The limited liability company is intended for smaller companies than joint-stock companies, and the equity participation in the company has a personal connotation which is absent in the s.p.a. In fact, it has a limited number of shareholders who are not personally responsible for the social security liabilities, even if they have acted in the name and on behalf of the company.
The legislation in place as of 1 January 2004 has had a major impact on the limited liability company, which is an extremely flexible type of company, that the partners can shape to fully pursue their specific objectives.
Without prejudice to the rules that govern joint-stock companies that also apply to the limited liability company, especially with regard to establishment, amendment of the Memorandum of Association and ensuing public notice/disclosure, to which the reader is referred, there have been several major changes. For this type of company it is of crucial importance for the Memorandum of Association and the by-laws (that the legislator now calls “Company Operating Rules”) to be drawn up carefully with a view to streamlining activities and reducing management costs. The advice of a notary public is therefore of fundamental importance.
The procedure for establishing the company is mostly similar to the setting up of a joint-stock company, to which the reader is referred; also the monitoring and auditing activities and relevant obligations to be fulfilled are similar, in particular the depositing of the Memorandum of Association and the registration with the Register of Companies; only after registration with the Register of Companies can the limited liability company be considered to exist.
Unlike the joint-stock company, a minimum share capital of 10,000 euros is required, and unlike joint-stock companies there is great freedom in determining shareholders’ contributions, which can be made in kind – through one’s work or services – and in the form of any other type of asset that can be attributed an economic value; it is also possible to establish the quotas of participation in the company in a way which is not proportionate to the assets conferred. As soon as the implementing provisions have been adopted, payment in cash can be replaced by a simple guaranty. As for contributions in kind, it is no longer necessary for an expert estimator to be appointed by the Judicial Authority, but can be appointed by the parties from a list of experts that are officially registered. An expert opinion is deemed to be necessary also in the case in which the contribution consists in work or services. The issue of the shareholders’ financial contributions that are not assigned to the share capital is regulated in this way, at least to some extent.
The transfer of quotas can be restricted and even prohibited; but in this latter case, each partner may withdraw from the company and obtain reimbursement of his/her quota.
Extreme flexibility likewise marks the rules governing management: it will be possible, as in the past, to have a Sole Director or a Board of Directors (which can decide without complying with the ‘board method’ provided the bylaws envisage this and except for cases where a board decision is required by the law), but in addition now there are also forms of joint administration (under which the directors have to act jointly) or separate (under which each director can work on his/her own); mixed forms are envisaged for some acts and/or categories of acts, and separate for remaining acts. A partner may also be granted special administration rights ad personam, and in general special rights on the management of the company and on the distribution of profits.
As in the past, the Board of Statutory Auditors is obligatory only for limited liability companies of a certain size; the obligation is imposed on the basis of the amount of share capital and in certain circumstances it is established by the law. In such cases, unless otherwise agreed in the Memorandum of Association, the auditing of the accounts is carried out by the statutory auditors. For the cases in which it is compulsory to appoint an independent audit firm, seek the advice of your notary public.
Except for certain resolutions of particular importance, even the Meeting is no longer compulsory: the “Operating Rules” (By-laws) may envisage alternative decision-making methods, such as consultation or written consent.
And finally, the limited liability company may issue debt securities: these are comparable to bonds (which remain the prerogative of joint-stock companies and limited partnerships with share capital). However, unlike bonds, these securities may be underwritten only by professional investors.
This increased flexibility of the limited liability company model means that the “Operating Rules” (the by-laws), can be shaped to suit the specific requirements of the shareholders and be such as to regulate relations between them in a much more stable and legally binding way than could be done on the basis of separate agreements, the so-called shareholders’ agreements.
The ample room left by the legislator to individual autonomy in regulating this type of company is so wide that it is impossible here to exhaustively illustrate all the opportunities that are provided so as to meet the wide-ranging and varied needs of entrepreneurs.
Your notary public, who is an expert in this field, will give you the advice you need, bearing in mind that the discipline of the limited liability company is autonomous and contains references to the rules that govern joint-stock companies, on which there is debate especially as to whether they can be applied to limited liability companies, especially where the “Operating Rules” have a personal connotation.