The second subparagraph of Article 2463 formalises form and content of instrument of incorporation: as regards form of the articles of association it must be established by public deed. The same Article lists the content of instrument of incorporation: - Each shareholder’s surname and name or corporate name, date and place of birth or State of incorporation, domicile or registered office, citizenship; -The corporate name containing the reference to limited liability company (srl); - The activity constituting the company’s purpose; - The amount of subscribed share capital, not lower than 100.000 euro, and the amount of share capital paid-in (in contrast to corporation where the amount of share capital is 120.000 euros); - The contribution of each shareholder and the assessed value of receivables and assets contributed in-kind; - The quota holding interest of each shareholder; - The rules governing the functioning of the company and the persons entrusted with the management of the company and any possible person in charge of accounting control. The discipline applicable to LLC was originally that applicable to joint-stock company but now, as part of the reform of limited-liability company, there are fewer limits and bans compared to joint-stock company especially with the initial capital. The articles of association may provide specific conditions for the exclusion of the partner. In this context the transfer of the shares merits attention. If the transfer happens for inter vivos act it must be written in a notarized private agreement or in an electronic documents signed using a visible Digital Signature. The notary has to deposit deed of transfer in register of companies within 30 days. The transfer of the shares is good and effective between the parties as a result of mere consent but it can have effects only from the date of submission of the deed of transfer. The purchase of own shares by limited-liability company is absolutely forbidden, it cannot accept his own shares as collateral and it cannot make loans or provide security with a view to the acquisition of its shares by a third party. The share can be subject to an uncontested expropriation exercise from shareholders’ creditors but whenever the share is not freely transferable the sale has not any practical effect if there is another buyers within 10 days and he offers the same price. The functioning of limited-liability company is based on many figures and each of them with a definite role inside the company and, one of this figures, is the quota holders. “Decisions of the quota holders” are covered by article 2479 of Civil Code. It states that the quota holders decide on: 1) approval of the financial statements and divided distribution; 2) the appointment of the directors (if it is provided for under the incorporation deed); 3) the appointment of the statutory auditors and of the president of the board of the statutory auditors or of the person entrusted with the statutory accounting audit; 4) the amendments of the articles of associations and 5) the decision to carry out operations that may imply a modification of the corporate purpose determined in the deed of incorporation. The first subparagraph of Article 2479 provides that the quota holders can decided on the subject matters reserved to their competence. Shareholders shall take a decision on question submitted to them by one or more directors or a number o quota holder representing at least one third of the corporate capital submit to their approval and sometimes the assembly- based decision is necessary and it is the articles of associations that determine the criteria and the ways to convene the assembly. Each shareholder has the right to intervene and the partners vote is proportional to the participation of the various parties concerned. The ordinary shareholders’ meetings are constituted by as much partners as the share capital but for some decisions is required an absolute majority. The universal meeting/assembly is expressly provided. Decisions that are not in line with law or articles of associations directors may be challenged by partners within 90 days from the entire in the decision register. Also decisions taken by the board of directors may be challenged by partners if there is a conflict of interest and if the same decision can cause a financial loss to the company. Administration and control of the company are entrusted to partner or partners that remain in office for an unlimited period except that the articles of associations require otherwise. If the administration is entrusted to more people they constitute the “Board of Directors” (BOD), they can work separately or together (it is provided for by articles of associations) and they generally have a power of representation of the company. The contracts concluded by directors may be cancelled on request of company or if the third know or known the existence of the conflict of interest. BOD is responsible for damage to resulting from failure to their duties. Shareholders that do not participate in administration of the company have the right to be informed about the course of business and they have the right to access the data directly, books and accounting entries included, so shareholders have sometimes supervisory powers even if they are not part of Board of Directors. The company’s directors must draw up the Balance Sheet. This set of documents deal with the financial position of Limited-liability company. The action of responsibility carried out by shareholders could determine the removal of the director/directors. The articles of association may provide for the appointment of “Board of Statutory Auditors”, it is an internal supervisory body. It is largely entrusted with the oversight of corporate management in order to ensure compliance with the law, memorandum and articles of association; compliance with the principles of sound administration, in particular the effectiveness of the organizational, administrative and accounting systems adopted by the Company, and its effective performance. The Board of Statutory Auditors or Sole Auditor therefore, supervises: the activities of the BoD, attending the board meetings; the activities of the shareholders’ meeting, attending the meetings with the power to challenge the resolutions adopted against the law or the articles of association. The Board of Statutory Auditors or Sole Auditor is appointed by the shareholders’ meeting. Among the peculiar features of the limited-liability companies’ rules we can highlight: - Share capital increase: the articles of association may assign the ability to increase the share capital to directors. It cannot be increase if the previous contributions have not been performed; - Reduction of the share capital: in case of reduction of the share capital caused by losses the lower limit for the share capital has to be 10.000 euros. Changes of participation shares of shareholders and of shareholders’ rights are excluded; - The winding up of the company: it is subject to the provisions set for all of limited companies and the winding up of the company is followed by the liquidation of the loan stock. Bibliography and sitography G. F. and M. Campobasso. Manuale di diritto commerciale; 7th edition; UTET Giuridica, 2017. «Società» (n.d.), retrived December 24, 2019 from https://it.wikipedia.org/wiki/Società_(diritto) «Setting up a company in Italy». (n.d.) from https://www.italiancompanyformations.com