General features of companies

A company has a life of its own which is independent from that of its partners: it will go on living even after its partners die or it can be dissolved and wound up even if its partners are alive.


Legal status

All companies have a legal status and as such they have assets that are distinct from those of the partners that constitute the company. They have a name, a registered office and, hence are legal entities that are quite distinct from the individuals making up the company.

They are non-personified collective subjects.

In some types of companies (partnerships) the assets of the company are not fully separate from the assets of the individual partners who, to different degrees, are liable for the debts of the company.

Other types of company (companies with share capital and cooperatives) instead, are recognized by the legal system as having a legal personality and their assets are perfectly distinct from those of  its shareholders  and hence, the latter are never liable for the debts of the company except for some cases envisaged by the law.

In short, the recognition of a legal personality sets the assets of the company apart from the assets of its partners and the partners’ assets are autonomous with respect to the assets of the company.

The legal status is not attributed automatically to a company: the Memorandum of Association must be registered with the Register of Companies.


Joint investment of assets and financial resources

In order to do business often huge investments are required and often a single person may not have that amount of financial means. Doing business through a company enables several people to invest and work together so that each individual may then enjoy the benefits of the activity carried out proportionately to the amount of work done and to the quota of investments made.

A participation (share or quota) of the capital of the company is assigned to the partner in return for the assets he has contributed.

During the life of the company, the founding partners or new partners may contribute new assets, for instance by increasing the capital.

The resources put into the company become assets of the company and the investor will never recover such resources and will have to wait until the company is wound up or if he no longer wishes to be partner of the company he may transfer his share to a third party or he may withdraw, where this is envisaged, but he will never recover the resources he transferred to the company.


Financial autonomy

In  share capital companies the financial autonomy is perfect in that the shareholders are accountable for the debts of the company only in proportion to the share they hold.  

This means:
- that the personal creditors of a shareholder can never receive payment from the company;
- that creditors of the company, in turn, can never expect the members to use their personal assets to pay for the company’s debts.

The financial circumstances of the shareholder of a company with share capital will never affect the company’s assets and vice versa, with the sole exception in which all the quotas or shares of the company are held by a single person and when the obligations envisaged by the law are not fulfilled (refer to the provisions of the law in force on limited liability companies (s.r.l.) and on single-person companies limited by shares (s.p.a.). Seek the professional advice of your notary public.

In partnerships financial autonomy is imperfect:
- for instance, in informal partnerships and in other forms of partnership (general partnerships and limited partnerships) only when the life of the partnership is extended does the law envisage that a partner’s share can be liquidated for his personal debts;-  moreover the law envisages unlimited and joint and several liability of the partners (except for the inactive/limited partner) and hence their personal assets are used to pay for the company’s remaining debts once all of the company’s assets have been used.

Perfect financial autonomy means that if the company goes bankrupt the bankruptcy does not apply to the partners, whereas when the financial autonomy is imperfect also the partner who has unlimited responsibility goes bankrupt.

On the other hand, if the partner who has unlimited responsibility goes bankrupt, the company does not.


Duration of partnerships

Duration is not an essential element for the establishment of partnerships. The parties may also expressly agree on indefinite duration.

When a date of termination is envisaged, then on that date the company can be dissolved.

The termination date may be modified or eliminated by the partners via:
- express extension. In this case all the partners expressly decide on a new date of termination or on continuing the company’s life indefinitely;
- tacit extension. If, after the date of termination the partners continue to do business as usual, then the company is tacitly extended for an indefinite period of time.


Duration of companies limited by shares

Also companies limited by shares can have indefinite life, but in such case all the shareholders have the right of withdrawing: hence this is a choice that is to be adopted with caution, since the possibility of withdrawing is a major cause of instability.

In carrying out its business, the company can use distinctive features such as a name, sign-board and trademark.

The name characterizes the entrepreneur in exercising the company’s business, the trademark identifies and distinguishes the goods and services produced by a company and the sign-board identifies the premises where the business is carried out.


Registered Office

In its Memorandum of Association each company must indicate an office address where it will presumably carry out its administrative and management activities.

The company may set up one or more branch offices where it carries out its business, with an organizational and administrative autonomy, and normally with a stable representative.


Nationality

The company is of Italian nationality when the incorporation procedures have been completed in Italy and the company has been registered with the Register of Companies. For foreign companies, refer to "Foreigners in Italy".

As such an Italian company is subject to the organizational and tax regulations set forth in Italian Law.