Historically and culturally speaking, Italian agricultural products have always been symbols of quality and excellence. This is also confirmed by the National Federation of Agricultural Retail which places Italy at the top position as an exporter country of agricultural goods.
Given previous circumstances, the choice of setting up an agricultural company in Italy may be the right choice for foreign investors. This is also confirmed by VGS company lawyers that have developed a remarkable expertise in setting up agricultural companies within the Italian territory. The agricultural company may take the form of a partnership, cooperative, or company. However, even though a farming business may take several corporate forms, they can be created only in presence of two formal requirements plus one substantial requirement.
Table of Contents
Farming Business Object
In order to set-up a company in Italy dealing with farming business, the only and sole object of the business entity shall be agricultural business activities and all connected activities. Specifically, these activities are listed in the art.2135 of the Italian Civil Code. Among these activities, we find land cultivation, livestock farming, and forestry. Generally speaking, these are the activities with the purpose of developing a biological cycle involving the use of land.
The connected activities are manipulation, storing, preservation, transformation, and commercialization of products generated by the cultivation of the land or from livestock farming. In this sense, the Italian Revenue Commissioner stated that activities such as leases and loans are seen as connected to agricultural business, provided that they have the purpose to improve agricultural activity.
Company Name
The second formal requirement involves the company name. In this sense, the Law allows a business to be named as an agricultural company only if this results from the company name.
Company scheme
The last substantial requirement involves the selected corporate model.
In the case of a partnership company, the Law requires that at least one of the shareholders is a professional agricultural entrepreneur or “direct cultivator”. And in the presence of a limited partnership company (società in Accomandita Semplice), at least one shareholder must be a professional agricultural entrepreneur.
In the event the selected corporate scheme is a limited company, at least one director must be a professional agricultural entrepreneur. This is because, in the context of limited company corporate schemes, directors have the chance to not be shareholders of the company. By doing so, you risk having a farming business company where no shareholder is a farmer. Again, in the case of a single-member company, the presence of a professional agricultural entrepreneur allows the company to have access to facilitations.
The role of the Director
In the context of limited and cooperative companies, directors who have the professional agricultural entrepreneur qualification make it possible to legally treat the company as a farming business. In the context of partnership companies, one of the shareholders must have the qualification of a professional agricultural entrepreneur.
Under previous aspects, in order to constitute a farming business company, the investor shall take into consideration the following steps:
- To identify the object of the company to be included within the by-law
- To select the favored corporate scheme for the farming business taking into consideration the aforementioned elements;
- To identify the farming business structure in terms of shareholders, directors, and contributions. In this sense, shareholders may want to enter into a shareholder agreement to define the internal organization of the company;
- Incorporation of the Company before a public notary;
- To get the registration in the Company Register
The incorporation of a farming business company reveals critical points and aspects. VGS corporate lawyers have the expertise to advise agricultural entrepreneurs on corporate structure, employment regime, and tax implications.
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