The rules on corporate governance in a limited liability company in Italy are very flexible and, in general, rules on corporate governance are not mandatory.
However, according to the Italian Civil Code, the corporate bodies of an SRL are:
- the shareholders meeting and
- the governing body;
The articles of association may provide for the appointment of a supervisory body or an auditor, determining their competences and powers. When the company exceeds certain size limits or is subject to the consolidated financial statements, the appointment of supervisory body becomes mandatory.
Unless otherwise provided in the articles of association, the administration of the company is entrusted to one or more shareholders, but the founding shareholder(s) may decide how to structure the governing body of the company including in the articles of association the following options: 1) a sole director; 2) a board of directors; or 3) directors acting jointly or separately.
Thereafter, the shareholders meeting may amend the structure of the governing body (special quorums are requested) and may remove or appoint the directors. A person who is not a shareholder and even a corporate entity may be appointed as director.
The directors are vested with the general power to act on behalf of the company and the articles of association shall also indicate who is the person having the power to represent the company. No legal provision limits the extent of the powers granted to the directors, with the exception of those expressly reserved to the shareholders’ meeting (such as: approval of annual accounts, amendments to the share capital or to the Articles of Association, merger decisions, etc.).
The directors’ powers may be limited by the articles of association or by a shareholders’ decision, but such limitations are not enforceable against third parties unless it is proven that such third party acted to the detriment of the company.
There are some conditions that prevent the appointment of a natural person: being bankrupt or having been convicted of some crimes can prevent a natural person from being appointed director.
There are no restrictions on the nationality or place of residence of legal representatives for citizens of the European Union. Vice versa, for all non-EU citizens, some additional conditions are required (e.g. the existence of a specific international treaty or the applicability of the “condition of reciprocity” provided in art. 16 of the preliminary provisions to the civil code of 1942, specific visa…).
The shareholders have the power to decide on the matters the articles of association reserved to their decision. In any case, the following subjects are reserved to the shareholders decision:
- approval of the financial statements and distribution of profits;
- the appointment of the directors;
- the appointment, in the cases provided for by article 2477, of the statutory auditors and of the chairman of the board of statutory auditors or of the person in charge of carrying out the statutory audit;
- amendments to the articles of association;
- the decision to carry out operations that involve a substantial modification of the corporate purpose determined in the deed of incorporation or a significant modification of the shareholders' rights.