General characteristics of companies

• Advantages of a company
  A company has its own existence, independent of that of its shareholders: it can continue to exist even if the shareholders die, or it can be dissolved and put into liquidation even if its shareholders survive.
• Legal personality

  All companies have legal personality in that they have assets separate from those of their shareholders, and they have their own name and registered office, and are therefore legal entities separate from their individual shareholders.

They are non-personal collective entities.

However, in some types of company (partnerships) there is not complete autonomy between the assets of the company and those of the individual shareholders, who have varying degrees of liability for the company’s debts.

On the other hand, other types of companies (joint-stock companies and cooperatives) are recognised by the legal system as having what is known as legal personality, which means that their assets are completely separate from those of their shareholders, and therefore the shareholders are never liable with their assets for the debts of the company, except in certain cases provided for by law.

In short, the recognition of legal personality makes the company’s assets autonomous in relation to those of the shareholders, and the shareholders’ assets autonomous in relation to those of the company.

The legal personality of the aforementioned companies is not automatically conferred, as it is necessary to register the instrument of incorporation with the Business Registry.

• The pooling of assets and funds
  The exercise of an economic activity often requires large investments that may exceed the financial means of a single person. Carrying out an economic activity in the form of a company allows several people to invest and work together: in this way, each person can enjoy the benefits of the activity carried out in proportion to his or her share of the investments made and the work carried out. In return for the assets contributed, a consideration is received in the form of a share (ownership share or stock) in the company’s capital. During the life of the company, the founding shareholders or new shareholders may bring in new assets in the form of contributions, e.g. a capital increase. The assets contributed become part of the company’s assets and the investor cannot recover his/her contribution, but must wait for the company to be wound up; if he/she no longer wishes to remain in the company, he/she must transfer his/her shareholding to a third party or, only in cases where this is permitted, withdraw from the company agreement, but can never recover what he/she has contributed.
• Patrimonial autonomy

  In the case of joint-stock companies there is perfect patrimonial autonomy, meaning that the shareholders are liable for the debts of the company only to the extent of their shareholding. This means that: 

  • the shareholder’s personal creditors cannot obtain payment from the company’s assets;
  • the company’s creditors cannot require the shareholders to pay the company’s debts out of their personal assets.

  Therefore, the events affecting the assets of the shareholders of a joint-stock company do not affect the assets of the company, and vice versa, except when all the ownership shares or stocks are concentrated in the hands of a single person, in the event of failure to comply with the obligations laid down by law (see what is laid down by the legislation in force for limited liability companies or single-member companies). Your Notary Public can provide you with the information you need.

  In contrast, partnerships have imperfect patrimonial autonomy:

  • for example, in the case of simple partnerships and other partnerships (collective partnerships and limited partnerships), the law provides for the liquidation of a partner’s share for his/her personal debts only in the event of extension;
  • the law also provides for the unlimited and joint liability of the partners with their own assets (except for limited partners) for the debts of the partnership, even if on a subsidiary basis. However, the personal liability of the partners is enforced differently in the simple partnership and in other partnerships.

  Perfect patrimonial autonomy means that the bankruptcy of the partnership does not normally lead to the bankruptcy of the partners, whereas in the case of imperfect patrimonial autonomy, the partner with unlimited liability also goes bankrupt.

  Conversely, if the partner with unlimited liability goes bankrupt, the partnership does not go bankrupt.

• Duration of partnerships
  The duration is not an essential element in the formation of a partnership. The parties may also expressly agree on an indefinite duration. The duration, if provided for, determines the dissolution of the company upon its occurrence and may be modified or cancelled by the will of the partners as follows:
  • express renewal. In this case, all partners expressly decide to set a new time limit or to continue the partnership indefinitely;
  • tacit renewal. If the partners continue to carry on the business of the company after the period for which the company was formed has expired, the company is deemed to be tacitly renewed for an indefinite period of time.
• Duration of joint-stock companies
  Nowadays, joint-stock companies can also be formed for an indefinite period of time, but in this case all shareholders have the right to withdraw: this is therefore a choice to be made with caution, as the possibility of withdrawal is a strong reason for the instability of the company structure.
• Distinguishing signs
  In carrying out its activities, the company may use distinctive signs such as the company name, the signage and the trade mark. The company distinguishes the entrepreneur in the exercise of the business activity, the trade mark makes it possible to identify and distinguish the goods and services produced by a company and, finally, the signage identifies the premises in which the business activity is exercised.
• The registered office
  Every company must specify in its instrument of incorporation a registered office where its administrative and managerial activities are to be carried out. The company may set up one or more branches where it conducts its business with organisational and administrative autonomy and, normally, with a permanent representation.
• Nationality
  The company has Italian nationality if the incorporation procedure has been completed in Italy and the company has been registered in the Business Registry; as such, an Italian company is subject to the organisational and tax rules laid down by Italian legislation.

Extract from the National Council of Notaries