Business and

Competition Law

A.Y. 2022-2023
Teaching Fellow Sara Addamo
Formation of the company
• First Directive 1968, recodified in Directive 2017/1132/EU

Incorporation of the public liability company

1. Instrument of incorporation, memorandum of association, company
charter
= agreement signed at the same time by all the constituent members or
through an initial public offering

deed usually formalized by a notary

Compulsory minimum information (Art. 3; Sec. 2.03 EMCA):
• Type
• Name
• Object if the company: activity (i.e. business sector) in which the
company is involved
• Amount of subscribed legal capital (minimum 25.000 euros)
• Appointment of management and supervisory bodies and
allocation of their powers
• Duration (unless it is indefinite)
• NO limitation in the minimum number of shareholders
2. statutes, articles of association, by-laws
Compulsory minimum information (Art. 4):
• nominal value of the shares subscribed
• special conditions limiting the transfer of shares
• where there are several classes of shares, the rights attached
• amount of the subscribed capital paid up at the time the company is
incorporated
• rules on the functioning of the companied bodies
• both documents of instrument of incorporation and statutes have to be
published in the companies register where the company has its
registered office (legal seat)
• Effects of registration: these documents may be relied on by the
company against third parties after they have been disclosed
• Information compulsory to disclose: Art. 16
• instrument of incorporation and statutes
• amendments to those documents
• termination of office and personal details of the directors and members of the
supervisory board
• members of the bodies responsible for representing the company
• financial statements
• change of the registered office
• winding up of the company
• appointment of liquidators and their respective powers
The company acquires legal personality with the registration
• the company exists as a legal entity separate from the persons of the
shareholders who established it
• limited liability companies: shareholders don’t have to pay with their
money the obligations arising from the activity of the company
• the company with its assets is solely responsible for corporate
obligations
• Art. 7: If, before a company being formed has acquired legal
personality, action has been carried out in its name and the company
does not assume the obligations arising from such action, the persons
who acted shall, without limit, be jointly and severally liable therefor,
unless otherwise agreed.
After the formation of the company:
• subscription, underwriting of shares
• shares are to be paid up at not less than 25% of their nominal value
• timing for paying the balance: within some months from the
company’s registration or the decision is left to directors’
discretion
• if consideration is “non-cash” (contributions in kind) shall be
transferred in full within five years (Art. 48)
Nullity of the company
• The corporate contract and the activity of the company involve
several parties
• The invalidity of the contract setting up the company can be ordered
only in very limited cases
• maintain the effects of the contract
• protect third parties rights

• Conditions for nullity of a company (Art. 11)

a) nullity must be ordered by decision of a Court;
b) nullity may be ordered only on the grounds:
1. that no instrument of constitution was executed or that the rules of
preventive control or the requisite legal formalities were not
complied with;
2. that the objects of the company are unlawful or contrary to public
policy;
3. that the instrument of constitution or the statutes do not state the
name of the company, the amount of the individual subscriptions of
capital, the total amount of the capital subscribed or the objects of
the company;
4. of failure to comply with provisions of national law concerning the
minimum amount of capital to be paid up;
5. of the incapacity of all the founder members;
6. that, contrary to the national law governing the company, the
number of founder members is less than two.
Consequences of nullity (Art. 12)
• entails the winding-up of the company
• shall not of itself affect the validity of any commitments entered into
by or with the company,
• Holders of shares in the capital of a company shall remain obliged to
pay up the capital agreed to be subscribed by them but which has not
been paid up, to the extent that commitments entered into with
creditors so require.

≠ general rules on the invalidity and the ability to terminate contracts

result in the elimination of the effects produced by the contract
Single-member company
• Twelfth Directive, recodified by Directive 2009/102/EC
• company with a sole member established by a unilateral act
• only the company with its assets is liable for the corporate obligations
• the sole ownerships and the identity of the sole member must be
disclosed (companies register)
• contracts between the sole member and the company - as
represented by the former - must be recorded in minutes or drawn
up in writing (contracts with potential conflict of interest)
• Penalties for failure to disclose or record the necessary information

• Italy: loss of limited liability

• also if the sole shareholder does not pay in full the contributions
to share capital
• subsidiary liability: when the disclosure obligations are fulfilled or
the share capital is fully paid up, the sole shareholder returns to
enjoy limited liability