jurisdiction

1. Are members of the armed forces permitted to hold shareholdings in private companies, including startups, provided that they do not participate in management?

Members of the Italian Armed Forces are generally prohibited from carrying out paid professional, commercial or business activities unrelated to their military duties. This reflects the constitutional principle that public servants must act exclusively in the service of the state and ensure the impartiality and proper functioning of public administration.

Italian law distinguishes between passive investment and active involvement in a business. We are not aware of any general prohibition preventing military personnel from holding a passive minority shareholding in a private company, including a startup, solely because of their military status. The key distinction is between a purely passive financial investment and the exercise of management functions, corporate offices, entrepreneurial activities or other roles that may interfere with the duty of exclusive service.

Italian guidance further confirms that merely holding shares in a for-profit company, without carrying out any activity on behalf of that company, is generally compatible with military service and does not require prior authorisation. This applies to various corporate structures, provided the individual does not participate in the company's management or operations.

There are no specific quantitative thresholds. The assessment is qualitative and focuses on factors such as the nature of the company's activities, whether the individual holds management powers and whether the investment could interfere with official duties or the impartial exercise of public functions.

2. Is notification or approval required before acquiring a shareholding or establishing a company?

A passive shareholding does not generally require prior authorisation. However, Italian law requires public officials to disclose situations that may give rise to an actual or potential conflict of interest and, where necessary, refrain from participating in related decisions or activities.

Any remunerated activity beyond passive shareholding generally requires prior authorisation from the relevant military authorities. The applicable rules provide that such activities must be compatible with military duties, carried out outside working hours and be occasional in nature.

In practice, while a purely passive minority investment is generally permissible, investments that involve management powers, corporate offices, entrepreneurial activities, remuneration or potential conflicts with official duties may require prior approval and should be assessed carefully on a case-by-case basis.

3. Are there any notable limitations, thresholds or conflict-of-interest rules?

The most significant limitation is the potential for a conflict of interest. Under Italian law, a conflict of interest exists where a public official has a direct or indirect financial, economic or personal interest that could affect, or appear to affect, their independence and impartiality.

Importantly, the conflict does not need to have materialised. A potential conflict may be sufficient. As a result, investments in companies whose activities are connected to the functions of the Ministry of Defence or the armed forces may create a risk of incompatibility.

Italian law does not impose a blanket prohibition on passive minority shareholdings by military personnel. However, restrictions may arise where an investment conflicts with the military duty of exclusivity, involves outside professional or business activities or creates an actual or perceived conflict of interest. The key consideration is whether the investment remains genuinely passive and entirely separate from the service member's official responsibilities.

Conflict-of-interest obligations extend beyond the service member personally and have an impact on spouse, cohabitant, and relatives and in-laws up to the second degree. This means that shareholdings held by close family members, or investments in entities that are counterparties, suppliers, or contractors of the military administration, may also trigger the obligation to abstain.