From the historic and regulatory point of view, the joint-stock company is the prototype of the company with share capital whose body of rules apply to the limited partnerships with share capital (s.a.p.a.), with which it is compatible, and in some respects they are very close to the rules that govern the limited liability company, which however makes little reference to the rules on joint-stock companies, which consequently do not directly apply. The joint-stock company (s.p.a.) differs from these two types of company because of two specific elements, namely the limited liability of all the partners, which distinguishes it from the s.a.p.a. in which the members of the administrative body (unlimited partners) are liable jointly and unlimitedly for social security liabilities that came into being during the period in which they were in office, and the division of capital into shares, that distinguishes it from the limited liability company (s.r.l.), in which the quotas cannot be represented by shares.
In order to ensure better harmonisation with the law of the financial markets, the legislation currently in force makes a difference between the so-called open companies, that have recourse to the venture capital market (listed companies and companies with floating shares) and closed companies, that do not have recourse to venture capital. There is a major difference in the auditing of the accounting system:
- in closed companies the accounts can be audited by the board of statutory auditors instead of an external auditor or auditing firm; this can be decided in a clause in the company’s by-laws or by the shareholders’ meeting;
- in open companies the law envisages that the accounts must be audited by an external auditing firm.
Shares are participation quotas that can be freely transferred and are normally represented by documents that circulate under the rules that govern credit instruments: Joint-stock companies may issue shares but this is not essential because under the law, instead of actually issuing the shares, a joint-stock company can register them in the stock ledger. As regards listed companies, under the new law the shares can no longer be represented by paper documents, but by accounting records called “registered shares” of “dematerialized shares”.
As regards shares, the legislator has increased the scope of action of private individuals. The joint-stock company can therefore issue not only the usual types of shares bust also: shares carrying different rights, related also to the impact of losses; shares for workers as distribution of profits; shares carrying equity rights linked to the performance of the company in a given sector; shares without voting rights or with voting rights limited to some issues, or subject to given circumstances, or (for non-listed companies and without floating shares) with voting rights limited to a maximum amount or to tranches; enjoyment shares; redeemable shares. The joint-stock company may also issue, on given occasions, financial instruments endowed with specific equity or administrative rights.
The minimum starting capital of a joint-stock company must not be less than a hundred-and-twenty thousand euros (except for higher amounts required for some companies depending on their nature, size and impact that their business has on the market). The shareholder’s stock need not correspond to the assets contributed to the company: the shareholders may freely decide to “reward” another shareholder whom they deem to be of strategic importance or whose contribution was of fundamental importance.
In general for the joint-stock company, there are no other requirements considering the activity to be carried out (corporate purpose), other than a share capital of at least a hundred-and-twenty thousand euros, and that in the case of sole-proprietorships, a quarter of the contribution or the entire contribution must be paid up.
In the past it was normal practice to establish a joint-stock company with standardized by-laws, and with separate shareholders’ agreements and contracts for implementing the business plans. This must now change because the shareholders’ agreements can last five years at the most and, if the shareholders agree on a longer time horizon, the partner have the right of withdrawing simply by sending a notice. Partners who intend to establish sound agreements that are bound to last in time, have the sound option of having a notary public draw up the company’s by-laws tailored to their specific needs.
Seek the professional advice of your notary for any further details and to evaluate the limitations envisaged by the law on the establishment of a joint-stock company and on its corporate purposes so as to decide whether it is conducive to your type of business.