By-laws of Italian limited liability companies are likely to be soon amended
Legislative Decree no. 14 dated January 12th 2019 (the so-called "Codice della crisi di impresa e dell’insolvenza", published in the Italian Official Journal no. 38 dated February 14th, 2019) significantly amended conditions under which limited liability companies must appoint a supervisory body, either an “internal” statutory board or an “external” auditor. As a consequence, many by-laws of limited liability companies’ will need to be amended accordingly.
Let’s take a step back. According to Italian laws, not all limited liability companies (so called “società a responsabilità limitata”) are required to appoint a supervisory body. Thanks to the 2019 reform, such appointment is now mandatory, should a company exceed at least one of the following (decreased) thresholds for two fiscal years in a row:
- Total assets of the balance sheet exceed € 4.4 million (instead of € 2 million as previously required);
- Total revenues from sales and provision of services exceed € 2 million (instead of € 8.8 million as previously required);
- Average number of employees employed per financial year exceeds 10 employees (instead of 50 as previously required).
Such amendment is applicable to all new companies incorporated after March 16th 2019. Other limited liability companies (already established) have nine months to comply with the new provisions. In other words, the by-laws of companies that meet the thresholds must be updated by December 16th 2019. Please note that, of course, only shareholders are entitled to amend by-laws.
Only those by-laws that set forth specific rules in contrast with the new provisions will have to be amended. On the contrary, by-laws that simply recall the rules of the Italian Civil Code can remain unchanged.
After the December 16th deadline, shareholders’ meetings called to approve the financial statements of the fiscal year in which one of the updated thresholds is exceeded, must appoint the statutory board or the auditor within thirty days. Should the shareholders’ meeting fail to fulfill this obligation, any interested party may file with the Court a formal request to appoint the supervisory body.
As you may imagine, the new three thresholds mentioned above (assets, revenues and number of employees) capture a significant number of companies, since one threshold is enough to trigger the appointment requirements. According to a research, Italian limited liability companies with supervisory boards will increase from 3% to 28.5%.