Recently proposed legislation
might make it more appealing for international investors to do business in Italy.
The more favorable opportunity is part of the decreto liberalizzazioni, the
deregulation measures introduced by the current technical government led by
Mario Monti, which are meant to boost the Italian economy. In upcoming issues,
this column will address issues for expats who want to start a new business or
transfer an existing one to Italy from their native countries.
The first piece of good news is this: starting a new
business might soon be cheaper and faster for young entrepreneurs thanks to the
proposed Società Semplificata a Responsabilità Limitata (S.s.r.l.).
The
deregulation measures introduced by the Monti government hope to attract young
entrepreneurs with great ideas, even those with limited budgets for
implementing them. (This is what Italy needs right now.) In a recent TV
interview, Prime Minister Monti said ‘I do not know how many Bill Gates there
are among young Italians, but if there are some, we do not want to discourage
the emergence of entrepreneurial activities because of excessive wait times and
expensive bureaucratic procedures.’
If you are
under 35 years old and you have at least 1 euro (yes, just 1!) to invest, and
most importantly, a good business idea, Monti wants you to be able to set up
your own company, in Italy called Società a Responsabilità Limitata (S.r.l.),
which is the limited liability company (LLC) used for small businesses.
Normally,
the time and the costs to start an S.r.l. in Italy can be overwhelming. It
usually requires starting capital of at least 10,000 euro. A Memorandum of
Association, which contains all the basic rules that govern the company, must
be drawn up by a notary public, who is also responsible for the registration of
the company with the Registro delle Imprese (Registry of Companies). In addition,
the new company has to pay taxes, duties, and several other administrative fees
before beginning operations.
Aware of
this problem, Monti and his team are seeking to encourage entrepreneurial
activities by allowing young entrepreneurs to open a new kind of S.r.l. with
very little initial capital, no notary expenses, reduced taxes and a minimum
degree of bureaucracy: this new type of company would be called a Società
Semplificata (simplified) a Responsabilità Limitata, which is abbreviated as
‘S.s.r.l.’
I believe
that the S.s.r.l. could have some positive aspects, chief among them that the
process of start-up is streamlined and inexpensive. Yet, I have some doubts.
Once any of the remaining members reach age 35, under the proposed law, the
company must be converted to a regular S.r.l. by a notary: what is the point of
this requirement, especially once the S.s.r.l. has been in business for several
years? Indeed, some critics of the measure argue that this new form of company
should be part of a more structured and coordinated reform that reconsiders the
role of and need for a public notary in an S.r.l. start-up.
It will be
interesting to see if the final version of the legislation, after parliamentary
approval, will maintain the same structure and how many new start-ups will be
created in the coming months. International cities such as Florence are home to
many university graduates and young entrepreneurs with great ideas and skills,
especially in the fields of fashion, graphic design, media, catering, event
coordination and art. Notwithstanding all the criticism of these measures we
read in the newspapers, I still believe that this new form of company could be
a very useful tool to transform the dreams of Italy’s young talents into real
businesses.
There is a
second piece of good news: faster court decisions for companies limited by
shares (such as the S.p.A.), as well as for class action claims. The government
has created a specialized branch of the court (already in charge of
intellectual property infringement cases) with judges specifically trained and
prepared to deal with matters of corporate law. They will rule only on these
kinds of cases, a change, which according to the current government, should
dramatically speed up average trial times in corporate cases and class action
claims.
In my legal
practice, I have heard many times that international companies are very
reluctant to bring business to Italy because they are terrified of the idea of
having to deal with the country’s (now infamous) slow wheels of justice, as
well as the time and costs the Italian justice system incurs. Should the
proposed decree become law, all court cases involving companies limited by
shares as well as class action suits are supposed to be decided much faster.
Although the
definitive version of each measure is yet to emerge from and be approved by
parliament, I believe that Italy is finally trying to do something positive to
boost competition and spur economic growth.
As a lawyer,
I do not agree with many of the new measures recently enacted by the Monti
government, but I definitely applaud ideas that could really make legal
processes less burdensome for those who decide to invest in Italy. My hope, as
both a citizen and legal professional, is that Barak Obama’s campaign slogan of
2008, ‘Yes we can!’ might be used to support the entrepreneurial spirit of so
many young people who are willing to start their own business in our wonderful
country.
The four requirements of the proposed S.s.r.l.
1. YOUTH.
All members of the company must be under 35. When a member reaches 35, either
he or she must leave or the company must be converted to an S.r.l.
2. CAPITAL. The initial capital required is a symbolic 1 euro. Many technology-based
businesses need much less than the 10,000 euro required for an S.r.l. or LLC,
as they can be operated on little more than a computer, some good ideas and
skills, and a small space. It is important to question whether a bank would be
willing to make loans to a company that has little or no capital. However, it
is also important to make it possible, in such a pressing moment of economic
difficulty, for young entrepreneurs, even those with a limited budget but a
good business plan, to have a chance to enter the marketplace.
3. CONTRACT. The Memorandum of Association for the S.s.r.l. can, theoretically, be drafted
by the parties, because the services of a notary are no longer required by law.
However, I strongly believe that it is wise, especially for young entrepreneurs
starting their first business, to seek the expertise of a professional to
negotiate the terms of the contracts with future work partners, if only to be
sure that the contracts contain all the provisions indicated by the law.
4. FORMALITIES. The Memorandum of Association must be registered
electronically with the Registry of Companies, which can be performed directly
by the chief executive officer of the company. Registration is free: there is
no marche da bollo (registration tax) or any other administrative fee.
