A joint-stock company must be set up through a public deed which must clearly indicate who the parties to the contract are. Such parties may be individuals but also legal entities (as for instance other joint-stock companies, partnerships, cooperatives or other bodies).
The Memorandum of Association must indicate the Municipality in which the company has its registered office, which is where it operates, and the name of the company which must contain the wording “"società per azioni" or "s.p.a.".
The Memorandum of Association must also indicate the corporate purpose that may consist in a commercial or agricultural activity carried out for making a profit, thus clearly ruling out that the company is not a charitable or cultural organization, nor an entity for the mere enjoyment of assets, in which cases the activity would come under the rules that govern associations and communities of interests.
The corporate purpose that is expressed in the Memorandum of Association of the joint-stock company must be clearly stated. Moreover, a joint-stock company must have an initial share capital whose minimum amount is established by law, namely a hundred-and-twenty thousand euros. The law envisages that for some companies the minimum share capital must be higher depending on the type of activity carried out (for instance in the case of stock-brokers, banks or lending institutions).
Another requirement for the Memorandum of Association is that it must indicate who the first directors must be, as well as the representatives of the company.
The Memorandum of Association can indicate a fixed or variable number of directors, in which case the Shareholders’ Meeting will have to decide how many members there should be on the Board of Directors, in accordance with the needs of the company.
The law requires that the duration of joint-stock companies be indicated. This time-frame can be extended before the expiry date by a decision taken at an extraordinary Shareholders’ Meeting; the company may also have an indeterminate duration, in which case all the shareholders can exercise the right of withdrawal.
The initial share capital is made up of the contributions made by the shareholders, as a rule, should be made in money, unless otherwise agreed in the Memorandum of Association. The corresponding shares must be fully released at the time of underwriting.
Unlike partnerships and limited liability companies, shareholders cannot contribute to a joint-stock company by putting in their work or their services.
Once the Memorandum of Association and the By-laws have been drawn up, the notary public must fulfil some obligations that are extremely important in order for the company to come into existence. Indeed a company with share capital comes into being only when the company is disclosed through a public notice and is registered with the Registry of Companies. The notary public will have to file the Memorandum of Association and all the other documents so that they may be registered.