Unlock the Complete Guide to AGMs in Italy You Need to Know

Annual General Meetings (AGMs) are a cornerstone of corporate governance in Italy, ensuring transparency, accountability, and compliance. Governed by the Italian Civil Code, AGMs are essential for approving financial statements, electing directors, and addressing key corporate matters. Here’s a comprehensive guide to managing AGMs effectively.

Legal Deadlines and Extensions

AGMs must be held within 120 days from the end of the financial year, typically aligning with the fiscal year ending December 31. The board of directors may extend this deadline to 180 days, provided the Articles of Association (AOA) allow it and a board meeting is held to approve the extension by June 30.

Failure to hold the AGM within the legal timeframe can lead to the late filing of financial statements, which incurs fines and administrative consequences.

Who Calls the AGM?

Responsibility for convening the AGM primarily lies with directors or, in some cases, statutory auditors.

• SRL Companies: Shareholders holding at least one-third of the corporate capital may request a meeting if directors fail to act.
• SpA Companies: Shareholders with a smaller ownership interest may request a meeting, first approaching the board of directors and, if necessary, the statutory auditors or the court.

Notice Requirements

For SpA companies, AGM notices must be published in the Official Gazette or a designated newspaper at least 15 days prior to the meeting. Alternatively, notices can be sent through any communication method that proves the meeting was validly called, no less than 8 days in advance.

For SRL companies, if the by-laws do not specify otherwise, notices must comply with Article 2479 bis of the Civil Code, requiring dispatch by registered mail at least 8 days before the meeting.

Meeting Formats and Voting

Both SRLs and SpAs may allow for participation via telecommunication or written resolutions, provided these methods are permitted in the by-laws and adhere to principles of good faith and equal treatment. However, resolutions involving significant changes, such as amendments to the by-laws, generally require an in-person meeting.

Quorum and Voting:

• SpA Companies: On the first call, at least 50% of capital must be represented, with resolutions requiring a majority of attendees. On the second call, resolutions pass with a majority regardless of capital representation.
• SRL Companies: Meetings require representation of at least 50% of voting capital, with resolutions needing a simple majority.

Financial Statements and Filing Obligations

The board of directors must approve the financial statements 30 days before the AGM, allowing time for statutory auditors and external auditors to review them. Financial statements must be filed with the Business Register within 30 days of AGM approval.

Failure to file financial statements on time results in:

• Late approval fines: €1,032 to €6,197 per director or statutory auditor.
• Late filing fines: €90 if filed within 30 days, €270 thereafter.

Shareholder Participation and Proxy

Shareholders can participate in AGMs personally or by proxy, which may be given to another shareholder or a third party. For SpA companies, proxies cannot be granted to directors, auditors, or employees of the company or its subsidiaries. These restrictions do not apply to SRL companies.

Dividend Distribution

Dividends can only be distributed from approved profits outlined in the financial statements. 5% of annual net profits must be allocated to a statutory reserve until it equals 20% of corporate capital. Dividend payments must be registered with the Commercial Register within 20 days and filed with tax authorities.

Best Practices for AGM Management

1. Prepare Early: Finalize financial statements and board approvals well in advance of the AGM.
2. Comply with Notice Deadlines: Ensure notices are sent or published in line with statutory requirements.
3. Facilitate Remote Participation: Where allowed, offer telecommunication options to enhance shareholder engagement.
4. File on Time: Submit financial statements to the Business Register promptly to avoid penalties.

Conclusion

Adhering to Italy’s AGM requirements ensures smooth governance and mitigates legal risks. From managing notices to filing financial statements, every step is crucial.

Klea offers tailored support, ensuring your company remains aligned with Italian corporate law. For more insights into processes in other jurisdictions, explore our article, Indonesia AGM Compliance Made Easy: Avoid Expensive Mistakes.