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The establishment of LLCs online

Published in: Startups, Business and Innovation
by Federico Regolo
Home > The establishment of LLCs online

Incorporation of companies (LLCs or LLCs online) is now a reality. The attempt to exclude the notary at the incorporation stage was quashed by a Council of State ruling. However, today, there is a remote incorporation procedure by videoconference (developed by the Council of Notaries) that is catching on in new business ventures.

In this article:

From LLC without a notary to incorporation by video conference

Today’s entrepreneurs have the opportunity, through technological measures, to optimize the effort required to form an LLC, at least in terms of physical travel. The partners of the forming company may not all reside or be domiciled in the same city. In a way, this simplification, could attract or facilitate foreign entities to invest in Italian newco.

The 2006 “Mise Decree“, which allowed the online incorporation of startups without the presence of a notary, had been challenged by the National Council of Notaries as being in conflict with Article 2463 of the Italian Civil Code, which clearly stipulates that LLCs can only be incorporated by public deed before a notary. The Council of State, in ruling No. 26439 of March 29, 2021, had ended up agreeing with the notaries. Considering the retroactive effects of this ruling, following the aforementioned judgment, one had moreover wondered what should be the fate of the many startups already established without a notary public.

The Legislature has duly clarified, decreeing the validity and effectiveness of the articles of incorporation and bylaws of innovative startups “swept away” by the Council of State’s ruling. Article 39f inserted in the conversion text of dl 77/2021 in the simplification DL finally approved in the House expressly stated that: “the articles of incorporation, bylaws and their subsequent amendments of innovative startup companies referred to in Article 25, paragraph 2, of Decree-Law No. 179 of October 18, 2012, converted, with amendments, by Law No. 221, established in the form of a limited liability company, including a simplified one, filed with the office of the Companies Registry on the date of entry into force of the law converting this decree and drawn up in the manner alternative to the public deed pursuant to Article 4, paragraph 10-bis, of Decree-Law No. 3, converted, with amendments, by Law No. 33 of March 24, 2015, and in accordance with the provisions dictated by the Decree of the Minister of Economic Development of February 17, 2016, published in the Official Gazette No. 56 of March 8, 2016, remain valid and effective and consequently the same companies retain their registration in the commercial register”.

The surge of notary-free startups and their demise

The possibility of forming a LLC online, as we have mentioned, has a troubled history and turned out to be an obligatory regulatory development. Decree No. 56 of Feb. 17, 2016, of the MISE (now the Ministry of Business and Made in Italy) had stipulated that, in the event that the form of Srl was chosen for the establishment of an Srl, the public deed, ex art. 2463 Code, drawn up before a notary, would no longer be indispensable. The very role of the figure of the notary had thus been excluded.

The aforementioned reform, in the period following its entry into force, had seen a surge in the incorporation of many startups without a notary public (about 3500 startups from 2016 to March 29, 2021), ending up with notaries rising up. An initial halt to this digital trend is in fact associated with the ruling of T.A.R. Lazio No. 10004 of October 2, 2017 then followed by the Council of State ruling No. 26439 of March 29, 2021, which, as seen, made the possibility of excluding the figure of the notary completely disappear. Basically, any situation in which the persons involved in the incorporation are unable to meet in person (because they are abroad, because they are prevented from doing so by health reasons or simple organizational convenience) will still be possible to establish a limited liability company.

The National Council of the Notary Public, after victoriously challenging the so-called “Mise Decree”, was commissioned by the Legislature with Legislative Decree No. 183, Nov. 8, 2021, to develop an ad hoc platform for the management and transmission of public and computerized acts to digitally establish LLCs.

The remote incorporation procedure in practice

Today, this platform is a reality (there is even a practical guide prepared by notaries titled “Guided Path for Entering into the Incorporation of LLC Online”) and incorporation (of LLC) can also be performed remotely and online.

Legislative Decree No. 183 of Nov. 8, 2021, provides that “The deed of incorporation of limited liability companies and simplified limited liability companies having their registered office in Italy and with capital paid through cash contributions may be received by the notary, by public computerized deed, with the participation by videoconference of the requesting parties or some of them. The acts referred to in the first sentence shall be received through the use of a telematic platform prepared and managed by the National Council of Notaries.”

Thus, from what can be deduced from the quoted measure, all LLCs (as well as Srls), and therefore also startups having the form of an Srl, can be formed by means of a computerized public deed received and formed “at a distance”. Appointments, following the Covid emergence, have become a recurring habit that saves time and travel charges. This development today has also reached the world of notarization through the incorporation of companies through an online procedure. The drafting of shareholders’ agreements and bylaws for the incorporation of LLCs, in collaboration with notaries who also adopt the remote incorporation procedure, is one of the characteristic activities of the Canella Camaiora Law Firm.

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Publication date: 24 November 2022
Last update: 5 January 2023
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