Sole shareholder
No relationship between shareholders to regulate, so the constraint of the articles does not bite. This is where an SRLS works well.
Businesses · Company forms
SRLS, the simplified SRL in Italy
You can set it up with a token minimum capital and with no notary's fee for the deed. In exchange, it imposes standard articles of association that cannot be changed, and that constraint weighs more than it seems once the company starts to operate.
01 · The definition
What an SRLS is
The società a responsabilità limitata semplificata (simplified limited liability company) is an SRL in every respect: the same limited liability, the same legal personality, the same accounting and filing obligations.
There are three differences, and they concern only formation and the structure of the articles: a token minimum capital, standard, fixed articles of association, and exemption from notary's fees, stamp duty and administrative charges on the deed of incorporation.
| Aspect | SRLS | Ordinary SRL |
|---|---|---|
| Minimum capital | One euro, up to below the ten thousand threshold | Ten thousand euros, with partial payment possible |
| Paying in the capital | In full and in cash | Can be partial, contributions in kind also allowed |
| Articles of association | Standard model that cannot be changed | Freely drafted |
| Notary's fee on the deed | Not due | Due |
| Shareholders | Individuals only | Companies and other bodies too |
| Liability | Limited | Limited |
| Accounting obligations | The same | The same |
| Annual running costs | The same | The same |
The saving applies only to formation. From the next day, an SRLS costs exactly as much as an ordinary SRL: accounting, annual accounts, filing, Chamber of Commerce fees, corporate formalities.
02 · The real constraint
The standard articles of an SRLS and their limits
This is the point nobody considers when setting up, and it surfaces later, when the company needs to do something the model does not provide for.
The articles of an SRLS are fixed by law and the clauses cannot be changed. Everything an ordinary SRL can regulate freely is set in stone here.
- You cannot create classes of shares with special rights.
- You cannot provide customised pre-emption or approval clauses on the transfer of shares.
- You cannot set meeting quorums different from the standard ones.
- You cannot write shareholder agreements into the articles, nor lock-up or drag-along clauses.
- You cannot set specific rules on the withdrawal or exclusion of a shareholder.
- Contributions other than cash are not allowed: no contribution of assets, receivables or a going business.
The constraint becomes concrete when an investor comes in, when the founders want to regulate their relationship, or when a sale of shares is being prepared. In all these cases the SRLS first has to be converted into an ordinary SRL.
03 · Is one euro enough?
Token capital and its consequences
Setting up with minimum capital is possible, but capital is not a formality: it is the first indicator of soundness that anyone dealing with the company looks at.
- Banks read capital as a measure of the shareholders' commitment: token capital makes credit lines harder to obtain or makes them conditional on personal security.
- Larger suppliers check the company register extract and the accounts before granting payment terms.
- Some public calls and tenders set requirements for capital or net equity.
- An undercapitalised company sees its capital wiped out by its first losses, which triggers the obligation to recapitalise or to wind up.
- Companies with capital below the ordinary threshold must make an accelerated allocation to the legal reserve, setting aside larger shares of annual profit.
The middle way
There is an in-between solution that many people do not know about.
- You can set up an ordinary SRL with capital below ten thousand euros
- In that case the capital must be paid in full and in cash
- You pay the notary's fee, but the articles can be drafted freely
- It is often the more suitable choice when there is more than one shareholder
04 · The favourable cases
When an SRLS makes sense
There are situations where it is the right choice, and they are narrower than its popularity would suggest.
Light service business
No initial investment, no stock, no debt exposure: token capital is not an obstacle.
Uncertain start-up phase
When it is not clear whether the project will continue, the saving on formation is a reasonable insurance.
Not with several shareholders
Being unable to regulate relations between shareholders is the most serious flaw, and it shows precisely when those relations get complicated.
Not with investors
No investor will enter a structure where they cannot negotiate the terms of their entry.
Not with contributions in kind
If you need to contribute a business, a property or an asset, an SRLS does not allow it.
05 · The switch
How to move to an ordinary SRL
Technically it is not a conversion, because the type of company is the same: it is an amendment to the articles, adopting freely drafted articles and, as a rule, adjusting the capital.
Extraordinary meeting
A resolution minuted by a notary approving the new articles and any capital increase.
Adjusting the capital
If you want to exceed the ordinary threshold, the increase can come from new payments or from available reserves.
Registration
Filing and registration of the amended articles with the Registro Imprese (the Companies Register).
Costs
Notary's fee, taxes and charges: overall more than was saved at formation.
Moving from an SRLS to an ordinary SRL is a routine and frequent operation. But if you already know at the outset that you will need tailored articles, setting up an ordinary SRL straight away costs less than going through two steps.
06 · What to avoid
The most frequent mistakes
Almost all of them are mistakes of expectation: people choose the SRLS believing it solves a problem it does not solve.
- Believing an SRLS costs less after formation too: it does not, the annual obligations are identical.
- Setting it up with two or three shareholders without being able to regulate their relationship, and getting stuck at the first disagreement.
- Thinking token capital is irrelevant in dealings with banks and suppliers.
- Underestimating the erosion of capital: with one euro of capital, the first loss triggers the recapitalisation obligations.
- Choosing an SRLS when what you actually need is a ditta individuale (sole proprietorship), which for a very small business costs and weighs much less.
- Overlooking that all the adequate organisational structures required of any company still apply.
Frequently asked
The questions that keep coming up
Does an SRLS cost less in later years too?
No. The saving applies only to the deed of incorporation. Full accounting, annual accounts, filing, Chamber of Commerce fees and corporate formalities are identical to those of an ordinary SRL.
It is the most common misunderstanding, and it leads people to underestimate the recurring running cost of a company structure.
Can a company be a shareholder in an SRLS?
No. The shareholders of an SRLS can only be individuals.
If you need a structure with a holding company or a corporate shareholder, the route is the ordinary SRL.
Can I really operate with one euro of capital?
Legally, yes. In practice you still need cash to get the business going, which normally comes from shareholder loans.
Shareholder loans must, however, be documented and repaid: they are not capital but a debt of the company, and as such they count in assessing its soundness.
Can I change the articles of an SRLS?
The clauses of the standard model cannot be changed as long as the company remains an SRLS.
To introduce your own clauses you need to adopt ordinary articles by a shareholders' resolution, leaving the simplified regime.
Let's talk
The initial saving has to be weighed against the cost of correcting things later
Converting an SRLS into an ordinary SRL can be done, but it costs more than you saved when you set up.