Recently, Italy took one step further into the innovation field and passed a specific law on small and medium enterprises (“SMEs” known as “PMI” in Italy) showing innovation-oriented characteristics.
As of 2 January 2017, there are 373 Innovative SMEs in Italy.
Innovative SMEs share many of the special rules applied to Innovative start-ups discussed in my previous post so I encourage you to read it first.
Innovative SMEs: requirements
In order to be recognised as Innovative SMEs, the following requirements must be met:
- limited liability company (società a responsabilità limitata under Italian law) or joint-stock company (società per azioni under Italian law);
- headquarter in Italy or in a EU country with a branch in Italy;
- certified balance sheet;
- unlisted shares;
- turnover no higher than € 50 millions;
- no more than 250 employees;
- at least two of the following criteria: (i) R&D expenses equal or higher than 3% of the total costs, (ii) at least ⅕ of the personnel is PhD graduated or students, (iii) at least ⅓ of the personnel is properly graduated or (iv) it is the holder/licensee of a patent or software.
Innovative SMEs: benefits and exceptions
Innovative SMEs have access to several tailored-made rules not applicable to other companies.
The shareholder assembly of the Innovative SMEs may postpone any decisions concerning financial losses affecting the share capital of the company up to two years.
The by-laws may regulate shares with different rights and obligations including:
- shares with no voting rights;
- shares with voting rights limited to certain matters or subject to certain conditions;
- shares with non proportional voting rights.
Financing and investments
Innovative SMEs, as innovative start-ups, may raise financing through the equity crowdfunding platforms which are open to the public.
Workforce and other costs
The work- for-equity model is applicable to Innovative SMEs. Therefore, personnel and external consultants may be paid with stock option plans and shares. Also, this kind of remuneration is not considered as income.
Italy as a Country for Innovation
Italy is positioning itself as one of the go-to Country for innovation regardless if the enterprise is a new company (start-up) or an established one (SME). Also, the pro-innovation laws discussed in the present post and in the previous one sum up with several fiscal incentives to foreign direct investments (inbound investments) and to internationalisation (outbound investments).
With this post, my “Guide” dedicated to Foreign Investors willing to enter the Italian market ends. I hope it is useful to all of you for your decision-making process about investing in Italy. For any further discussions or questions, you are free to contact me in the comment section below or via email.
About the Author: Raffaele Battaglini (LLM. at The University of Edinburgh) is a lawyer expert in international contracts and M&A, innovation and startups.