After the description of the different types of companies (I) and the analysis of the specific tax regime applicable to companies in Italy (II), we will discuss the current trends in company law (III).
THE DIFFERENT FORMS OF COMPANIES
The Italian Civil Code distinguishes between two groups of companies: on the one hand, partnerships with unlimited liability where the partners are generally directors and indefinitely liable for social debts (A); on the other hand, limited liability companies where the administrators can be third parties and the partners answer for the debts of the company on their patrimony (B). A third category entitled “Other companies” (C) groups together companies that are difficult to classify into the first two types.
A. Unlimited liability companies
1- The “societa simplice” or simple company
The simple partnership cannot have commercial activities . It is not subject to any formal requirement and can therefore be validly constituted even in the absence of a written contract. However, the latter is necessary as proof of the contribution of immovable property, real or personal rights. In addition, the simple company does not have legal personality, although it has patrimonial autonomy .
According to the Italian Civil Code, all partners are directors . They can therefore commit the company without having previously sought the agreement of the other partners (separate administration). However, the Civil Code authorizes the establishment of a joint administration. In addition, certain nuances relating to the attribution of administrative power can be made by the partnership agreement.
In this case, the directors are appointed either by the partnership agreement or by a separate act concluded subsequently by the partners. The appointment and dismissal of a director requires the agreement of all the partners. However, in the event of a dismissal for just cause of a director, any partner has individual competence.
Unless otherwise agreed, each of the managing partners has the power to represent the company . This power extends to all acts which enter into the social object of the company. Consequently, each director is held responsible towards the company in the event of non-compliance with the obligations imposed by law or by the articles of association.
Likewise, unless otherwise agreed and brought to the attention of third parties, the partners are personally and jointly responsible for social obligations .
The distribution of profits and losses requires the individual agreement of each of the partners.
The “societa in nome collettivo” or general partnership (SNC)
The SNC is normally used for the exercise of a commercial activity . However, a different use is not excluded.
As in a simple partnership, the partners of an SNC are jointly and severally liable for the social debts , any agreement to the contrary being void.
The SNC is established by private deed or by notarial deed. The absence of writing does not however affect the existence of the company, since the writing is required for the purposes of registering the company in the enterprise register. In the absence of writing, the rules governing simple companies will be applied, except those relating to the liability of partners.
The autonomy of the patrimony is here more marked than in the case of a simple company, the personal creditor not being able to request the liquidation of the share of the partner if his patrimony turns out to be insufficient.
The rights and obligations of the partners are identical to those of the partners of simple companies. However, in SNCs there is a particular duty incumbent on the partners: the partner’s duty to collaborate, which, except with the consent of the other partners, prohibits the partners, on the one hand, from exercising in a personal capacity or in profit of a third party an activity concurrent with that of the company, and, on the other hand, to participate as a partner with unlimited liability in the activity of a competing company.
The provisions governing the administration of a general partnership are similar to those of simple partnerships. Nevertheless, administrators are required to keep the accounting records to which all entrepreneurs having a commercial activity are subject.
Limited liability companies
The joint stock company (SPA)
The joint stock company is the main form of capital company. It has legal personality and has full patrimonial autonomy, that is to say that the company is solely responsible for its patrimony. However, this principle is set aside on the assumption of a single shareholder structure. Shareholders’ equity interests are represented by shares .
The constitution is carried out by a public deed, the joint stock company being able to be constituted either by call for public savings, or by simultaneous creation. The minimum share capital required is 200 million lire.
If the operation to set up the company were to fail, the failure would be entirely the responsibility of the founders. They will be jointly and severally liable with regard to the company but also to third parties, a principle covering subscription, goods in kind and the veracity of the information.
The constituting act of the company must take, under penalty of nullity, the form of a notarial act. The corporate purpose, the nature of the activity, the amount of capital subscribed and paid up, the nominal value, the number of shares subscribed by each partner, their capacity (registered or bearer) must be indicated therein.
b) Method of administration
The bodies of the joint stock company are made up of the assembly, the directors and the college of auditors.
-The assembly, as the deliberative body, decides on the essential questions of the life of the company. As in French law, Italian law distinguishes between an ordinary meeting and an extraordinary meeting. The latter deliberates on the most important questions such as the modification of the constituting act or the issuance of bonds. Only shareholders, endorsees, partners holding limited voting shares, directors and auditors have the right to participate in meetings.
-The directors have the obligation to manage and administer the social aspect of the company. The directors are competent in all matters which are not assigned to the meeting. They are appointed by the ordinary meeting for a period of three years, excluding the first who are appointed by the subscribers.
-The board of directors is the executive power of the company. May be members of the board, shareholders but also third parties. Decisions are adopted by an absolute majority of the votes of the members present. The directors are responsible for any damage they have caused with regard to the company, the social creditors or each partner.
– Finally, the statutory auditors are responsible for monitoring the activity of directors and partners. They control the conformity with the law and with the constitutive act of the decisions taken. Likewise, they check the management and accounting of the company.
Joint-stock companies can place bonds on the financial market but cannot issue bearer or registered bonds for an amount greater than the capital. In addition, they can also issue shares in the following forms: savings, profit sharing, employee and privileged shares.
The conditions for the dissolution and liquidation of joint stock companies are similar to those of other companies. There are however specific provisions, in the event of blocking or impossibility of functioning of the meeting or during the reduction of the capital if the amount falls below the legal minimum.
2- The private limited company (SRL)
The limited liability company appeared in 1942 in order to provide small and medium-sized enterprises with a legal framework to meet their specific requirements. However, this structure can also apply to larger companies. However, it cannot be applied to certain activities which are reserved only for joint-stock companies.
It emerges from article 2472 of the civil code that the limited liability company is held on its assets of social obligations. In addition, the company cannot have a capital of less than 20 million lire.
The SRL regime is flexible insofar as the articles of association of the company may derogate from legal regulations. The similarity with the joint-stock company is important so that the regulations governing joint-stock companies apply by analogy to SRLs (especially for the acquisition of legal personality) . However, the SRL has specific features compared to the Joint Stock Company.
Unlike joint-stock companies, in the event of constitution or capital increase whose threshold is less than ten billion lire, it is not necessary to make an administrative request.
The deed of incorporation must contain certain provisions: the quality of the partners, the name and address of the company’s registered office, the corporate purpose, the amount of capital subscribed and paid in, the amount of the contribution of each partner, the conditions for the distribution of profits, the provisions on directors, auditors and the duration of the company.
The number of company shares is indexed to that of the partners . They cannot take the form of shares or negotiable securities. In addition, shares are freely transferable but their transfer may be prohibited. The pre-emption and approval clauses are part of the specific provisions that can be incorporated into the statutory clauses.
Concerning the constitution of the SRL, exemptions have been introduced in relation to the regime of the Joint Stock Company. Thus, the convening of the SRL meeting is the sole responsibility of the directors. However, in two cases this power belongs to the auditors – when the directors cannot do so – or to the president of the tribunal – when the auditors and directors have failed to call the shareholders’ meeting.
The rules for directors of SRLs are again similar to those for corporations. However, in case of silence of the constitutive act, the administration of the company falls under the competence of one or more partners.
In the event that there is a legislative or statutory void, the partners will have the obligation to ensure the proper management of the company on an individual basis. However, the production of accounting documents will be excluded from their area of competence.
1- Limited partnerships
Limited partnerships constitute an intermediate category which brings together characteristics of partnerships and capital companies.
There are two types of limited partnerships: the limited partnership which is a partnership and the limited partnership with shares which is a corporation.
The common characteristic of both types of companies is the existence of two categories of partners: general partners and limited partners. General partners, whose situation is comparable to that of partners in general partnerships, are jointly and severally liable for corporate debts. They alone can be administrators . Limited partners are only liable for the debts of the company up to the limit of their contributions.
* The limited partnership : the general partners have the same rights and obligations as those of the partners of general partnerships. Limited partners do not have the power to take administrative acts, and are not authorized to negotiate or carry out business with third parties on behalf of the company. In the event of non-compliance with this rule, the limited partner would incur unlimited and joint and several liability, and could be excluded from the company.
* The limited partnership by shares : the regime of the Limited Partnership by Shares is similar to that of the Joint Stock Company. Article 2264 of the Italian Civil Code provides that the rules applicable to the latter also govern the Partnership Limited by Shares to the extent of their compatibility.
2- The cooperative society 
This company has mainly developed in Italy in areas such as production, distribution, construction, credit and insurance. The mutualist vocation of the cooperative society consists in the supply of goods or services directly to the partners at conditions more advantageous than those of the market. Since a 1998 law, cooperative societies can only be formed by 2 partners (previously a minimum number of 9 was required). No minimum capital is required. Regarding liability, cooperative societies are divided into three types: cooperatives with limited liability, cooperatives with limited subsidiary liability, cooperatives with unlimited liability.
Italian corporate tax is broken down into three types of tax : corporate tax (A), municipal income tax (B) and property tax (C). It should be emphasized that companies are not subject to business tax, this statement has been tempered since the introduction of a municipal tax for the exercise of an activity.
Corporate tax (IRPEG)
Corporate tax is based on four distinct foundations:
– First of all, due to their form , limited liability companies will be subject to limited liability.
– Then, public or private structures whose activity is commercial will be imposed on the basis of their social purpose .
– In addition, because of their activity , all legal structures having a commercial activity on an occasional basis will be subject to corporation tax.
– Finally, partnerships and capital companies as well as companies with or without legal personality will be taxable because of their residence outside Italy .
Companies domiciled in Italy are subject to tax on profits of Italian origin as well as those made by their foreign branches.
However, they benefit from a derogatory regime called “right to direct and indirect credit” for foreign taxes. This last provision, which is based on the principle of distribution of dividends by foreign subsidiaries, must be considered as a foreign tax whose deduction is made at source on the amount of the distribution.
In addition, they have the possibility of deducting their losses of foreign origin as provided by the law of March 3, 1984 authorizing Italian companies associated with a foreign company within the framework of a contract of association to deduct their losses. The provisions of the contract must however comply with articles 2549 et seq. Of the Civil Code.
For dividends of Community origin, Italy has incorporated Directive EC n ° 90/435 concerning the tax regime applicable to intra-Community distributions of dividends by subsidiaries to their parent companies. According to this directive, any dividend paid by a subsidiary located in the European Union to the Italian parent company will be taxed at
Local income tax (ILOR)
There are no exceptions since all companies are subject to local income tax. It should be noted that only profits of Italian origin will be taxed, a rule that does not cover dividends received from foreign subsidiaries. In addition, in order to encourage companies to set up in the Mezzogiorno (Southern Italy) , the Italian State has decided to grant an exemption for a period of ten years on the condition of satisfying certain conditions.
The fundamental principle of ILOR is the territory since it only applies to income of Italian origin. However, are also subject to ILOR the profits derived from commercial or non-commercial activities carried out by Italian residents and whose place of realization is outside Italy under the express condition of not having a business there. stable establishment.
However, various incomes are not taxable such as, among others, salary and similar income, dividends, royalties paid to non-residents, income from small businesses.
Other local taxes
In addition to ILOR, there is also a municipal tax for the exercise of an activity (ICIAP ) to which natural persons, companies and organizations developing a business or professional activity on the territory of the municipality are subject. It can be compared to the French professional tax. This tax is paid to the municipality where the “production facilities” are installed. There are also municipal tax on buildings (ICI ) which is due since 1 st January 1993 by the companies at the rate of 7.5 per 1000 of their net worth recorded in the financial year balance sheet.
III. CURRENT TRENDS IN ITALIAN CORPORATE LAW
Until the legislative decree of March 3, 1993, art. 3 (art 2475 al. 3 of the Italian Civil Code), transposing into Italian law the Community directive allowing the constitution of a company by a unilateral act, the traditional doctrine considered the company as a contract, concluded by a plurality of partners.
With regard to the law applicable to companies, the reform of private international law, art. 25 al. 1 confirmed the application of Italian law to any company incorporated in Italy, although the partners and the main activity are abroad. Italian law is also applicable when the company has been incorporated abroad but has its registered office or main activity.
We are witnessing a strengthening of the regulation of listed companies.
On 1 st July 1998 came into force the new Italian rules on takeovers and the Stock Exchange (Legislative Decree No. 58 of 24 February 1998). It brings together and amends various texts including the law of 1974 which created the Consob (National Commission for Companies and the Stock Exchange), the texts of 1991 and 1994 on insider trading as well as the law of 1996 which transposed the Investment Services Directive (DSI) in Italian law.
-The new text requires any entity that holds more than 30% of the shares of a listed company to launch a takeover bid on the entire capital . In addition, the same text introduces the concept of preventive takeover bid. In fact, any entity whose participation in a listed company reaches 20% must launch a takeover bid for 60% of the capital.
-The new regulations also cover cross-shareholdings . From now on, the latter cannot exceed the threshold of 2% of the capital. However, the legislative decree introduces the possibility for shareholders to raise this threshold to 5% to counter any hostile shareholdings.
Finally, as regards the control bodies , the distribution of powers has been changed. Previously, banks reported to the Bank of Italy, listed companies and financial intermediaries to Consob , and insurance companies to a specific body. Today, the distribution of competences is as follows: the Consob controls “behavior” and “transparency” while the Bank of Italy monitors “stability”.
The Mirone Commission is currently studying a project for a complete reform of capital companies, in line with the general trend of adapting company law to corporate governance . The first part of it was published by the press (Sole 24 of February 16, 2000.) According to the Ministry of Justice a legislative decree could be adopted before the end of the year.
Art. 1 specifies the general principles that the reform must take into account:
– simplify the rules taking into account the requirements of businesses and the competitive market;
– broaden the areas of statutory autonomy, while considering the different interests at stake;
– regulate groups of companies on the basis of principles of transparency and taking into account all the interests concerned;
– specify the conditions for submitting to bankruptcy proceedings and their coordination with the regulations governing partnerships.
One-off provisions target the different types of companies, cases of mergers and demergers, criminal regulations relating to commercial companies, mergers and acquisitions.
There is also provision for the creation within the Courts of Appeal of sections specializing in the treatment of economic disputes, namely: members, banking as well as in the field of competition, patents and bankruptcy proceedings.