The corporate purpose of the innovative startup must have particular characteristics provided for by law. Let’s see together what it is and how to write the object in the best way.
What is the corporate object?
The corporate purpose is the description of the activity of a company. The subject is found in the statute, the document that regulates the company, and the relations between the shareholders. The rules for writing the subject of an innovative startup are the same as for any company, with some additional requirements.
The purpose of the object is to delimit the social activity and that of the administrators to protect the shareholders. The object must be formulated clearly and specifically to allow the shareholders to verify that the company carries out only the planned activities. This is because carrying out different activities can greatly change the economic risk and the investments required. For example, if the object chosen by the shareholders involves the clothing trade, the administrators cannot undertake the construction business which would involve different risks and costs.
The corporate purpose can include one or more activities. Generally, a company carries out a prevalent activity which can be accompanied by other activities, called secondary ones. In any case, ancillary activities are considered included in the corporate purpose, even if not expressly indicated. For example, a company may have as its business the development and production of medical devices but may also carry out all the ancillary activities required such as software development and purchase of components, without specifying it in the subject.
Rules for drafting the corporate purpose of the innovative startup
The innovative startup must comply with certain requirements to be able to register with the chamber of commerce and benefit from the concessions provided by law. The main requirement concerns the activity carried out by the company which must respect the following characteristics:
- the development, creation, and marketing of innovative products or services
- a concise description of those products or services
- a brief explanation of the innovative and highly technological aspects of the products or services offered
These characteristics must be clearly reflected in the corporate purpose. Otherwise, the company cannot register in the Business Register as an innovative start-up. However, it will be possible to establish an ordinary SRL with the assistance of a notary.
Let’s see in detail the three steps necessary to best formulate the corporate purpose of the startup.
1. Describe the startup’s product or service
The corporate purpose of the startup must briefly describe the category of products or services offered. In particular, the ideal description is 1-2 lines and must allow the reader to understand the sector of reference and the products or services of the company.
The description must specify that the company will deal with all three stages that bring the product or service to market (development, production, and sales). For example, the startup cannot limit itself only to the sale of innovative and highly technological products but must also take care of their conception and realization.
The description should not be too general to avoid being vague, nor too specific to avoid limiting the activity too much. Eg:
- “software development” is too generic
- “enterprise automation software development” is the right level of detail
- “Development of enterprise automation software for the Android platform” is too specific and limits the company’s business
2. Explain why it is innovative
The next step is to explain, again in a few lines, what the innovation of the product or service offered consists of. Innovation is a new way of solving a problem or approaching customer needs.
For example, a product can be innovative because it automates a process that was previously done manually.
3. Explain why it is highly technological
Finally, in the object, it is necessary to briefly indicate the characteristics that make the product or service of high technological value. In fact, in addition to the innovative idea, the startup must use the latest technologies available on the market for its products or services.
There is no need to go into too much detail. It is sufficient to indicate in a few words the type of technology used. For example, you can indicate that your software uses a particular proprietary algorithm or the latest machine learning technologies, without specifying exactly which ones.
Examples of innovative start-up corporate purpose
Here are some practical examples of an innovative startup object.
Example 1 (cleaning product)
Mainly, the development, production, and marketing of innovative solutions for cleaning environments and, in particular, an antibacterial gel for any surface.
These solutions are innovative as they allow you to clean all surfaces using a single product that is based solely on natural and non-aggressive components.
Furthermore, these solutions are highly technological because their formula is created using a component extraction method based on proprietary patented technology.
Example 2 (sound-absorbing headphones)
Mainly, the development, production, and marketing of innovative hearing protection devices and, in particular, of sound-absorbing headphones.
This product is innovative as it allows 100% reduction of environmental noise through headphones that are much smaller than those on the market.
Furthermore, this product is highly technical as it uses a proprietary algorithm for the automatic recognition of background noises and their elimination in real-time.
What happens if the corporate purpose does not meet the requirements?
The chamber of commerce may refuse registration if the corporate purpose is not formulated clearly enough or the activities indicated are not among those that the law reserves for startups. The consequences of the refusal are different depending on whether the company is already established or is in the process of being established.
In particular, if the company is in the process of incorporation and the registration in the special section of startups is rejected, the company will be registered in the register of companies as an ordinary SRL and will have to pay the related registration taxes.