formation of a comapny - corp

Legal personality

Ability of a corporation to act as a separate legal entity: enter contracts, sue and be sued, own assets, take loans, pay taxes, and exist independently from shareholders.

Indefinite life of company

Corporation continues to exist independently of shareholders unless formally dissolved.

Limited liability

Shareholders risk only the capital they invested in the company.

Transferable shares

Ownership rights (profits and voting rights) can be transferred to others.

Delegated management

Company is managed by appointed directors rather than shareholders directly.

Investor ownership

Shareholders control the company through voting in general meetings.

Capital lock-in

Shareholders cannot withdraw capital during the company’s life except in liquidation or exit.

Private limited company (s.r.l.)

Small/closely held Italian company where shareholders often manage and share transfers can be restricted.

Public limited company (s.p.a.)

Large company with freely transferable shares, suitable for investors and big businesses.

Right of first refusal

Existing shareholders can buy shares first before they are sold to outsiders.

Instrument of incorporation

Document establishing the company: shareholders, capital, structure.

Statutes (bylaws)

Document regulating internal governance of the company.

Statutes as contract

Agreement between shareholders regulating company organization and rules.

Article 3 Dir. 2017/1132

It requires the statutes or instrument of incorporation to include the company’s basic constitutional information:

name and type, objects, capital structure, rules for appointing governing bodies, and duration of the company.

Article 4 Dir. 2017/1132

It requires disclosure of detailed financial and shareholding information in company documents, including registered office, share capital structure, classes of shares, transfer restrictions, founders’ identities, formation costs, and any special advantages granted at incorporation.

Preventive control

Legal check before registration by notary or authority to ensure legality.

Notary control in Italy

Notary checks legality of incorporation, not economic merit.

Company register

Public registry where company data is stored and accessible.

Unique identifier (EU)

Code allowing identification of companies across EU registers.

Disclosure principle

Company information must be public to protect third parties.

Reliance on disclosure

Undisclosed documents cannot generally be enforced against third parties.

Branch disclosure requirements

Branches must disclose address, activities, parent company, and representatives.

CorpTech Directive 2019/1151

EU directive enabling fast, online, low-cost company formation.

Online incorporation

Digital process using electronic identity and online filing.

Once-only principle

Companies should not submit the same data multiple times.

Pre-company

Business operates before registration without full legal personality.

Pre-registration liability (Art. 7 Dir. 2017/1132)

Persons acting before incorporation are jointly and severally liable unless company assumes obligations.

Post-registration liability

Company is liable for acts of its organs after registration.

Ultra vires doctrine

Acts beyond company object; EU law limits its effect to protect third parties.

Acts of company organs (Art. 9 Dir. 2017/1132)

Company is bound even if acts exceed company object unless third party knew otherwise.

Internal limits not opposable

Internal restrictions on directors cannot be used against third parties.

Nullity of company

Court-declared invalidity of company only in limited legal cases.

Grounds of nullity (Art. 11 Dir. 2017/1132)

Includes lack of formation, unlawful object, missing capital info, incapacity, or too few founders.

Effect of nullity

Company enters liquidation; past obligations remain valid.

Protection of third parties

EU law protects third-party rights even if company is null.

Ubbink case

CJEU case limiting EU nullity rules where company was not properly registered.

Marleasing case

CJEU case requiring national courts to interpret law in line with EU directives.

Single-member company

Company owned by one shareholder allowed under EU law with safeguards.

Sole shareholder decisions

Must be written and recorded instead of general meeting.

Sole ownership disclosure

Must be registered publicly for transparency.

Transfer restrictions

Statutory limits like right of first refusal on share transfers.

Job Centre case

CJEU case striking down national restrictions on private employment intermediation.

Formation steps

1) Constitution 2) Statutes 3) Registration in public register.

Winding-up

Liquidation process after dissolution or nullity.

Legal certainty principle

Third parties must be able to rely on registered company information.

Digital identity requirement

EU requirement for secure electronic identification in online incorporation.