Limited liability companies in Italy can now be set up with a corporate capital of 1 euro
15.11.2014 - In Italy the limited liability companies can be set
up in two main forms: the company limited by shares
("Società per azioni" –
"SpA") and the limited liability company
("Società a responsabilità limitata"
The main differences between the above mentioned companies are that the legal minimum corporate capital of a Società per azioni must be now equal to euro 50,000.00 (instead of euro 120,000.00 as in the past) and is divided into shares; while the legal minimum corporate capital of a Società a responsabilità limitata can be now equal to euro 1 (instead of euro 10,000.00 as in the past) and is divided into quotas in respect of which, unlike shares, certificates are not issued. In general terms, it can be said that the Società a responsabilità limitata is more flexible and subject to less administrative restrictions than the Società per azioni.
The following is a brief note on the new provisions of the Italian Civil Code on the minimum corporate capital for a limited liability company (Società a responsabilità limitata).
Starting from mid of 2013 (by law decree no. 76/2013, converted into law by law no. 99/2013), there is no longer the obligation for an ordinary limited liability company to have a minimum corporate capital of euro 10,000.00 (as in the past), as new Article 2463, 4° paragraph, of the Italian Civil Code allows the setting up of a limited liability company with a minimum corporate capital between 1 euro and 9,999.99.
Article 2463, 4° and 5° paragraph, state in fact that:
"the amount of the corporate capital can be established at an amount below euro 10,000.00, but at least higher than euro 1. In such a case the initial contribution shall be made in cash and shall be wholly paid in to the directors"
"an amount equal to at least 20% of the annual net profit shall be allocated as legal reserve until the latter will be equal, together with the corporate capital, to euro 10,000.00. The legal reserve shall be used to cover losses or attributed as capital and shall be reinstated if decreased for any reason"
Having said the above, it is clear that it is now allowed for a limited liability company to have a corporate capital between euro 1 and euro 9,999.99. In such a case, it is however required the following:
(i) any incorporation contribution shall be made only in cash and paid in whole at the incorporation date (irrespective of the number of shareholders);
(ii) an allocation of at least 20% of the annual net profit shall be made as legal reserve until the legal reserve will be equal, considering also the corporate capital, to euro 10,000.00. The law does not provide however for a deadline within which the company shall achieve the above euro 10,000.00 amount (considering, as said, legal reserve and corporate capital). A limited liability company with a corporate capital of euro 10,000.00 (or above) shall instead annually allocate as legal reserve an amount of 5% of the annual net profit until the legal reserve will be equal to 20% of corporate capital (as provided for Article 2430 of the Italian Civil Code).
Once the limited liability company with a corporate capital between euro 1 and 9,999.99 has achieved the above threshold of euro 10,000.00, it shall make the subsequent annual allocations in accordance with the ordinary procedure under the above Article 2430 of the Italian Civil Code.
(iii) as mentioned above, the legal reserve of a limited liability company with a corporate capital between euro 1 and 9,999.99 can be used not only to cover losses but also can be attributed as capital (for example in case of a gratuitous capital increase). According to Article 2430 of the Italian Civil Code, the legal reserve of a limited liability company with capital equal or above euro 10,000.00 can be instead only used to cover losses.
Except for the above special provisions, the legal discipline for a limited liability company with a corporate capital between euro 1 and 9,999.99 is the same of that provided for a limited liability company with a corporate capital equal or above euro 10,000.00.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.