There are many reasons to close a company, from declining profits due to industry conditions or new competition to a change of opinion about the company’s direction as an investor, partner or business owner.
Closing a company in Italy is a relatively simple process, although there are several legal steps you’ll need to follow in order to legally dissolve the business and remove it from the register.
Italy has a civil legal system and is a member of both the EU and the EEC, meaning that many of its laws are similar to those of other European countries.
Below, we’ve listed and explained the various options available for closing an Italian company, which range from voluntary liquidation to compulsory liquidation at the request of a creditor or court.
Closing a Company Through Voluntary Liquidation
An Italian company can close and wind up voluntarily at the request of its shareholders. This form of liquidation is called a voluntary liquidation. As its name suggests, it’s used when the owners of a business wish to close it and liquidate the company voluntarily.
There are a variety of reasons to use the voluntary liquidation process. The business may no longer be as profitable as it once was, or the shareholders might simply no longer wish to run the business for personal reasons.
In order to close a company through voluntary liquidation, the company’s directors will call a shareholders’ meeting. The meeting must be attended by a public notary. During the meeting, the shareholders decide on and appoint a liquidator to close the company.
Once the liquidator has been appointed, they will begin the process of liquidating the company and paying any creditors.
Closing a Company Through Compulsory Liquidation
If an Italian company has excessive debts that it cannot pay due to cash flow issues or financial insolvency, it can be closed at the request of creditor through a legal process called compulsory liquidation.
Compulsory liquidation can also be launched by a prosecutor or court, such as when a company has been found to have engaged in illegal activity.
The compulsory liquidation process is more involved than the process of closing a company via voluntary liquidation. The company’s shareholders are legally required to provide three years of financial records to the court, in addition to a list of creditors and summary of activities.
During this process, the company is declared bankrupt by the court and enters into receivership, with the court-appointed receiver assessing the value of its assets. A liquidation calendar for the company is established and the company’s assets are used to repay creditors.
Other Italian Company Closure Information
Depending on the size and complexity of a company, both voluntary and compulsory liquidation can take some time. Often, it can take several months or years to finish the process of closing a company in Italy and striking it off from the Italian Commercial Register.
During this period, the company is considered to be “pending dissolution” and is not yet formally or legally closed.
There are also specific company closure cases in Italy classed as extraordinary liquidation, or “amministrazione straordinaria”. This process is typically reserved for large-scale bankruptcies, such as the failure of major companies considered to be of national importance.