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Limited Liability Companies in Italy
In Italy there are different types of companies. Hereafter we focus on the Limited Liability Company (the italian acronym is “S.r.l.”, Società a responsabilità limitata): this is a Corporation with a juridical personality, where the interests of the members (shareholders) are represented by shares. It may be even composed by a single shareholder.
The S.r.l. is mostly chosen by Italian entrepreneurs starting a new business, because the company has totally separate assets from those of the members, who therefore have the great advantage to limit their liability only to what they have contributed. In other words the company's creditors can satisfy their claims only within the limits of the assets of the company itself. If the assets prove not to be sufficient, the creditors are not allowed to attack the assets of the single members.
Until a few years ago, in Italy, there was only one type of S.r.l.: it had to be constituted with a minimum capital of € 10,000 and the 25% of this capital was necessarily to be contributed at the time the company was formed.
Recently some important reforms have been carried out, which led to the development of the so-called simplified S.r.l., beside the “ordinary” S.r.l.
The simplified S.r.l. (hereinafter "S.r.l.s.") has been attractive in the market from the very beginning as it allows people who have limited financial resources to start an entrepreneurial activity.
The S.r.l.s., specifically, is a company "with a reduced capital": the share capital can vary from a minimum of € 1 to a maximum of € 9,999.
If it is true that because of this reduced capital it is more difficult to face the start-up costs, the first business activities (rental of premises, purchase of materials, machinery etc.) and get funding, it is equally true that the S.r.l.s. represents a major opportunity for people who have a business project or a business idea that they feel successful, but have limited economic resources (a typical situation of young entrepreneurs).
Actually the opportunity to constitute a S.r.l.s. was initially attributed by the legislature only to people below 35 years.
Today there is no age limit for constituting a S.r.l.s., but this right is granted only to pysical persons and not to legal entities (unlike the ordinary S.r.l.), which shall pay the full amount of the capital chosen at the time of the subscription of the company.
Furthermore, the members of a S.r.l.s. can contribute only with money and not in kind, works or services, as is the the case for ordinary S.r.l.
Another important advantage of a S.r.l.s. is that neither tax charges, nor stamp duty, nor administration fees, nor notarial charges are due for its constitution, if it is in accordance with the standard model provided by the legislature.
Given all above, we believe that the S.r.l.s. is an interesting investment opportunity not only for italian entrepreneurs but also for those foreign entrepreneurs interested in starting a business activity abroad.
Anyone who wishes to receive more detailed information on the S.r.l.s. regulation can contact our firm, which is pleased to provide specific advice not only about the necessary fulfillments for the constitution of a company but also about further due operations related to accounting management, budget management and any other challenge that may arise during the ordinary company’s life.
Massimiliano Desalvi, partner of Interconsulting for more than 10 years, provides consulting and he is experienced in litigation in the areas of civil and commercial law, bankruptcy and insurance legislation.
He coordinates the team of lawyers and young professionals in order to meet and respond to the challenging client’s needs concerning legal matters or disputes.