Law Finale Spero 3 PDF

Art. 2252. (Amendments to the partnership agreement). The partnership agreement can be amended. only with the consent of all the partners, unless otherwise agreed. Art. 2296 (Publication) states that only for the purpose of the registration in the Business register and so for the regularity of the general partnership, the instrument of incorporation must be drawn up with the form of the public deed or of a written private deed certified by the notary Art. 2295. (Instrument of incorporation). The instrument of incorporation of the general partnership must contain: 1) the last name and first name, domicile, citizenship; 2) the name of the partnership; 3) the partners who have the administration and representation of the partnership: 4) the headquarters of the partnership; 5) corporate purpose; 6) the contributions of each partner, the value attributed to them and the method of valuation; 7) the services to which the work partners are obligated: 8) the rules according to which profits are to be distributed and the share of each partner in profits and losses; 9) the term of the partnership. 2. Contributions and liabilities With the partnership incorporation each partner assumes the obligation to make the contributions determined in the partnership agreement. As said, the determination of the contribution of the partners in the instrument of incorporation is not necessary to have a valid incorporation of the partnership. If nothing is provided in this regard in the instrument of incorporation, as stated in Art. 2253. (Contributions): the partner is obligated to execute the contributions determined in the partnership agreement. If the contributions are not determined, it is presumed that the partners are obliged to contribute, in equal parts among themselves, what is necessary for the achievement of the partnership object. Unlike companies, no restriction is provided for the assets which can be conferred as contribution. So, with partnerships any assets (goods or services) that can be economically valued and that are useful for the achievement of the corporate purpose can be conferred. The Italian Civil Code provides some specific rules for some types of contributions: contribution of assets in kind, contributions of receivables, contributions of work. Contributions go to form the initial asset (patrimonio) of the partnership. Partners cannot use the goods that in the partnership asset for purposes diﬀerent from the corporate purpose (art. 2256 c.c.). The violation of this prohibition may result in compensation for damages and exclusion of the partner from the partnership. Also, this prohibition can be derogated with the consent of all the other partners. A regulation of the partnership asset lacks in the Civil Code for the simple partnership. For the general partnership, instead, there are few rules. The law states that the instrument of incorporation indicates the contributions made by the partners, the value attributed to them and the method of valuation there are only two rules provided to grant the integrity of the partnership capital: Art. 2303 of the Civil Code forbids the distribution among the partners of profit that were not really achieved: amounts that do not correspond to a surplus of net asset (patrimonio netto) over the nominal capital. The same rule states also that if there is a loss in the partnership capital, no distribution of profits may take place until the capital is replaced or reduced accordingly. Art. 2306 forbids directors to reimburse partners the contributions already done or to release partners from the contributions they still have to make in the absence of a resolution to reduce the share capital. This operation involves a real reduction of the net asset and could undermine the interests of the partnership's creditors. So, they have the right to claim against the reduction resolution. 3. Partners' participation in profits and losses Art. 2262. (Profits). Unless otherwise agreed, each partner is entitled to receive his share of profits after the approval of the accounts. So all the members have the right to participate in profits and losses of the partnership. They are free to determine each partner's due portion and the division could not necessarily be made proportionally to the contributions. Art. 2265. (Leonine pact). Any agreement leading to one or more partners being fully excluded from profit sharing or from participation in losses shall be deemed null and void. it would be indeed unreasonable to exclude a partner from profits or losses. In any case this would not cause the entire agreement to be declared null and void, but only the Leonine pact. As art. 2263. (Allocation of gains and losses) states, the legal criteria for allocating gains and losses are the following: 1. Partners' shares in gains and losses are presumed to be proportional to contributions. 2. If the value of the contributions is not determined by the agreement, they shall be presumed equal 3. The share due to the contributing partner, if not determined by the contract, shall be determined by the court according to equity. 4. If the contract determines only the share of each partner in the gains, to the same extent shall be presumed to determine the share in losses. In the simple partnership the right of the partners to have their profits arise with the approval of the financial statement, which is drawn up by the managing partners at the end of each year, unless otherwise provided in the partnership agreement. In the general partnership the document that states profits and losses it's a real financial statement, drawing up following the rules provided for the financial statements of the companies limited by shares. The financial statement must be drawn up by the managing partners and it must be approved by the partners, with the majority determined according to the portion in the profits attributed to each of them. 4. Partners liability for partnership obligations (debts) Both in simple and general partnership, the partnership's assets are the primary guarantee for the partnership creditors. In simple partnership, the personal liability of all the partners is not a mandatory principle. The liability of the partners who don't have the power to represent the partnership may be excluded or limited with an appropriate agreement. As stated in Art. 2267 (Liability for corporate obligations), Creditors of the partnership may claim their rights toward the corporate assets. For corporate obligations also shall be liable personally, jointly and severally the partners who have acted in the name and on behalf of the partnership and, unless otherwise agreed, the other partners. The agreement must be brought to the knowledge of third parties by suitable means; failing this, the limitation of liability or exclusion of solidarity is not enforceable against those who did not have knowledge of it. In general partnership, the personal liability of all the partners is not derogable. So, a contrary agreement does not have any eﬀect against third parties and cannot be opposed to them, but it has eﬀect between the partners (Art. 2292) Limitation of liability of some partners: Simple partnership: an agreement limiting the liability of some (not all) of the partners is possible, but is enforceable against third parties only if brought to their knowledge by appropriate means. General partnership: an agreement limiting the liability of some (not all) of the partners is possible, but it has only an internal eﬀect (i.e., only among the partners) and is not enforceable against third parties. Art. 2269. (Liability of the new partner). A person who joins an already incorporated partnership is liable with the other partners for corporate obligations prior to the acquisition of the status of partner. Partners are jointly and severally liable among them, but they are liable subsidiary to the to the partnership, because to them is granted the benefit of prior enforcement of partnership assets. This benefit of prior enforcement of partnership assets works in diﬀerent ways, depending on the type of partnership. In the simple partnership (and also in the irregular general partnership), Art. 2268. (Preventive execution of partnership assets - Beneficium excussionis). A partner required to pay corporate debts can request, even if the company is in liquidation, the preventive enforcement of the corporate assets, indicating the assets which the creditor can easily satisfy himself. In this article, the prior enforcement of partnership assets works by way of exception and the partner will have to pay if he/she doesn't prove that in the partnership asset there are suﬃcient assets, easy to liquidate by the partnership creditor. In the regular general partnership, instead, Article 2304. (Liability of partners - Beneficium excussionis). Corporate creditors, even if the partnership is in liquidation, may not demand payment from individual partners, except after the execution of the company's assets. Beneficium excussionis: a legal clause entitling a surety the right to have a creditor proceed against the principal debtor first before pursuing the surety for any further payment. → Simple partnership: the beneficium excussionis doesn't work automatically. Partnership creditors can address their request to the partners, and it is the latter who must oppose the beneficium excussionis. General partnership: the beneficium excussionis works automatically. The partnership creditors first have to execute the partnership assets and only in the case these are insuﬃcient may address the request to members. 6. Partner's personal creditors Partner's personal creditors can never directly "attack" the assets of the partnership. But a partner's personal creditor is granted a form of protection. Both in the simple and in the general partnership he/she may (art. 2270, par. 1): 1) assert his/her rights to the profits due to the partner/debtor and 2) perform conservative acts on the quota due to the partner in the liquidation. In the simple partnership (and in the irregular general partnership too) (art. 2270, par. 2): If the debtor's other assets are insuﬃcient to satisfy the debtor's claims, the partner's personal creditor may also ask at any time the liquidation of his/her debtor's quota. The quota must be liquidated within three months by the request, unless the dissolution of the partnership is resolved. To the regular general partnership, the law provides with a diﬀerent rule (art. 2305): a partner's personal creditor, as long as the partnership lasts, cannot demand the liquidation of the quota of the debtor/partner. Also in the case he/she can give the proof that the other assets of the partner/ debtor are not suﬃcient to satisfy his/her credits. As art. 2307 states, this rule applies until the deadline of the general partnership stated in the instrument of incorporation. Partners can pass a resolution to approve the extension of the duration, but in this event a partner's personal creditors may object to the extension of the partnership. If the opposition is accepted, the partnership must, within three months by the decision, liquidate the quota of the debtor/partner. 7. The administration of partnership The administration of the partnership is the activity aimed to manage the partnership. The power to manage is the power to carry out all acts within the corporate purpose. Under Italian Company Law each unlimited liable partner is director of the partnership (art. 2257 (Disjunctive administration)). The instrument of incorporation may provide that the power of administration is reserved only to some partners, arising the distinction between managing partners and non-managing partners. art. 2257, par. 2: If management powers are exercised by several diﬀerent partners, then each managing-partner has the right to object to any operations proposed by another managing-partner before it is completed (veto right). This disjunctive administration oﬀers some benefits in terms of speed of the decision, but also it could be dangerous because the single managing partner could fulfill operation that can undermine the interest of the partnership without the knowledge of others Hence, the law also provides for another model of administration, which is aimed to privilege the exigence of a major ponderation: the joint management or conjunctive administration. Art. 2258. If management is entrusted to several partners jointly, then all manager-partners must give their consent for company operations to be carried out. If it is agreed that for that the management or for certain acts require the consent of the majority, the majority is determined in accordance with the last paragraph of the previous article. In the cases provided for in this article, individual managers cannot take any decision on their own, except in the case of urgency to avoid damage to the partnership 8. Administration and representation Among the responsibilities provided by the law for the managing partners there is also the power to represent the partnership. The power of representation is the power to act with third parties on behalf of the partnership, acquiring rights and assuming obligations for the partnership (art. 2266, par. 1, c.c.). The power of representation is diﬀerent from the power to manage. The power to manage involves the internal management activity, the decision-making process of the partnership operations. The power of representation, instead, involves the external management activity, that is the stage of implementation with third parties of the partnership operations. Unless otherwise provided in the instrument of incorporation, the power to represent the partnership is attributed to each managing partner, disjunctively or conjunctively, depending on the administration model adopted by the partnership. In the case of disjunctive administration, each managing partner can decide alone and stipulate acts in the name of the partnership (several signature power). Instead, in the case of conjunctive management, the decision will be taken with the consent of all the managing partners or with the majority, and all managing partners must participate in the stipulation of the act (joint signature power). The instrument of incorporation can provide a diﬀerent regulation of the power of management and of the power of representation. It can, for example, attribute the power of representation only to some managing partners, it may establish ways of exercise for representation that diﬀer from those that apply to the power of management and may limit the extent of the individual managing partners' power of representation. This issue, in the regular general partnership is solved with the legal publicity as stated in art. 2298, limitations on managing partners' power of representation, are not enforceable against third parties if they are not recorded in the Business register or if it is not proved that third parties had actual knowledge of them. In the irregular general partnership, by art. 2297, so general partnerships that lack registration shall be regulated by the provisions relating to the simple partnership. Limitations to the power of representation. cannot be opposed to third parties, unless it can be proved that they were aware of it. In simple partnership, original limitations to the power of representation are always opposable to third parties, the latter must check if partners who act on behalf of the partnership have eﬀectively the power to represent the partnership. 9. Managing partners The instrument of incorporation can attribute the administration to some partners, giving rise to the distinction between managing partners and non managing partners. The removal of the managing partner appointed in the instrument of incorporation involves an amendment to the latter, so, it must be decided by the other partners with the consent of all of them, unless otherwise provided (art. 2252 c.c.). Moreover, the removal has no eﬀect if there are not a just cause (art. 2259, par. 2, c.c.). Managing partners appointed with a separate act, instead, can be removed from their oﬃce following the rules provided for the mandate. Hence, he/she can be removed also without a just cause, except for the right to compensation for damages. Art. 2260. (Rights and obligations of directors). The rights and obligations of directors are regulated by the rules on mandate. The directors are jointly and severally liable toward the partnership for the fulfillment of the obligations imposed on them by the law and by the partnership agreement. However, the liability does not extend to those who prove that they are exempt from fault. 10. Non-managing partners When the power to manage the partnership is attributed only to some partners, the law grants other partners deep powers of information and control (art. 2261 c.c.) Each non-managing partners, indeed, has the following powers: a) The right to have information from the directors about the running of the partnership's operations. b) The right to consult the documents relating to the administration of the partnership and all the accounting records. c) The right to obtain a financial statement at the end of each year, or at the end of the partnership's running if this one ends first. 11. Partners non-competition duties Art. 2301. (Prohibition of competition). A partner may not, without the consent of the other partners, carry on his/her own behalf or on behalf of others an activity competing with that of the partnership, nor participate as an unlimited partner in another competing partnership. The violation of this prohibition implies the compensation for damages to the partnership and entitles the other partners to decide on his/her exclusion. However, the prohibition is not absolute. It can be removed by the other partners and the consent is presumed if the competitive situation existed before the incorporation of the partnership and the other partners were aware of it 12. The amendments to the instrument of incorporation. In simple partnership and general partnership, the instrument of incorporation can be amended only with the consent of all the partners, unless otherwise provided (art. 2252 c.c.). No agreement in the instrument of incorporation can be changed without the consent of all partners. Within the amendment of the instrument of incorporation also fall the changes in the composition of the partnership (i.e., the changing of partners). So, also in the event of the transfer of quota (whether by act between living persons or by cause of death) it will be necessary the consent of all the other partners. In regular general partnership and now also in simple partnership, the amendments of the instrument of incorporation are subjected to the recording in the Business register, only after the recording they can be opposed to third parties. Before the recording they cannot be opposed, unless it can be proved that third parties were aware of it. In irregular general partnership, the amendments of the instrument of incorporation must be brought to the knowledge of third parties by suitable means and cannot be opposed to those who have, without fault ignored them. Art. 2252. (Amendments to the partnership agreement). The partnership agreement can be amended only with the consent of all the partners, unless otherwise agreed. So, the power of the majority with regards to the amendments of the instrument of incorporation meet some limits, because it must be compliant with two general principles: the obligation to execute the agreement with good faith and the respect for the equal treatment of partners. 13. Dissolution of the relationship between partner and partnership Each partner of a partnership discontinues to be so for case of: death, withdrawal and exclusion. When one more partners cease the relationship with the partnership this does not result in the dissolution of the partnership but requires only the necessity to define the patrimonial relationship between the actual partners and the outgoing partners or the heirs of the death partner throughout the liquidation of his/her quota. It's a decision of the actual partners if they proceed then to end or to continue the partnership. Causes of dissolution of the relationship between partner and partnership and their eﬀect: a) Death of the partner Article 2284. (Death of the partner). Unless the partnership agreement provides otherwise, in the event of the death of one of the partners, the others must liquidate the quota to the heirs, unless they prefer to dissolve the partnership, or to continue it with the heirs themselves and the latter agree to this. There are three ways: → liquidation of the quota to the heirs within 6 months → dissolution of the partnership, heirs wait the end of the liquidation procedure for the division of the partnership's assets → continuation of the partnership with the heirs, for which the consent of the partners and heirs is obviously required b) Withdrawal of the partner Art. 2285. (Withdrawal of the partner). Any partner may withdraw from the partnership when the agreement is for an indefinite period or for the lifetime of one of the partners. In this case the withdrawal must be communicated to the other partners with at least three months' notice. The right of withdrawal of a defined period agreement can be exercised when there is a just cause. In this case the will to withdraw must be communicated to the other partners too, but the withdrawal is immediately eﬀective c) Exclusion It can be distinguished into two hypotheses: in some cases, it follows automatically to some situations (exclusion by law), in other cases it is optional, i.e., it is decided by the other partners (optional exclusion). Art. 2288 (exclusion by law): a partner is excluded by law when he/she: a) is declared bankrupt, takes eﬀect from the day of the decision that states the insolvency b) against one of his/her personal creditors has obtained the liquidation of the quota under art. 2270, takes eﬀect only when the liquidation of his/her quota is eﬀectively done As art. 2286 states, the three kinds of causes for which a partner can be excluded are: 1. Causes related to breach of social obligations 2. Causes related to the loss of the legal capacity 3. Causes related to the contributions For each of these causes there needs to be an exclusion process to decide for the exclusion of a partner. Exclusion is decided by the majority of the partners. The decision must be motivated and must be communicated to the excluded partner. It takes eﬀect after thirty days from the date of notice to the excluded partner. Within this period the excluded partner can claim against this decision (opposition) before the Court, which can also suspend the execution of the decision. This procedure, of course, cannot apply when the partnership is composed of only two partners. In this event, the exclusion of the partner is decided directly by the Court by the request of the other partner. (Art. 2287. (Exclusion procedure)). When a cause of dissolution of the relationship between partner and partnership arises, partner or his/her heirs have the right to obtain the liquidation of the quota. More exactly, he/she has the right to obtain an amount of money corresponding to the value of the quota (art. 2289, par. 1, c.c.). It means that the partner cannot ask for the restitution of the goods conferred to the partnership, also if they are already existent in the partnership asset. Nor a partner who has contributed the use of a good to the partnership can ask for its restitution, unless otherwise provided in the partnership agreement. The value of the quota is determined taking into account the financial situation of the partnership on the day in which the dissolution of the relationship occurs. The financial situation of the partnership must be determined attributing to assets their actual value as well as taking into account the value of the partnership assets and of profits and losses from ongoing operations. The payment of the quota attributed to the partner must be fulfilled within six months, which runs from the day in which the dissolution of the relationship occurs. In the case of dissolution relating to the requirement of the partner's personal creditor, it must be fulfilled within three months by the request. As already seen, the ceased partner or the heir of the deceased partner continues to be personally liable for the partnership obligations that arise until the day in which the dissolution occurs.(art. 2289 (Liquidation of the quota of the leaving partner)). 14. The dissolution of the partnership The grounds of dissolution provided for the simple partnership and general partnership are the following: 1) The expiration of the term fixed in the instrument of incorporation. The continuation of the partnership is however possible. The extension of the deadline can be both express or tacit. The partnership is deemed to be tacitly extended indefinitely when, after the expiration of the term, the partners continue the business activity. 2) The achievement of the corporate purpose or by the supervening impossibility of achieving it. Causes that make impossible to achieve the corporate purpose also include obstacles to the operation of the partnership caused by the irreversible discord among the partners resulting in the absolute paralysis of the business activity. 3) The will (consent) of all partners, unless the instrument of incorporation provides that the early dissolution of the partnership can be decided by the majority. 4) The lack of the plurality of partners, if within six months this is not reconstituted. In the case there is only one remaining partner, it is not itself a cause of dissolution of the partnership. For this cause for dissolution to become operative, the situation must continue for six months. 5) Other causes provided for in the partnership agreement. 5-bis) The opening of the controlled liquidation procedure. Art. 2273. (Tacit extension). The partnership is tacitly extended indefinitely when, the partners continue to carry out the corporate operations. When a cause of dissolution occurs, the partnership enters automatically in the liquidation status and in case of a general partnership this situation must be expressly indicated in the agreement. The partnership is not immediately extinguished. First, partnership creditors must be paid, and the remaining assets (if any) must be distributed among the partners through the liquidation procedure. Art. 2274. (Powers of directors after dissolution). After the dissolution of the partnership occurred, the partners maintain the power of administration, limited to the urgent aﬀairs, until the necessary steps are taken for the liquidation. 15. The liquidation procedure and the extinction of the partnership Art. 2275. (Liquidators). If the partnership agreement does not provide for the liquidation of the partnership assets and the partners do not agree to determine it, the liquidation is done by one or more liquidators, appointed with the consent of all the partners or, in case of disagreement, by the president of the court. Liquidators may be removed by the will of all partners and in any case by the court for just cause upon the request of one or more partners. With the acceptance of the appointment, liquidators take the place of directors, then as stated in Art. 2277. (Inventory). The directors shall hand over to the liquidators the partnership assets and documents and submit to them the account of the management for the period following the last account. The liquidators must take delivery of the partnership assets and documents, and draw up, together with the directors, the inventory showing the assets and liabilities of the partnership assets. The inventory must be signed by the directors and the liquidators. Liquidators come into action, and their main role consists in the definition of all the operations relating to the business activity: conversion of assets into cash, payment of partnership creditors, distribution of any remaining assets among partners. Art. 2278. (Powers of liquidators). The liquidators may fulfill all the acts necessary for the liquidation and, if the partners have not provided otherwise, they may also sell the partnership assets in bloc and make transactions and compromises. They also represent the partnership in court. Art. 2280. par. 2 (Payment of partnership debts). If the available funds are insuﬃcient to pay the partnership debts, the liquidators may demand from the partners the payments still due on the respective quotas and, if necessary, the sums required, within the limits of ftheir t respective liability and in proportion to each one's participation in the losses. In the same proportion, the debt of the insolvent partner shall be divided among the other partners. The law provides two limitations for the liquidators: 1) Art. 2079: They cannot engage in new operations. If they breach this provision they will be personally, jointly and severally liable for those operations toward third parties 2) Art. 2280 par. 1: They cannot distribute the corporate assets, even partially, among the partners, until the partnership creditors are paid or the sums necessary to pay them are set apart Overall, liquidators' duties and liabilities are governed by the rules provided by directors (art. 2276). Once all the partnership debts are paid, the liquidation procedure goes to the end with the distribution of any remaining assets converted in money among partners, if the latter haven't stated that the distribution shall be done through the handover of the assets in kind. Art. 2282. (Allocation of assets). Having extinguished the partnership debts, the remaining assets are allocated to the repayment of contributions. Any surplus shall be distributed among the partners in proportion to each one's participation in the profits. There is not any specific rule for the end of the liquidation procedure in the simple partnership. In the general partnership, instead, liquidators must draw up the final financial statements and the distribution plan (art. 2311 c.c.). The first is substantially the report of the liquidator's management activity. The second is a division proposal among the partners of the remaining asset. With the approval of the financial statements, liquidators are free from their responsibility towards the partners and the liquidation procedure ends. In the irregular general partnership, the end of the liquidation procedure determines the extinction of the partnership, whether the rules are met and so the partnership creditors have been paid. Failing this, the partnership must be considered already existent, also because it lacks a formal act that states its end. Art. 2312. (Cancellation of the partnership). Having approved the final liquidation financial statements, the liquidators shall apply for the cancellation of the partnership from the Business register. From the cancellation of the partnership, partnership creditors who have not been satisfied may assert their claims against the partners who remain personally liable for the partnership's organization. Limited partnership Limited partnership is a partnership that can be distinguished to the general partnership for the presence of two categories of partners (Article 2313. (Notion)): a) general partners, who are personally, jointly and unlimitedly liable for the corporate obligations, b) limited partners who are liable limited to the quota conferred. More exactly, they are only obliged towards the partnership to fulfill the contributions promised. Diﬀerent is also the position of these two categories of partners in relation to the partnership administration. That is an exclusive responsibility of the general partners. Limited partners, instead, are excluded from the management of the business activities. The limited partnership discipline is designed on that of the general partnership (art. 2315 c.c.), of course with some adaptations required by the presence of two categories of partners, each one with diﬀerent powers and diﬀerent liabilities for partnership obligations. The partnership is also very diﬀerent from the limited partnership by shares: in the latter there are two categories of partners too, but that is a company (società di capitali), and its discipline is designed on the discipline of the company limited by shares. The limited partnership is the sole type of partnership that consents to the common exercise of a business activity with a limitation of the risk. For this reason, it is a type of partnership that could easily be abused. Hence the need to prevent abnormal use of this type of partnership, with the provision of strict limits on limited partners and serious penalties for their violation. This, as will be seen, is the reason for the rules provided for the formation of the partnership name and the prohibition of administration on limited partners. 1. Incorporation and partnership name Art. 2316. (Instrument of incorporation). The instrument of incorporation shall specify the general partners and the limited partners. The instrument of incorporation of the limited partnership is subject to the inscription in the Business register too, but the failure to register regis only results in the partnership's irregularity, with the application of the discipline exposed later. A diﬀerence between the general partnership and the limited partnership regards the partnership name (art. 2314 c.c.). The business name of the limited partnership must be composed with the name of at least one of the general partners and with the indication of the partnership type (s.a.s.). The names of the limited partners cannot be included in the partnership business name. This is to prevent those who come into contact with the partnership from also mistakenly relying on the personal liability of such partners. Indeed, the limited partner, who allows his/her name to be included in the business name, is liable towards third parties unlimitedly, jointly and severally with the limited partners for partnership obligations. It means that the limited partner lose the benefit of the limited liability, and that is for all the partnership obligations and towards all the partnership creditors. But it will not become a general partner and so it will not have the right to manage the partnership. 2. Limited partners and partnership administration The regulation of the limited partnership is designed on that of the general partnership, but there are significant diﬀerences relating to the administration. The administration of limited partnerships can be fulfilled only by the general partners, who have the same powers and duties as the partners of the general partnership (art. 2318). Art. 2320. par. 1 (Limited partners). Limited partners may not perform acts of administration or transact or conclude business in the name of the partnership, except by virtue of special power of attorney for individual business. The limited partner precluded both the participation to the partnership internal administration and the possibility to act on behalf of the partnership with third parties (power of representation). More exactly relating to the internal administration of the partnership, the limited partner is lacking in any autonomous decision-making power for the business activity: he/she cannot decide alone any operation and he/she cannot participate in the decisions of the managing partners or condition their actions too. For the limited partners it is forbidden to act on behalf of the partnership like a general representative. Limited partner who breaches the prohibition of interference will be liable towards third parties unlimitedly, jointly and severally for all the partnership obligations (present, past and future). Limited partners who breach the prohibition of interference will be also exposed to the penalty of exclusion from the partnership, with a decision taken by the majority of the other partners (general and limited partners). To the limited partners, however, are attributed by the law, or can be attributed with the partnership agreement, some rights and powers of an administrative nature (in a broad sense). First, limited partners have the right to contribute with the general partners to the appointment and the removal of the managing partners when the instrument of incorporation provides for their appointment with a separate act. Indeed, it is necessary the consent of all the general partners and the consent of the limited partners. who represent the majority of the capital subscribed by them (art. 2319). Regarding the participation in the business activities, the general prohibition of interference in the administration of the partnership is partially tempered by the legislative recognition that limited partners: a) may transact or conclude business in the name of the partnership, but only under a special power of attorney for some given business; b) may perform their work (manual or intellectual) in the partnership, under the direction of the managing partners and thus never in an autonomous or in an independent position; c) if the instrument of incorporation provided, give authorizations and opinions for certain operations, as well as carry out acts of inspection and control, always within the limits imposed by the general prohibition of interference in the administration. With specific regard to the powers of control of the limited partners, they have the right to have the annual communication of the financial statements and to control its accuracy, consulting the books and the other documents of the partnership (art. 2320, par. 3, c.c.). 3. The transfer of quotas The diﬀerent position of the general partners and of the limited partners is reflected in the rules provided for the transfer of their quota. Regarding the transfer of the general partners quota, it applies the rules provided for the general partnership. Unless otherwise provided in the instrument of incorporation, the transfer of the general partners quota, whether by act between living persons or by cause of death, requires the consent of all the other partners (both general and limited partners). For the transfer due the cause of death, it will be necessary the consent of the heirs too. Diﬀerent is the rule provided for the transfer of the limited partners quota (art. 2322). Their quota is freely transferable due cause of death, hence, without the consent of the remaining partners. Regarding the transfer between living persons, instead, it's required the consent of the partners (both general and limited partners) who represent the majority of the partnership capital, unless otherwise is provided in the instrument of incorporation. The relevance of the consent of the other partners is so mitigated (because provided by the majority and not the unanimity) with respect to the transfer of the limited partners quota. 4. The dissolution of the partnership The presence of two categories of partners, which characterized the limited partnership, must remain throughout the duration of the partnership. Indeed, this type of partnership dissolves, in addition to the causes provided for the general partnership, when only limited partners or general partners remain, unless within the period of six months the ceased partner has been replaced (art. 2323). Moreover, if all the general partners cease, the limited partners shall appoint a temporary director. His/her powers are by law limited to the carrying out ordinary administration acts. The term temporary director does not assume the status of a general partner; hence he/she is not unlimited liable for the partnership obligations. To the liquidation procedure and the extinction of the limited partnership will apply the rules provided for the general partnership. However, once the limited partnership has been canceled from the Business register, partnership creditors who have not been paid can claim for his/her credit against the limited partners only to the extent of what they received as liquidation quota, since they are not partners with unlimited liability (art. 2324 c.c.) The partnership is dissolved: 1) by the expiration of the term; 2) by the achievement of the corporate purpose or by the supervening impossibility of achieving it 3) by the consent of all members; 4) when the plurality of members ceases to exist, if within six months this is not reconstituted; 5) for other causes provided for in the partnership agreement. 5-bis) for the opening of the controlled liquidation procedure. 5. The irregular limited partnership The limited partnership is irregular when its instrument of incorporation has not been inscribed in the Business register. Like the general partnership, the lack of the registration doesn't involve the incorporation of the partnership. Moreover, the distinction between limited partners and general partners remains in place. Indeed, also in the irregular limited partnership the limited partners remain liable limited to the quota conferred, unless they participated in the running of the business activities (art. 2317 par. 2). In the case of an irregular limited partnership, therefore, not even the issuance of a special power of attorney exempts the limited partner from unlimited liability towards third parties for all the partnership obligations. Otherwise, the irregular limited partnership will apply the same rules provided for the irregular general partnership. European Company Law Purpose of ECL: → facilitation of freedom of establishment of companies → improve transparency, legal certainty and the operations control → protection of interests of shareholders and others, the constitution and maintenance of public limited-liability companies' capital, branches disclosure, mergers and divisions, minimum rules for single-member private limited-liability companies and shareholders' rights Article 3 par. 3 The Union shall establish an internal market. It shall work for the sustainable development of Europe based on balanced economic growth and price stability, a highly competitive social market economy, aiming at full employment and social progress, and a high level of protection and improvement of the quality of the environment. It shall combat social exclusion and discrimination, and shall promote social justice and protection, equality between women and men, solidarity between generations and protection of the rights of the child. It shall promote economic, social and territorial cohesion, and solidarity among Member States. par. 4. The Union shall establish an economic and monetary union whose currency is the euro. Internal Market Treaty on the Functioning of the European Union (TFEU). Article 26, TFEU 1. The Union shall adopt measures with the aim of establishing or ensuring the functioning of the internal market, in accordance with the relevant provisions of the treaties 2. The internal market shall comprise an area without internal frontiers in which the free movement of goods, persons, services and capital is ensured in accordance with the provisions of the Treaties. Freedom of establishment and freedom to provide services The freedom of establishment and the freedom to provide services guarantee mobility of businesses and professionals within the EU. Self-employed persons and professionals or legal persons within the meaning of Article 54 TFEU who are legally operating in one Member State may: 1. carry out an economic activity in a stable and continuous way in another Member State (freedomof establishment: Article 49 TFEU): 2. oﬀer and provide their services in other Member States on a temporary basis while remaining in their country of origin (freedom to provide services: Article 56 TFEU). The right of establishment includes the right to take up and pursue activities as a self employed person, and to set up and manage undertakings, for a permanent activity of a stable and continuous nature, Article 49, TFEU 1. Within the framework of the provisions set out below, restrictions on the freedom of establishment of nationals of a Member State in the territory of another Member State shall be prohibited. Such prohibition shall also apply to restrictions on the setting-up of agencies, branches or subsidiaries by nationals of any Member State established in the territory of any Member State. 2. Freedom of establishment shall include the right to take up and pursue activities as self- employed persons and to set up and manage undertakings How do we know that a corporation is subject to the law of a member state? Companies established and/or operated in any of the EU member states are regulated by the Company Law of the Member States. The application of national law to a company follows two main criteria of connection: → the incorporation theory → the real seat theory Article 54, TFEU 1.Companies or firms formed in accordance with the law of a Member State and having their registered oﬃce, central administration or principal place of business within the Union shall, for the purposes of this Chapter, be treated in the same way as natural persons who are nationals of Member States. What do we need to make the right of establishment eﬀective? Article 288, TFEU To exercise the Union's competences, the institutions shall adopt regulations, directives, decisions, recommendations and opinions. A regulation shall have general application. It shall be binding in its entirety and directly applicable in all Member States. A directive shall be binding, as to the result to be achieved, upon each Member State to which it is addressed, but shall leave to the national authorities the choice of form and methods. A decision shall be binding in its entirety. A decision which specifies those to whom it is addressed shall be binding only on them. Recommendations and opinions shall have no binding force. To enjoy the freedom of establishment and provide services granted to the TFEU we need a common legal framework on Company Law applicable throughout all the EU Member States. This does not necessarily imply the unification of the legislations of member states into a single uniform law. It is suﬃcient that national legislations share common basic principles. This goal can be achieved through approximation of laws or harmonization. (see art. 50(2), TFEU) Although in general Company law tends to be uniform throughout the world because it responds to the same needs, some legal institutes may be very diﬀerent from one state to another, because they depend on the legal traditions of each state. An eﬀective corporate governance framework creates a positive EU-wide business environment in the internal market. The objective of harmonizing company law is to promote the achievement of freedom of establishment (Title IV, Chapter 2 of the TFEU) and to implement the fundamental right laid down in Article 16 of the Charter of Fundamental Rights of the European Union, the freedom to conduct a business within the limits of Article 17 of the Charter (right to property). The purpose of EU rules in this area is to enable businesses to be e set up anywhere in the EU, enjoying the freedom of movement of persons, services and capital, to provide protection for shareholders and other parties with a particular interest in companies, to make businesses more competitive, and to encourage businesses to cooperate over borders. → There have been, since the European Community was founded in 1957, a series of Directives creating minimum standards for business across the European Union. → A central aim restated in each Directive is to reduce the barriers to freedom of establishment of businesses in the European Union through a process of harmonizing the basic laws. → When laws are harmonized, business will not be deterred by diﬀerent or more onerous laws, but at the same time harmonization provides a basic level of protection for investors in each member State. These objectives are followed through the instrument of the Directive. Uniform Company Law The EU institutions create a uniform company law that provides EU types of companies or firms, entirely or partially regulated by EU sources of law, acting by means of regulations. Also, EU institutions use the mean of regulation to establish common rules directly applicable to companies and firms established under the law of member states European model company law act: → soft law →model law that brings togheter best practices from member states legal system, from which all the member state can take inspiration → optional, non-binding adoption → the purpose is to provide a basic outline to be used as a model for national legislation and to create harmonization through a malleable tool

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