Foreign companies with subsidiaries in Italy must ensure they have complied fully with corporate governance regulations, particularly those related to the deployment of foreign executives. Failure to do so can lead to significant legal issues.
Subsidiaries in Italy can be formed either as “Società per Azioni” (Spa) or as “Società a responsabilità limitata” (Srl). The Spa and Srl are Italian corporate entities whose shareholders’ liability is limited to the capital contribution each shareholder makes (Italian subsidiaries).
The corporate governance of Italian subsidiaries is entrusted to either a sole director or to multiple directors. In the latter case, Italian subsidiaries may adopt either a board of directors, who may also delegate specific powers to a managing director, or multiple directors acting severally or jointly and unanimously.
Foreign companies maintaining Italian subsidiaries should keep in mind that foreign directors of Italian companies are required to obtain a Tax ID number, which can be applied for at the competent Italian Revenue Office or at the Italian consulate in the concerned foreign director’s home state.
Foreign companies maintaining Italian subsidiaries, often decide to second one of their existing executives, and grant them powers to run the daily operations of the company (seconded executive). If the seconded executive is a European citizen, the EU employer will need to comply with specific administrative formalities provided for by the Italian Legislative Decree n. 136/2016, which implemented the European Directive n. 2014/67/UE.
No visa will be necessary if the seconded executive is a European citizen, but if they are not a European citizen, then a specific visa and permit will be required to enter, stay and work in the Italian territory. Italian laws provide for specific visas and permits in favour of non-EU executives, including intra-company secondment which allows non-EU executives to enter the Italian territory for three or five years, provided that specific requirements set forth by the applicable Italian legislation are met.
As to the labour formalities, foreign companies are recommended to enter into a specific secondment letter with the seconded executive setting forth the terms and conditions of the secondment in Italy, as well as into a secondment agreement with the Italian subsidiary setting forth the obligations of the two companies in connection with the secondment.
It is recommended that these letters be translated into the Italian language, in case the competent Italian authorities ask for such documents to be exhibited.
Once the seconded executive is in Italy, the competent corporate body of the Italian subsidiaries may appoint them as either a director or as proxy (institore), and convey the necessary managing powers in order to allow them to run the daily operations.
To this end, a proper resolution is normally required whereby the appointment as director and the delegation of powers are perfected, or a special power of attorney in favour of the seconded executive is granted when the same is appointed as proxy (istitore).
