Abstract
The high economic relevance of business successions in Italy is strictly connected to the structure of Italian capitalism. In Italian law there is no definition of family owned firm and our literature uses the general notion “encompassing all cases in which the family maintains a share of the capital sufficient to appoint top management and influence the firm’s strategies, thereby limiting the set of choices available to management”. Family firm “dominates the national industrial structures, proving also to be very efficient, perhaps the most efficient model, particularly in the case of medium sized, specialised, and internationalised companies”. In last decades particular emphasis has been placed on leadership transition and insider succession; nevertheless, because the Italian civil law forbids succession agreements, proper estate planning is difficult: in order to mitigate the consequences of these prohibitions, business or family agreements are used, so as to maintain a certain number of management rules throughout the change of generations.
[Paper delivered at the conference organized by the Académie internationale de droit comparé – World Congress 2014 Vienna]
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Notes
- 1.
Distinction drawn by L.-G. Sund et al. (2009).
- 2.
The innovative importance of this rule is remarkable because, before the mentioned reformation, work done by a family member of the firm was intended as free. Now, article 230 bis CC offers assisting relatives a status and includes regulations on the relationship between members of a family who works in a family business. However, this rule applies unless the parties reach a different agreement (e.g. by creating partnerships, or companies, or enter into a contract of employment).
- 3.
See paragraph 2.4.1 below.
- 4.
Oxford Univ. Press, Oxford, 2006, 1071, 1072.
- 5.
J. H. LANGBEIN, The Nonprobate Revolution and the Future of the Law of Succession (1984) Harvard L R 1108.
- 6.
K. Zweigert and H. Koetz (1998).
- 7.
W. Pintens (2003).
- 8.
A. Verbeke and Y. Henri Leleu (1998).
- 9.
Art. 457: “L’eredità si devolve per legge o per testamento. Non si fa luogo alla successione legittima se non quando manca, in tutto o in parte, quella testamentaria. Le disposizioni testamentarie non possono pregiudicare i diritti che la legge riserva ai legittimari”.
- 10.
G. Alpa and V. Zeno – Zencovich (2007).
- 11.
Legge 10 December 2012, no. 219.
- 12.
So that, e.g., if direct descendants survive, the ascendants receive nothing.
- 13.
Art. 540 Italian CC relates to forced share, but it is also applied to intestacy. See Corte costituzionale, ord. 5 May 1988 n. 527. See Cass. Civ., 6 April 2000, nr. 4329, in: Giustizia Civile, 2001, I, 2198; Giurisprudenza Italiana, 2001, 33; Notariato, 2001, 357.
- 14.
G. OBERTO, Proposta di legge in tema di accordi preventivi sulla crisi coniugale, in http://giacomooberto.com/famiglia.htm
- 15.
- 16.
I.e. anyone who is 18 years old or more and of sound mind (art. 591 CC).
- 17.
Arts. 587 ff. CC.
- 18.
Mutual wills are void.
- 19.
Joint and mutual wills are void.
- 20.
A will is void if decisions are delegated to third parties.
- 21.
Binding agreements are void.
- 22.
Any mutual provision included in a will would be considered void if subject to the condition of being the beneficiary in someone else’s will.
- 23.
E.g. it may contain the legal recognition of a child.
- 24.
Oral wills are void.
- 25.
In strict compliance with legal provisions.
- 26.
(a) Holograph will (art. 602 CC, testamento olografo): the document is personally handwritten by the testator, and must be dated and signed. There is no need for witnesses and there is no attestation clause. It can be a simple letter or document. It can be executed up at any time using any kind of paper, therefore being inexpensive; (b) Solemn will (art. 603 CC, testamento pubblico): it is drafted by an Italian notary following the testator’s instructions. The will is executed by the notary in the presence of two witnesses. The will is read out loud by the notary to ensure that it complies with the last wishes of the testator; it is signed by the testator in the presence of witnesses and recorded and lodged by the notary; (c) Sealed will (art. 604 CC, testamento segreto): it is drafted by the testator and placed in a sealed envelope which is then delivered to an Italian notary in the presence of two witnesses in compliance with strict formalities laid down by the law. The contents of the will shall remain sealed until after the testator’s death, when the sealed envelope will be opened. The requirements for a sealed will are different from those for a holograph will (i.e., it need not be personally handwritten by the testator).
- 27.
L. MENGONI, Successione per causa di morte. Successione necessaria, in Trattato Cicu Messineo, Milano, 1992, 61; A. PALAZZO, Le successioni, in G. IUDICA, P. ZATTI (eds.), Trattato di diritto privato, Milano, 1996, 2.
- 28.
- 29.
Trib. Cagliari, 21 September 1998, in Riv. giur. Sarda, 2000, 16.
- 30.
M. Talamanca (1978).
- 31.
The reserved portion is a minimum proportion (percentage) based on the amount of the property value. Legittima is the right to a fixed portion, not to specific assets: Cass. civ., Sez. II, 12 September 2002 nr. 13310, in Famiglia e diritto, 2003, 79.
- 32.
Cass. Civ., 25 May 2012, nr. 8352, admitted the validity of a will containing only an indication of disinheritance.
- 33.
- 34.
- 35.
A. Fusaro (2009).
- 36.
Something similar happened in France, where the debate produced some reforms between 2001 and 2006, which introduced many changes: the legitimate portion has been retained, with some limitation; the legitimate portion should be replaced with a cash value, in order not to hinder or restrict the alienability of immovable disposed by will or gift.
- 37.
Only if the other spouse is the owner of the house: Cass. Civ., 23 May 2000, nr. 6691, in: Giustizia Civile, 2000/I, 2911; Studium Juris, 2000, 1137; Rivista del Notariato, 2000, 1499; Vita notarile, 2000, 1458. If it belongs to both of them, and the division cannot be done conveniently, the right becomes a claim for compensation. See Cass. Civ., 30 July, 2004, nr. 14594, in Giustizia Civile, 2005, 5, I, 1263.
- 38.
Cass. civ., 25 October 2004, nr. 20644, in Giur. it. 2005, 1605, in Vita not., 2005, 855: “Per individuare il “dies a quo” del termine di prescrizione dell’azione di riduzione per lesione della quota di legittima, occorre distinguere due ipotesi: (a) se la lesione deriva da donazioni, la prescrizione comincia a decorrere dall’apertura della successione; (b) se, per contro, la lesione deriva da disposizioni testamentarie, la prescrizione decorre dal momento in cui la disposizione testamentaria lesiva della legittima sia stata accettata dal chiamato all’eredità”.
- 39.
R. Frank (2007).
- 40.
Y.-H. Leleu (1997).
- 41.
Decreto-legge 14 March 2005, No. 35, converted into Law 14 May 2005, No. 80.
- 42.
G. Gabrielli (2005).
- 43.
A. Palazzo (2003).
- 44.
F. Salerno Cardillo (2004).
- 45.
Latin, meaning “gift on the occasion of death”.
- 46.
OJ L385, 31. December 1994, 14 (see also the communication containing the motivations of the recommendation: OJ C 400, 31 December 1994, 1), followed by the Communication from the Commission on the transfer of small and medium- sized enterprises (98/C 93/02).
- 47.
Through Law No 55, 14 February 2006, adding paragraph V bis to Tiltle IV of the 2 volume of the Civil Code.
- 48.
See A. Fusaro (2011).
- 49.
Art. 768 sexies CC states that excluded heirs may ask to receive the equal value of the asset as compensation of their portion.
- 50.
A “Draft” of a Family Agreement adapted from: I patti di famiglia e il trust, Le guide del professionista, Il sole 24 ore, 30/03/06, 15 and 16. (Family Agreements and Trust), has been translated in English by C. VALLONE, quoted above, 6.
- 51.
But finally they were not adopted.
- 52.
See Bill no. 4463 discussed on 28 June 2011, which transposes the original version of Decreto Sviluppo (d.l. no. 70/2011): these corrections were not adopted.
- 53.
The first concerned the possibility to postpone the transfer of the firm or shares at the time of the entrepreneur’s death, appointing a company director to manage the enterprise, with the same duties of a trustee indicate the beneficiaries of the firm. This amendment has been criticized (M. Ieva – A. Zoppini 2011), considering that the real beneficiary of the pact was the manager, not the heirs. Another amendment concerned the heirs who didn’t participate in the agreement: the proposal allowed to send them a copy of the contract, in order to enable the absents to subscribe it. The critics (M. Ieva – A. Zoppini, quoted above) argued that these heirs would certainly contest the agreement. An author (Campobasso 2011) proposed the introduction of an accordo fiduciario to amend the family agreement discipline.
- 54.
- 55.
B. Longo and A. Minto (2013).
- 56.
G. F. Campobasso, quoted above.
- 57.
Cass. Civ., 19 April 2001, nr. 5809, Foro it. 2001, I, 3653.
- 58.
The partnership agreement could also deal with the continued use of the name of a deceased partner.
- 59.
Cass. Civ., 16 December 1988, nr. 6849, Giur. it. 1989, I, 1, 1130, Giur. comm. 1989, II, 525.
- 60.
These clauses are described by F. Galgano (2007).
- 61.
Cass. Civ., 3 July 1967, nr. 1622.
- 62.
Cass. Civ., 16 July 1976, nr. 2815.
- 63.
Cass. Civ., 18 December 1995, nr. 12906; Cass. Civ., 19 June 2013, n. 15395 admitted the validity even in absence of agreement.
- 64.
When the meeting of shareholders decide to include this clause in the bylaws, the partner is allowed to recede from the company (art. 2473); the partner who withdraws, can get the value of the participation in money.
- 65.
P. Montalenti (2012).
- 66.
Prohibitive clause forbids all transfer of ownership, for a certain period; it covers sales and gifts, even inheritance, on condition that the heir receives compensation. Post- sale purchase right provides the same rule of “first refusal”, but after a person has acquired shares, giving the other shareholders an option to buy the shares, for a price settled according to stipulations or determined after negotiations. Further types of transfer restrictions are buy-sell clauses, mandatory for the heirs or for other shareholders. In the first case, other shareholders are obliged to buy the shares of the deceased, if the heirs want to sell. To protect ownership, the opposite is better suited, i.e. the clause according to which the heirs are obliged to sell if other shareholders want to buy. This clause is common in Italy, even in the articles of association, providing mechanisms to determine the price. The problem is that the heirs must be compensated, and this often happens through drainage of capital from the company, such as in the case of withdrawal; sometimes the partnership is dissolved and the business ceases. These are clause diffused even in other systems: L.-G. Sund and P.-O. Bjuggren (2008).
- 67.
The price to be paied to the heirs must be calculated “taking into consideration the assets of the company and its earnings prospects, as well as the possible market value of the shares”.
- 68.
With respect to the formation procedure, a notarial deed is necessary.
- 69.
The public authority has no discretion on whether it permits the formation of a foundation, provided that the requirements of the foundation law are fulfilled. The administrative body is involved in the ongoing supervision of the foundation.
- 70.
Cass. civ., 10 July 1979, nr. 3969, in Giur.it, 1980, I, 1, 882.
- 71.
- 72.
Cass. Civ, 10 July 1979, nr. 3969.
- 73.
Art. 28 CC: foundation may be dissolved by court order if it lacks the means to achieve its purpose and there are no prospects of means in the future. With respect to liquidation it is left to the founder to determine in the statutes what is to be done with the residual assets.
- 74.
- 75.
- 76.
Trib. Milano, 22 January 1998, in Nuova giur. civ. comm., 1999, I, 235.
- 77.
App. Palermo, 7 April 1989, in Giur. comm. 1992, II, 61.
- 78.
The so called impresa sociale: d.l.vo 24 March 2006, nr. 155.
- 79.
These participants can be called “members”, “supporters”, or “adherents” of the participatory foundation and normally may take part in an assembly of participants that has the right to elect a minority of the members of the governing body of the foundation.
- 80.
Membership of the Board of Directors, election and dismissal of board members, amendment of the statutes.
- 81.
He usually appoints the initial members of the board of directors, and may specify whatever appointment system within the formation deed (or other governing document) she/he deems suitable. Thus, the power to appoint new directors may rest with the founder herself/himself, with another natural or legal person, with the supervisory board of the foundation (if existing), or with the members of the board of directors (co-option/self-perpetuating).
- 82.
Because the state supervisory authority must act ex officio if there is justification in the form of suspicious facts.
- 83.
M. Lupoi, La giurisprudenza italiana sul trust, 3rd edn., Milano, Ipsoa, 2009.
- 84.
- 85.
A. Zoppini, Fondazione e trust (spunti per un confronto), in Giur. It., 1997, IV, 41.
- 86.
As a legal entity, foundation can own assets in its own name, does not require a change in the legal ownership of its assets as a result of a change in its governing body.
- 87.
This enables riskier types of assets to be managed within the structure.
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Fusaro, A. (2015). Company Succession in the Latin Law Tradition Using the Example of the Italian Legal System. In: Kalss, S. (eds) Company Law and the Law of Succession. Ius Comparatum - Global Studies in Comparative Law, vol 5. Springer, Cham. https://doi.org/10.1007/978-3-319-18011-3_9
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