From an SRLS to an Ordinary SRL: When It Might Be Necessary to Change the Structure

An SRLS can be a useful solution for starting a company with a simple structure.

Over time, however, a business plan may change. The business may grow, new partners may join, the share capital may increase, more detailed rules may be needed, or it may become necessary to customize the articles of incorporation.

In such cases, it may become necessary to convert from an SRLS to an ordinary SRL.

It’s not just a matter of changing an acronym. It means assessing whether the original structure is still appropriate for the project or whether the company needs more flexible rules, a different internal organization, and greater opportunities for customization.

For this reason, the transition from an SRLS to an ordinary SRL should be carefully evaluated, taking into account not only the formal aspects but also the company’s operational, corporate, and future needs.

To better understand the key differences between the two types of companies, you can also read the guide titled “SRL vs. SRLS: Differences You Should Know Before Starting a Business.”

What is an SRLS

The SRLS, or simplified limited liability company, is a specific type of SRL designed to facilitate the launch of business ventures with a streamlined structure.

It may consist solely of individuals and may also have a single member.

An SRLS must have a minimum share capital of 1 euro and a maximum of 9,999.99 euros. The capital must be paid in full in cash to the governing body at the time of incorporation.

Another distinctive feature of the SRLS is the use of a standard model of articles of incorporation prescribed by law, which cannot be freely amended.

These characteristics may make the SRLS suitable for simple projects, especially in the early stages. However, its simplified structure can become a limitation as the business grows or when the members need more detailed rules.

What does it mean to transition from an SRLS to an ordinary SRL?

Converting from an SRLS to an ordinary SRL involves changing the company’s structure to adopt the standard model of a limited liability company.

An ordinary limited liability company (SRL) offers greater flexibility than a simplified limited liability company (SRLS), particularly in drafting the articles of incorporation and organizing the relationships between shareholders and directors.

This transition may be appropriate when the company no longer fits within the limits of the simplified structure, or when the project requires a structure better suited to growth.

In practical terms, the change may affect several aspects:

• • • • • company name;
        • share capital;
        • articles of incorporation;
        • rules regarding members;
        • administration;
        • transfer of shares;
        • entry of new members;
        • overall structure of the company.

Evaluation should not be undertaken only when change is already urgent, but also when the company begins to show needs that differ from those of the startup phase.

When Might It Be Necessary to Change the Structure?

The transition from an SRLS to an ordinary SRL may be considered in various situations.

There is no single right time for all companies. The need depends on the type of business, the company’s growth, the number of shareholders, internal agreements, and future prospects.

However, certain signs may indicate that the simplified structure is no longer sufficient.

When You Need a More Customized Bylaw

One of the main reasons to consider switching from an SRLS to an ordinary SRL has to do with the articles of incorporation.

In an SRLS, the articles of incorporation must follow a standard format prescribed by law. This limits the ability to include customized provisions.

In an ordinary limited liability company (SRL), on the other hand, the articles of incorporation can be drafted to better meet the needs of the shareholders and the business project, always within the limits permitted by law.

Customizing the bylaws can be important when it is necessary to better regulate:

• • • • • relationships among members;
        • decision-making majorities;
        • special rights;
        • powers of directors;
        • transfer of shares;
        • entry of new members;
        • situations where decision-making has reached an impasse;
        • internal governance rules.

To learn more about this topic, you can read the article on the articles of incorporation of a limited liability company (SRL).

When Share Capital Must Be Increased

Another situation in which it may become necessary to modify the structure involves the share capital.

The SRLS has a maximum authorized capital of less than 10,000 euros.

If the company needs to increase its capital beyond this limit, the simplified form is no longer consistent with the new capital structure.

A capital increase may be driven by various needs:

• • • • • strengthen society;
        • support a period of growth;
        • improve the perception of reliability among third parties;
        • prepare for the arrival of new members;
        • make the facility better suited to the activities carried out there.

Share capital should not be viewed merely as a number. It is an element of the corporate structure and must be consistent with the business plan.

For more information, you can also refer to the entry on share capital.

When new members join

The admission of new members may be another opportunity to consider transitioning from an SRLS to an ordinary SRL.

An SRLS may consist only of individuals. If the project involves the participation of companies, entities, or investors organized as corporations, it may be necessary to rethink the structure.

Even when the new members are individuals, the addition of other participants may make it advisable to have a more detailed set of bylaws.

When the ownership structure changes, it is important to carefully address the following:

• • • • ownership stakes;
      • shareholders’ rights;
      • decision-making authority;
      • exit rules;
      • transfer of shares;
      • any right-of-first-refusal or approval clauses.

A membership share does not merely represent a percentage; it also affects the internal balance of the organization.

When the relationships between shareholders and directors change

In the early stages, managing a company can be very simple.

Often, those who form an SRLS are directly involved in the business, and the administrative structure is essential.

As the company grows, however, it may become necessary to more clearly distinguish the role of the shareholders from that of the directors.

This happens, for example, when:

• • • • • Some members contribute to the capital but do not participate in management;
        • the administration is entrusted to one or more specific entities;
        • We need differentiated powers;
        • Certain decisions must remain the sole prerogative of the members;
        • It is appropriate to establish clearer rules regarding representation.

In such cases, a standard limited liability company (SRL) can offer greater flexibility in drafting its articles of incorporation and establishing its administrative structure.

For more information, you can also read the article on “Shareholders and Directors in an SRL: Roles, Powers, and Responsibilities.”

When a company grows

The transition from an SRLS to an ordinary SRL may also be considered when the business grows and the initial structure no longer meets the company’s needs.

A company incorporated under a simplified structure may, over time, find itself facing new situations:

• • • • • • more established clients;
          • more complex banking relationships;
          • significant contracts;
          • investments;
          • hiring;
          • opening of new locations;
          • the entry of partners or investors;
          • the need for clearer governance.

In these cases, the question is not only whether SRLS is still possible, but whether it is still appropriate.

The corporate structure should support the project, not limit it.

SRLS or Ordinary SRL: It’s Not Just a Matter of Cost

An SRLS is often associated with an easier startup process and lower initial costs.

However, the choice between an SRLS and an ordinary SRL should not be based solely on how quickly it can be incorporated.

A simpler structure may be appropriate in the early stages, but it may become less functional if the project requires customized rules, more capital, the addition of new partners, or a more complex governance structure.

That is why it is important to consider not only how much it costs to incorporate a company, but also what structure is truly best suited to the project.

On this topic, you can also read our in-depth article titled “How Much Does It Cost to Form an SRL: Factors to Consider Before Getting Started.”

Is it always necessary to convert from an SRLS to an SRL?

No. It is not always necessary to change the structure.

An SRLS may remain appropriate when the business is straightforward, the shareholders are individuals, the capital falls within the prescribed limits, and there are no specific requirements for customizing the articles of incorporation.

The transition to a standard limited liability company (SRL) should be considered when the simplified form no longer meets the company’s needs.

The decision must be proportionate to the project and not automatic.

The Role of the Notary in the Transition from an SRLS to an Ordinary SRL

A notary public is involved when a company needs to change its structure through legal acts that require the form prescribed by law.

When transitioning from an SRLS to an ordinary SRL, a preliminary review is important to determine what changes are necessary and how to implement them correctly.

The following, for example, can be evaluated:

• • • • • • change of corporate name;
          • increase in share capital;
          • adoption of new bylaws;
          • entry of new members;
          • change in administration;
          • rules governing the transfer of shares;
          • comprehensive restructuring of the corporate structure.

The point is not merely to fulfill a requirement, but to build a structure that is consistent with the stage the company is currently in.

To learn more about this process, you can consult the section on corporate bylaws.

Frequently Asked Questions About the Transition from an SRLS to an Ordinary SRL

Can an SRLS become an ordinary SRL?

Yes, an SRLS can be converted into an ordinary SRL when the company needs a different structure—for example, to increase its capital, adopt a customized set of articles of incorporation, or overcome the limitations of the simplified form.

When is it advisable to switch from an SRLS to an SRL?

It may be advisable to consider this transition when the company grows, when more detailed bylaws are needed, when new shareholders join, when the capital must be increased beyond the limits of the SRLS, or when the management structure changes.

Does an SRLS have customizable bylaws?

The SRLS uses a standard model required by law. This results in fewer options for customization compared to an ordinary SRL.

Does the transition from SRLS to SRL affect only the share capital?

No. Capital may be one of the reasons, but it is not the only one. The transition may also involve the articles of incorporation, shareholders, management, the transfer of shares, and internal governance.

Do you need a notary to convert from an SRLS to an SRL?

Changes to the corporate structure that require formal documents must be evaluated and handled with the assistance of a notary, in accordance with the law.

Can a company be a shareholder in an SRLS?

No. An SRLS may only have individuals as members. If the project requires the participation of a corporation or an entity, a different structure must be considered.

From SRLS to SRL: A Choice for Growth and Structure

Transitioning from an SRLS to an ordinary SRL does not simply mean changing the legal form.

It means asking whether the company still has the right structure for its project.

When there are changes in capital, shareholders, management, bylaws, or growth prospects, the simplified structure may no longer be sufficient.

In such cases, a standard limited liability company (SRL) can offer greater flexibility and allow for a regulatory framework that is more consistent with the company’s actual needs.