How to define the corporate purpose of a company

Defining the primary activities of the company involves specifying what activities it is going to carry out
When drawing up a company's by-laws, the business activity must be clearly defined. It involves exemplifying which activities are to be carried out by the company, either immediately or in the future, and it is an aspect which, if not correctly specified, may hinder registration with the Trade Register.
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In general, a broad corporate purpose is set out. It is important to take into account that any statutory amendment requires the agreement of the Board, the recording of this agreement in a public deed and entry in the Trade Register. Therefore, usually the corporate purpose does not only include the main activities to be carried out, but also other secondary activities that may be of interest in the future.

How activities are defined

One of the requirements enforced by the Trade Register for registration of deeds is that the corporate purpose must be clearly defined, and the activities to be carried out must be outlined to avoid any misunderstanding.

To comply with this requirement, a simple system is to define the activities according to their classification in the IAE (Business Tax) or CNAE (National Classification of Economic Activities) codes. By identifying the activities to be carried out with the corresponding epigraphs and using the title of those epigraphs, it is possible to suitably adjust the definition of the activity.

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A problem may arise with activities that are not clearly defined. This may be because they are new or because they appear very generically in these codes. In such cases, a summary of the activity to be carried out must be provided, in order to ensure that it is clearly identified.

This is important, because a rejected registration requires a correction to the deed, resulting in delays in other procedures and, foreseeably, an increase in the cost of the constitution of the company.

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