Appointment of directors in Italian limited liability company, duration and co-option

The appointment of directors in srl (Italian limited liability company)  is provided for in Article 2475 of the Civil Code, which makes an express reference to Article 2383 of the Civil Code: the latter has as its object the appointment of directors in the s.p.a. and, as we shall see, it is not the only case in which rules of this kind are also applicable to the s.r.l. insofar as they are compatible.

>>READ OUR LATEST NEWS TO STAY UP TO DATED

At the time of appointment, each director-if a board of directors has been provided for, or a system of administration with several directors, in a conjunctive and/or disjunctive form among them-or in the case of a sole director, is required to make a declaration in which he or she self-certifies “the non-existence against him or her of causes of ineligibility provided for in Article 2382 and of disqualifications from the office of director adopted against him or her in a member state of the European Union”.Appointment of directors in srl

Usually, the above statement is issued at the same time as the director’s declaration to accept the office, according to the conditions set by the shareholders’ meeting.

Ultimately, the appointment of directors takes place:

  • in the deed of incorporation;
  • after incorporation, in the shareholders’ meeting.

The act of appointment must specify, among other things, at least two requirements:

  • duration in office of the director;
  • compensation, if any, received by the director.

The duration in charge of directors

While remuneration may also be only contingent – that is, the office of director may not be remunerated, perhaps because of other remunerated positions that the director already holds within the group of which the company is a part – the duration is a fundamental aspect, and to protect it certain legal provisions are laid down that are the subject, albeit extremely succinctly, of this contribution.

In Italian s.p.a.’s, the appointment can be for a maximum of three fiscal years (Article 2383, second paragraph, of the Italian Civil Code); in Italian s.r.l.’s, on the other hand, directors can also be appointed for an indefinite period, unless revoked or resigned.

In relation to the latter two instances of termination of directorship, the following should be noted:

  • revokation: is an act by which the assembly decides to remove the director from office; removal is possible by the assembly “at any time”, subject to the right to damages in favor of the director removed without cause;
  • resignation: it is an autonomous act of the director declaring that he or she is resigning from office; such a resignation – in a nutshell- takes effect immediately if a majority of the members of the administrative body remain in office; otherwise it takes effect upon acceptance of office by the new appointee.

Co-optation: the exception to assembly appointment

Co-optation is an exception to the (ordinary) rule that provides for the competence of the shareholders’ meeting to appoint directors.

In this area, too, reference is made to a rule provided for in the field of Italian s.p.a. – specifically Article 2386 Civil Code, paragraph 1 – which allows an exception regulated as follows: if, during the course of the financial year, one or more directors cease to hold office, the others remaining in office provide for their replacement by a resolution of the administrative body, approved by the board of auditors (but, in the sphere of an srl, reference is still made, by way of interpretation, to the control body, also in the form of a sole auditor); this procedure, however, is subject to the fact that the majority of the directors remaining in office is still made up of directors appointed by the shareholders’ meeting.

The directors thus appointed – who thus supplement the number of directors remaining in office – last until the next shareholders’ meeting, at which they may be confirmed by the shareholders or different individuals may be appointed in their place.

The procedure in question does not operate, therefore, if the majority of directors appointed by the shareholders’ meeting ceases to exist: in such a case, it is imperative that the appointment of the members of the administrative body takes place at the shareholders’ meeting.

Through co-optation-which, it is repeated, is a procedure of derogation from the ordinary shareholders’ meeting appointment of directors-the continuity of the administrative body is allowed without (at least immediately) having to convene the shareholders’ meeting and postponing its intervention (to confirm or replace directors) later.

The co-optation procedure, pursuant to Article 2386, paragraph 1, Civil Code, obviously does not operate in the case of a simul stabunt simul cadent clause, according to which (Article 2386, paragraph 4, Civil Code) the bylaws may provide that if one or more directors cease to hold office, the entire administrative body will lapse: in such a case, it is necessarily the shareholders’ meeting, urgently convened by the directors remaining in office (or, as extrema ratio, by the controlling body), that must provide for the appointment of the new administrative body.

LDP provides Tax, Law and payroll  scalable and customised services and solutions. LDP Professional have also matured a significant expertise in  M&A, Corporate Finance, Transfer Price, Global Mobility Consultancy and Process Automation. 

Sign up to our newsletter

Subscribe to our Newsletter

Subscribe Form