Учебный год 22-23 / Alpa_Italian_Private_Law_University_of_Texas

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This must show profits and losses clearly and in detail and in the case of quoted companies there must be a certification by an independent auditor that the financial statement is consistent with the recorded accounts. Once the financial statement has been approved, the meeting then decides whether to distribute the profits. This is an issue where the interests of the directors are frequently at odds with those of the members. The former are bound to seek to consolidate the company’s assets, which militates against a distribution of profits, while the shareholders will seek the best possible return on their investment.

Capital-based companies must be set up via a public document. The memorandum indicates how the company has been set up and is accompanied by the by-laws of association, which regulate the organisation and functioning of the company, which must be entered in the register of companies. There are minimum limits set for capital: 120,000 euros for share companies and limited partnerships with shares, 10,000 euros for limited companies. A capital-based company may be administered by non-members.

Changes to the memorandum or by-laws of association must be approved by an extraordinary general shareholders’ meeting, with a quorum higher than for an ordinary meeting, and must then be confirmed and registered in the same way as on first incorporation. Among the most important changes are those that produce an increase or reduction in the company’s capital.

A decision to increase capital can be taken for various reasons, including soliciting investment by the public and the need to invest. It can be free when it occurs without a corresponding increase in the company’s property, such as when reserves are transferred to capital or the property is revalued. It can also occur on payment, but in this case first refusal must be offered to members, who have a right to take options in preference to third parties. A reduction in capital, on the other hand, is optional when the capital is greatly in excess of that required to realise the company’s objects, and mandatory when the capital has been eroded by losses in excess of one-third. Any reduction below this limit will require the company to be wound up.

Capital-based companies are governed according to a majority principle. Decisions taken by a majority, calculated according to the relative capital contribution of each member, at a meeting are binding on all members, including those who dissent from or have not taken part in the decision. Decisions which violate the law or the company by-laws can, however, be challenged in court (Art 2377 civil code).

To regulate the functioning and organisation of a company shareholders can always conclude agreements among themselves. Such part-membership agreements are binding only on those who have entered into them. Two particularly significant examples of the type are the

so-called block syndicate whose participants undertake not to assign their share of the capital and the voting syndicate whose participants undertake to vote the same way in company meetings.

To these rules, which are for the most part common to all three varieties of undertakings based on capital – albeit that they are designed for share companies, the most socio-economically important of the three – others can be added that apply to just one of the three, and which may in some cases detract from the general rules outlined above.

The shares into which the capital of a share company (S.p.a.) is divided have a nominal value relative to the capital and a real value that reflects the company’s economic performance. The peculiarity of limited partnership with shares (S.a.p.a.), on the other hand, is the existence of a category of member, the active partners, who jointly and severally have unlimited liability to third parties for the partnership’s obligations and occupy by right the role of the directors of a company.

In a limited liability company (S.r.l), which has to be run by its members, the respective contributions to capital are expressed as stakeholdings that can only be transferred if the memorandum does not provide otherwise and that can be acquired by creditors of the company. Enacting a EU directive from 1993 it is possible to form one-person limited liability companies that permit individuals to pursue a commercial activity alone without risking unlimited liability. This is a significant exception to principle and indeed the risk of abuse prompted the legislator to incorporate numerous safeguards in the form of restrictions on the limiting of liability. On the one hand the substantial possibility of separating property is admitted, while on the other the title ‘company’ can be given to an entity created by a unilateral act (Art 2463 civil code).

Other distinctions could be drawn, whether based on the purpose of the undertaking (such as trust companies, audit companies and real property agencies) or on the regularity of the constituting procedure – companies can be regular or irregular in this regard. The most significant of such distinctions, however, is that between stock-companies and non-stock-companies, respectively, those whose shares are and are not traded on the stock exchange. This distinction has assumed an importance above all other ways of categorising the system.

Stock-companies are subject to supervision by a regulating authority, CONSOB (the national commission for companies and the stock exchange) and to a system of regulation which puts a premium on transparency and protection of investors and minority interests. For this reason there are strict reporting requirements, for example, concerning property arrangements and the existence of any part-membership agreements, as well as particular rules covering organisational aspects such as the functioning of meetings and the role of the board of auditors.

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5.9. Various aims of a company contract

5.9.1. Co-operatives, consortia, consortial companies

The company contract is compatible with other motives than that of profit. Indeed, in co-operatives the purpose is the mutual support and benefit of the members, who by participating in the co-op obtain either a reduction in expense or an increase in income.

In the first case we speak of a consumer co-operative. The member pays less than he would on the open market for the goods or services provided by the co-op. The second case is a production co-operative. The member supplies goods or services to the co-operative, which pays him for them.

Among the essential characteristics of a co-operative company (which can nevertheless pursue its activities as an entity towards third parties: in this sense the mutuality may be deemed ‘spurious’) are the variability of the company’s capital and the personal nature of participation. Members vote on the basis of one person one vote, with no weighting for the value of each one’s stake.

There is another set of rules particular to the consortium contract, by which ‘several entrepreneurs set up a common organisation to regulate or facilitate specific aspects of their respective businesses’ (Art 2602 civil code).

Internal consortia reflect a mere intent on the part of entrepreneurs to fulfil a common objective, while an external consortium is a single entity in the eyes of the law and for the purposes of legal relations. To attain the same objectives a consortial company can be set up. It is not intended to produce profits directly, but to save production costs or to raise the prices of goods and services produced by members of the consortium.

5.9.2. Secret and ostensible companies

When the company contract is not revealed to the outside world we speak of a secret company or partnership. One member acts ostensibly as a sole trader but is in reality pursuing an activity governed also by the other members, with whom profits are divided. An ostensible company, by contrast, is one which two or more persons appear to be operating in their dealings with the outside world when in fact they have not, even ‘de facto’, entered into a company contract. The courts tend in such cases to protect the trust that third parties have placed in the unlimited joint and several liability of all the parties involved.

In practice, though the contract is missing in secret companies, the conduct of the participants can give rise to a constructive presumption of one. In an ostensible company, although there is a contract covering the internal affairs of the company, the conduct of the participants towards third parties does not reveal it.

5.10. Company fortunes

Undertakings can be transformed from one type into another. It is quite common for one based on persons to be reorganised as a capital-based company.

Two or more companies can come together by merger to form a new one, or by acquisition, the incorporation of one in the other(s). The reverse phenomenon is transfer, when a company transfers the whole or part of its property to one or more other companies, and stakes and shares in the latter are assigned to the members of the former.

Companies may also invest their capital to acquire stocks and shares in other companies. In such cases we refer to a controlling interest when one company has a majority (or just a dominant share) of the votes in the general meeting of another or can exercise such control through the terms of a contract (Art 2359 civil code). Linked companies are those in which one exercises a significant but not controlling influence over another: such influence is presumed when the holdings of one in the other exceed certain thresholds.

The winding up of a company involves a complicated liquidation procedure in which its activity comes to an end, its assets are distributed among creditors and any left over are apportioned among the members. These measures do not, however, result by themselves in the extinction of the company, which only comes about once all legal relations with third parties have been extinguished.

The reasons for a winding up (Art 2272 civil code) may depend on the wishes of the members, on the operation of law (for example, insolvency in the case of commercial companies), or on external causes such as the attainment of the purpose of the undertaking or that purpose becoming impossible of attainment. There are also grounds particular to one or other form of undertaking, such as the disappearance of one of the categories of members of a limited partnership, or the reduction of the capital of a capital-based company to below the legal minimum.

Chapter VI:

Property and Goods

6.1. Goods and things in the legal sense

6.1.1. Basic concepts

Things have always been one of the most important areas that the law deals with. They give rise to rights and are the object on which these rights are exerted.

In the nineteenth century, when the economy was closely tied to the land, there was essentially a physical and naturalistic concept of things. Today the legal analysis has become more complete and sophisticated. Rights can attach not only to things in a physical sense, but can be activities, such as the work done by a paid employee, products of the intellect, aspects of personality such as privacy, identity, sex and so on. Rights can also attach to energies (Art 814 civil code). Not all things, however, can be the object of rights. Things outside commerce, such as those serving religious ends, do not; nor do things which belong to everyone, like the air, the sun and sea.

In legal language one applies the term goods in a technical sense to denote things which can be the object of rights (Art 810 civil code). Thus in a legal sense things are not synonymous with goods, but they share certain aspects and differ in others. Thus there are physical things to which rights can attach, such as earth, a house, trees and fruit: these are goods also but air by the same token is not, nor would we normally describe such non-physical phenomena as the energy put into work, products of the intellect and privacy as ‘things’, although rights do attach to them. It used to be wrongly held that the rights attaching to things were goods: rights (whether property or choses in action) are not considered as things. Rather they regulate the uses to which the latter are put, and thus are covered by the same regime.

Goods can be divided into various categories, according to their nature and content. The most important distinction is that of entitlement, that is, the issue of whom they belong to and who has use of them. One of the most important aspects of rules concerning goods and property is therefore ownership.

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6.1.2. The regime of property ownership

The rules on property stem from Art 42 of the Constitution which states that property is public or private, and further, that economic property belongs to the State, to bodies or to private persons; the expression bodies can mean either public or private bodies, whether de facto or de jure. The fact that the Constitution provides for private property is significant because it affords it a protection that could only be removed by laws to change the Constitution.

Private and public property is regulated also by the civil code and by statute. The civil code sets out many principles drawn on such statutes as those on mines, quarries and peat extraction, on water, fisheries and so on (Arts 822ff).

Neither the Constitution nor the civil code gives a definition of private or public property, but they (and particularly the civil code) distinguish between categories of property that belong to private persons or to the State or public bodies.

Public property is that belonging to a public authority (public property by title) or those distinguished from private property by some characteristic feature (public property by nature).

According to the distinctions established by formal statutory criteria, public property, belonging to the State and public bodies such as regions, provinces, local and other authorities, is divided into two categories which we can render literally as domain and patrimony, the latter being further subdivided into the disposable and non-disposable. The word ‘demanio’ derives via French ‘domaine’ from the Latin dominium meaning property owned by the State. Formally public property (public property by title) is thus either domain, disposable patrimony, or non-disposable patrimony.

Domain consists of maritime domain (shoreline, beaches, ports and harbours, and lagoons opening into the sea), historic, artistic and archaeological domain (State cultural heritage), and also of local markets and cemeteries.

The rules on domain are very strict. This property cannot be sold (Art 823 civil code), nor can third parties acquire rights over them (Art 1145(2) civil code). The property rights enjoyed by the State and public bodies over property belonging to others are subject to the same restriction, if it is connected to domain or if they are for the attainment of public objectives (Art 825 civil code).

Domain property that is not being used can be licensed upon consideration to third parties, but the State has to carry this out by means of an administrative act, with all the consequences this implies.

The rules on patrimony are less strict. Non-disposable patrimony (Art 826 civil code) includes: forestries (forests and regional and national parks);

extractive property (mines, which belong to the State, and quarries and peat workings which belong to the regions, though there are also private quarries and peat workings); military property (barracks, armaments, ships, aircraft and other items put to military use); and finally, public buildings, used to house public offices such as ministries, town and county halls and regional administration, as well as other public depots and establishments.

Non-disposable property cannot be put to any other than its allotted use, except by the processes laid down by law (Art 828 civil code). It is therefore bound only by an allotted use.

It can also be alienated, so long as there is no change of allotted use. Finally, disposable patrimony is property, such as office furniture,

that the State and other public bodies acquire as private parties. Specific laws and, where there are none, the principles of private property apply.

Two situations relating to public property by title need to be distinguished. There is property which the State and other public bodies have the power to use and dispose of (property which the State and other public bodies use for public purposes such as military property and the railways) and other property which belongs to the State or public bodies for the use and enjoyment of the wider public or part of it. This latter category includes the seashore and national heritage, but also mines leased to private interests.

The second situation helps define public property by title. It consists of public property, originally reserved by law to the State and other public bodies, but which is put to collective use or to private commercial use, such as in the mining example.

There is also property for collective use which is not public, but held in common, that is, property belonging to everyone (the air, the sea and the airwaves used for radio–TV transmission). This category once included animals that were not privately owned, and wildlife, but the current law on hunting has changed this position. The ownership of wild animals is regulated in minute detail with the aim of ensuring the survival of species.

There is another type of property, collective property, which belongs to large and small communities. These forms of property holding are historic survivals, for example, the farm holdings in Emilia and the closed farms of Trentino-Alto Adige.

More common and more important are traditional rights over the property of others, such as the gathering of wood and pasturage on public land. The law looks with disfavour on these vestigial remnants of collective property.

One form of collective property is particularly significant, due to the prominence given to it in Art 43 of the Constitution, even though no instances of it have ever in fact been instituted. Alongside nationalisation

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(which has taken place, for example, the electricity industry by law no. 1643 of 1962), the Constitution also provides that laws may reserve enterprises or categories of enterprise to groups of workers and specified consumers, where essential public services, or energy sources, or monopoly situations or overriding public interest are involved.

Regional domain and regional patrimony were set up by law no. 281 of 16 May 1970. Article 11 states that ‘property of the kind indicated by the second paragraph of Art 822 of the civil code, if it belongs to a region by acquisition of any kind of title, constitutes regional domain and is subject to the regime provided by the said code for public domain property.’

The same regime applies to property rights which regions have over property belonging to others, when those rights are constituted by a use made of any of the property referred to in the preceding paragraph or are intended for applications in the public interest of the kind which the property itself is used for.

Ports situated on lakes have been transferred to regions and form part of regional domain, as have aquaducts of regional importance belonging to the State.

Property belonging to regions but not coming under any of the categories set out above form the regional patrimony.

6.1.2.1. Moveable and immoveable property. Alongside the distinction between private and public property, the most important division of types of property turns on whether it is moveable or immoveable. This distinction gives rise to profound legal consequences and it also has a historic importance.

The historical significance of the distinction is readily understood. In an economy based on the exploitation of agriculture, immoveables, that is, the land and buildings on it, acquired a particular value differentiating them from moveable things which could easily be displaced, transported, passed on or destroyed. Immoveable things have in most cases a higher value and because they are so basic to the economy they have required particular attention by legislators.

Land, whether in town or country, outlives its owner, can be readily subjected to taxation and is easier to defend. From these circumstances arises a formalistic and restrictive regime based on its circulation. Transfer of immoveable property has to be supported by a written document and registered and extended limitation periods apply (Arts 2643, 1158 civil code). Moveable property, on the other hand, can circulate with much more fluidity and less formality, limitation periods are shorter and simple possession, suitable evidence of title and good faith are sufficient to secure ownership of the property, even if the purported transferor was not in fact the owner (assignment by non-owner, Art 1153 civil code).