STOCK COMPANIES & LIMITED LIABILITY COMPANIES
Stock Company (SpA)
The main feature of a public company is that the capital is divided into freely transferable and indivisible shares of equal value (the nominal value of each share corresponds to a fraction of the entire share capital), conferring equal rights, both administrative (e.g. voting rights) and economic (e.g. Right to a share of net profits). In addition to ordinary shares, the company’s articles of association may provide for particular classes of shares granting special rights, also in respect of losses.
If permitted by the company’s articles of association, the capital contribution may also be represented by assets (either tangible, including receivables, or intangible). Contributions in kind must be fully paid in at the time of subscription and the contributor must provide – in accordance with article 2343 of the Italian Civil Code – a sworn appraisal prepared by a court-appointed expert. In no event can the overall value of the contribution be less than the aggregate increase in share capital.
Shareholders of a SpA can be either natural or juridical persons, or Italian or foreign. At least one shareholders’ meeting must be held each year, to approve the company’s annual financial statements, no later than 120 days or, in exceptional circumstances, no later than 180 days after the close of the financial year.
Extraordinary shareholders’ meetings must be held to approve matters such as amendments to the articles of association, the winding-up of the company (including the appointment of liquidators, their substitution and their powers), and mergers or similar corporate reorganizations; whereas ordinary meetings approve matters connected with the ordinary course of the company’s business.
The management of the company is assigned to directors, who handle all matters and transactions necessary or advisable for the attainment of the corporate purpose.
The management may lie with a sole director or a board of directors; in the latter case, the number of directors is established by the articles of association. Their management powers involve a duty to take all necessary and appropriate steps to attain the corporate purpose, as well as to ensure compliance with the law, including the preparation of the draft annual financial statements.
SpAs must also appoint a board of statutory auditors (collegio sindacale), formed of three or five statutory auditors and two alternate auditors. The main duty of the board of statutory auditors – as set out in article 2403 of the Italian Civil Code – is to supervise compliance with the law and the articles of association.
They also have to verify that the company’s organization and administrative and accounting structures are adequate and work properly. Accounting controls are the responsibility of the board of statutory auditors or an audit firm.
Besides the governance system described above, two further systems are available for SpAs. In the first (so-called sistema monistico or one-tier model, taken from Anglo-Saxon culture), management and control lie with a board of directors and a committee appointed from amongst the members of the board itself. The management of the company is the exclusive responsibility of the board of directors, whilst the management control committee supervises the adequacy of the company’s organizational structure, internal control system and administrative and accounting system, as well as its capacity to represent the acts of management correctly.
The committee also performs any additional function assigned to it by the board of directors and, in particular, liaises with the auditors or board of statutory auditors with regard to controls on the accounts.
The second (so-called modello dualistic or two-tier model) provides for two corporate bodies: a management board and a supervisory board. The management of the company is entrusted exclusively to the management board, which must do everything necessary or advisable for the attainment of the corporate purpose.
The supervisory board is entrusted with the functions of the board of statutory auditors and with those functions reserved, in the traditional model, to the shareholders’ meeting.
Neither model includes a board of statutory auditors: accounting controls are carried out by an audit firm.