Abstract
In Italy the general regulation of cooperatives may be found in articles 2511–2545octiesdecies of the Civil Code of 1942 (CC), as amended by Legislative Decree 17 January 2003, n. 6, on the reform of company law. Therefore, in the Italian legal system, cooperatives enjoy a specific regulation and represent a legally distinct subject matter. More precisely, cooperatives are considered a particular type of “society”—as companies are referred to by the CC—different from all other company types contemplated by law.
This chapter presents the general regulation of cooperatives under Italian Law, focusing on the aspects that make their identity distinct as compared to other business organizations. Italian Cooperative Law is an interesting model for lawmakers and a necessary point of reference for comparative cooperative lawyers.
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Notes
- 1.
This having been stated, two general explanations are necessary. Firstly, being a type of company, cooperatives are business organizations, since under Italian law societies (i.e. companies) are being characterized by the fact that they run an enterprise (see art. 2247 CC). However, the CC does not preclude other legal types of organizations, namely associations and foundations, from conducting business, although, unlike companies, associations and foundations that carry out an enterprise would be “non-profit” business organizations, as they are obliged in all cases to allocate their profits altruistically. Secondly, under Italian law, the “principle of typicality” (numerus clausus) of societies exists (see art. 2249 CC), which implies that only the types of societies contemplated and regulated by the CC (or other laws) may be established. The legal types provided for by the CC are: the simple partnership (società semplice); the general partnership (società in nome collettivo); the limited partnership (società in accomandita semplice); the public company (società per azioni); the private company (società a responsabilità limitata); the limited public company (società in accomandita per azioni); and the cooperative (cooperativa). Incorporation of EU legal types (the European company and the European cooperative society) is of course possible as well.
- 2.
Estimations for 2006 result in 71,464 cooperatives, 11,490,000 members (more or less, 1 in 5 Italian citizens), € 119 billion of turnover, and 1,249,000 employees (cf. Zamagni and Zamagni 2008), p. 89, which refers to the official data of cooperative federations). According to La cooperazione in Italia. 1° Rapporto Euricse [Cooperation in Italy. 1st EURICSE Report] of November 2011, at http://www.euricse.eu/it/node/1868, active cooperatives as of 31/12/2008 are 71,578, with 1,155,290 employees and € 91,8 billion of turnover.
- 3.
The Commercial Code of 1882 and the Civil Code of 1865 were repealed and substituted by the Civil Code of 1942, currently in force, although subject to many changes across the last 70 years, especially, as we will see, with regard to company law. On the history and ideology of the Italian codification of 1942 cf. Nicolò (1960), pp. 240ff.
- 4.
Cf. Bonfante (1984), p. 9, where also references to previous legal provisions dealing with cooperatives.
- 5.
In this sense Bonfante (1999), p. 15.
- 6.
In this sense Bonfante (1984), p. 80, where also, ivi, pp. 48ff., references to previous relevant regulations.
- 7.
- 8.
Indeed, unlike “ordinary” laws, the adoption of laws amending the Constitution and of other constitutional laws requires a more complex procedure, which makes the Italian Constitution a “rigid” constitution: see art. 138 of the Italian Constitution.
- 9.
This appears to be enough to justify, at the national level, the particular tax treatment of cooperatives as compared to companies, and thus to exclude, at the European Union level, its nature of “State aid prohibited” under art. 107 of the Treaty on the Functioning of the European Union: on this point, see European Union Court of Justice, 8 September 2011 (joined cases C-78/08 to C-80/08); this decision is commented in Fici (2013a).
- 10.
Legislative Decree 6/2003 implemented Law 3 October 2001, n. 366, and came into force on 1 January 2004.
- 11.
See, for example, with regard to cooperative banks, art. 150bis, Legislative Decree 385/1993.
- 12.
Thus, during the life of a cooperative, the applicable regulatory framework may change. This happens, for example, when the membership of a cooperative, which is initially subject to the regulation of an SRL, increases to 20 members. This change cannot be regarded as an event of cooperative conversion, even when the change is deliberately caused by the cooperative (which, for example, cancels the clauses of the act of incorporation where the rules of an SRL were opted for, thus becoming subject to the rules of an SPA). See in this sense, among others, Marano (2007), pp. 754ff.
- 13.
Before the 2003 reform, the absence of a definition gave rise to different theories on the meaning, contents and effects of the mutual aim, which are illustrated in detail in Bonfante (1999), pp. 9ff. The Italian Supreme Court viewed the mutual aim in the same sense as the Ministerial Report on the CC (n. 1025), and held it sufficient that mutuality was at least prevalent (see, among others, Cassazione, 4 January 1995, n. 111, in Le Società, 1995, p. 1164, and Cassazione, 8 September 1999, n. 9513, in Foro italiano, 2000, I, p. 3820).
- 14.
According to the Ministry of Economic Development (in Rilevazioni statistiche del Movimento Cooperativo in Italia. Anni 2006-2007-2008), which is responsible for the Register of Cooperative Societies (see par. 5 and 9), OCs were only 5.07 % of total cooperatives in 2008.
- 15.
Moreover, moving from the assumption that also an OC pursues a mutual aim (being subject to art. 2511 CC), it is not clear what the minimum amount of relationships with members must be for this entity to be recognized as a cooperative.
- 16.
In Italian law, social enterprises are a precise category of organizations, as identified by Legislative Decree 24 March 2006, n. 155. On this subject, see Fici (2009), pp. 77ff.
- 17.
More precisely, art. 2545octies, par. 1, CC states that the quality of PMC may be lost in two cases: when the cooperative does not respect the requirement of the prevalent activity with its members for two consecutive financial years and/or when the cooperative (cancels or) modifies the provisions of its statutes on partial profit non-distribution constraint, which were adopted in accordance with art. 2514. In the latter event, the cooperative shall draw up an extraordinary balance sheet and allocate its assets to indivisible reserve funds (art. 2545octies, par. 2 and 3, as amended by art. 10, par. 8, Law 23 July 2009, n. 99): on this subject, see Rocchi (2006), pp. 27ff.; Bonfante (2010), p. 75, which mentions a different line of thought according to which assets should be devolved to the mutual funds of art. 11, Law 59/1992. The loss of quality of PMC, and the consequent “transformation” of the cooperative into an OC, cannot be regarded as an event of conversion (therefore, the pertinent regulation would not be applicable), if one is of the view that conversion only occurs when an organization of a certain legal type is transformed into another organization of a different legal type (e.g., from a cooperative into an SPA): see in this sense De Stasio (2007) p. 193f.
- 18.
On this topic cf. Casale (2005), and, among others, Cassazione, 6 September 2007, n. 18724, in Banca Dati De Jure.
- 19.
The formation of cooperatives is carefully examined in La Sala (2007) pp. 699ff.
- 20.
E.g., the minimum number of members of cooperative banks is 200 (articles 30, par. 4, and 34, par. 1, Legislative Decree 385/1993).
- 21.
However, it must be pointed out that, according to Italian law, cooperative banks are of two types: “popular banks”, which are not obligated to operate prevalently with their members, and “credit cooperative banks”, which are obligated to do so. The regulation of the two types is partially different. E.g., while the rule just mentioned in the text applies only to credit cooperative banks, the rule on the minimum number of 200 members applies to both.
- 22.
More in particular, it is not clear whether the general meeting may modify the decision of the board of directors, and thus exact the admission. Similarly, it is not clear what types of legal actions may be taken by third parties if the general meeting does not reverse the decision and the refusal is unlawful (still less clear is when a refusal may be considered unlawful). A detailed discussion of all these issues may be found in Mazzoni (2007), pp. 763ff.
- 23.
As stated (see sec. 22.6), this does not mean, however, that third parties are entitled to enter the cooperative. Cooperatives may also decide to issue new shares to be subscribed to by the present members (art. 2524, par. 3, CC).
- 24.
What is stated in the text does not mean that cooperative members are free to withdraw. Under Italian law, members may withdraw only in the cases provided for by law or by the cooperative statutes (art. 2532, par. 1, CC).
- 25.
The percentage is 10 % for popular banks (art. 32, par. 1, Legislative Decree 385/1993) and 70 % for credit cooperative banks (art. 37, par. 1, Legislative Decree 385/1993).
- 26.
See in this sense art. 12, Presidential Decree 601/1973 (see infra, sec. 22.11), and art. 3, par. 2, b, Law 142/2001. Cf. also Cassazione, 8 September 1999, n. 9513, cit.
- 27.
The prevailing opinion is that members have no right to patronage refunds (as they do not have to dividends), whose distribution, therefore, depends on a decision taken by the cooperative organs. Members’ right to patronage refunds emerges only after this decision is taken.
- 28.
A limit of 30 % of the salary applies to worker cooperatives (see art. 3, par. 2, Law 142/2001).
- 29.
In addition, it is still not clear, even after the 2003 reform, whether (in cooperatives that act both with members and non-members) only that part of the profits that derives from transactions with members may be refunded or also that part of the profits that derives from transactions with non-members. In the former sense, see Ministerial Communication 53/E of 18 June 2002, which, in dealing with the specific tax treatment of cooperative refunds (see infra, sec. 22.11), affirms: “cooperative refund, that is, the restitution to members of part of the price paid for goods and services or the extra-remuneration for work, and in general, goods and services provided by members, is possible only if the balance of the activity performed by the cooperative with its members is positive. What may be refunded is only the documented surplus from transactions with members and not the surplus from transactions with non-members” (translation by author).
- 30.
Art. 2545sexies, par. 1, CC helps to correctly interpret art. 2516 CC, according to which, in the conclusion and execution of mutual exchanges, the cooperative must treat members equally. This rule does not obligate the cooperative to treat its members in the same way, but as clarified by art. 2545sexies, par. 1, to treat its members in proportion to their individual contributions to the fulfillment of the mutual aim. On this topic see Fici (2011), pp. 2484ff.
- 31.
Given art. 2514, a further limit regards financial instruments subscribed to by user-members in a PMC, as already pointed out above in the text.
- 32.
Namely, it may offer financial instruments, which do not confer governance rights, only to qualified investors.
- 33.
Art. 2539, par. 1, only deals with cooperatives SPA, and thus it is debated whether voting by proxy is permitted in cooperatives SRL.
- 34.
Namely, for cooperatives with more than 3,000 members, cooperatives that operate in several provinces, and cooperatives with more than 500 members and different types of mutual relationships (art. 2540, par. 2, CC).
- 35.
These systems are also available to cooperatives SRL (but some scholars hold differently). The governance of cooperatives SRL might even be simplified, but the limits of this chapter do not allow the analysis of this subject.
- 36.
In fact, smaller cooperatives (namely, those whose capital is not greater than € 120,000; and which do not simultaneously go beyond two of the following limits: balance sheet assets € 4,400,000; proceeds € 8,800.000; 50 employees on average; and which do not issue “non-participative” financial instruments) are not obligated to appoint a supervisory board (see art. 2543, par. 1; 2477, par. 2, 3; 2435bis, par. 1, CC). It is debated whether in this case the cooperative SPA is obligated to appoint an external auditor of accounts.
- 37.
Cooperative revisions are also directed at providing cooperative organs with advice in order to improve management, internal democracy and member participation (art. 4, par. 1, a, Legislative Decree 220/2002). Cooperative revisions cannot be justified only on the grounds that the cooperative is a recipient of public aid, as shown, among other things, by the fact that also OCs are subject to control.
- 38.
The decision to convert shall be approved by a specific majority (see art. 2545decies, par. 1 and 2) and entitles dissenting (as well as abstaining and absent) members to withdraw from the cooperative (see articles 2437 and 2473 CC, applicable to cooperatives in virtue of art. 2519 CC).
- 39.
See supra, sec. 22.4 and fn. 17.
- 40.
For example, up to € 120,000 if the cooperative is to be transformed into an SPA. This is, in fact, the minimum capital prescribed by the law in order to establish an SPA (art. 2327 CC). Some argue that, notwithstanding the letter of art. 2545undecies, par. 1, and on the basis of a systematic interpretation, assets to be devolved to mutual funds are only indivisible reserves: see in this sense Bonfante (2010), p. 386f.
- 41.
- 42.
It is worth pointing out that these reserves may be used to cover financial losses—without this producing the loss of the tax measure—but only as long as the profits are not distributed before the re-establishment of the reserves (art. 3, par. 1, Law 18 February 1999, n. 28).
- 43.
The threshold of non-exemption has been recently increased (see art. 2, par. 36bis, Decree-Law 13 August 2011, n. 138): this shows a legislative trend towards the approximation of the tax treatment of cooperatives to that of companies. Along the same lines, art. 2, par. 36ter, Decree-Law 13 August 2011, n. 138, by changing art. 1, par. 1, Decree-Law 15 April 2002, n. 63, excludes the exemption of 10 % of profits allocated to the compulsory legal reserve (i.e., 3 % of total annual profits, as 30 % of total annual profits must be allocated to the compulsory legal reserve according to art. 2545quater, par. 1, CC).
- 44.
This does not exclude, per se, that members are subject to taxation for the sums received as patronage refunds, which would be postponed when patronage refunds are assigned as free shares of capital. On the concept of patronage refunds for the application of this provision, see Ministerial Communication 53/E of 18 June 2002, quoted in footnote 29.
- 45.
See, for example, articles 10 and 11, Presidential Decree 29 September 1973, n. 601, dealing with agricultural, small fishery, and worker cooperatives.
- 46.
In reality, the VAT regime applicable to social cooperatives is more complex: for further details, see Di Diego (2010), pp. 195ff.
- 47.
Of course, since their members are legal persons and entrepreneurs, secondary cooperatives may enjoy the subset of rules dedicated to cooperative members who possess this nature (e.g., art. 2538, par. 3, CC, on the attribution of plural votes to cooperative members who are legal persons; art. 2538, par. 4, CC, on the attribution of plural votes in cooperatives made up of entrepreneurs).
- 48.
In this regard, it is worth mentioning that a cooperative may hold shares of a (public or private) company (art. 27quinquies, Legislative Decree 1577/1947, as introduced by art. 18, Law 19 March 1983, n. 72), and even control it (see art. 15, Law 59/1992), thus establishing an “heterogeneous” cooperative group consisting of a cooperative which holds the control of one or more (non-cooperative) companies. Italian cooperatives have made large use of this structure to expand their business.
- 49.
The most important are at the moment Confcooperative and Legacoop (which moreover, together with another federation, the AGCI, established in 2011 the “Alliance of Italian cooperatives”, as a structure of coordination between them).
- 50.
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Further Reading
Abbadessa P, Portale GB (eds) (2007) Il nuovo diritto delle società [The new company law]. Liber amicorum Gian Franco Campobasso, vol IV. UTET, Torino
Fici A (2004) Financial participation by employees in co-operatives in Italy. J Co-oper Stud 37(2):16
Fici A (2010) Italian cooperative law reform and cooperative principles. Euricse Working Papers (2). in www.ssrn.com
Pernazza F (2012) Corporations and partnerships in Italy. Kluwer Law International, The Netherlands
Presti G (ed) (2006) Società cooperative [Cooperative societies]. Egea-Giuffrè, Milano
Zamagni S, Zamagni V (2011) Cooperative enterprise. E. Elgar, Cheltenham
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Fici, A. (2013). Italy. In: Cracogna, D., Fici, A., Henrÿ, H. (eds) International Handbook of Cooperative Law. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-30129-2_22
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