Partnership PDF

Companies are the typical organisational structure provided by the legal system for the exercise of business activity in associated form An entrepreneur is one who professionally carries on and organise economic activity for the proposal of producing or exchanges goods or services. He has the duty, whether to establish an organisational administrative and accounting structure appropriate to the nature and size of the enterprise as well to take action for the adoption of the instrumental provided by the law for overcoming the crisis and recovery of the business activity The business activities can be divided in: Depending on the object of the business activity depending on the size of the business activity Depending on the person carrying out the business activity Special commercial entrepreneur statue A) legal publicity and business register B) accounting records C) Statuatory agency D) insolvency law- the commercial entrepreneur who demonstrated the joint possession of a certain requirement is not subject to bankruptcy Distinctive signs Business name Banner Trademark Type companies Type partnership Companies limited by share spa- società per azioni Simple partnership Limited liability companies srl- società di capitali General partnership Partnership limited by share sapa- società in accomandita per azioni Limited partnership Through a partnership company agreement, two or more people contribute goods or services in order to carry out an activity for the propose of sharing the relative profit. Common features partnership company Joint exercise of a business activity Contribution granted by members Profit sharing Contributions For the partnership contribution must be economically estimable For companies, there are specific rules: contribution are the risk capital of the partnership and companies and they go to form the partnership companies share capital Share capital Is a number that expresses the contribution in cash and remains the same throughout the course of the partnership company. To modify this number a decision of the member of the company is necessary, because the evaluation of the contribution expressed in the capital is containing the instrumental incorporation of sharing the relative profits. This rule applies to both partnership and company Common features between share capital of partnership and companies 1- it indicates the value that the partner have agreed to bind in the business activity which cannot be divided among them and there is an asset guarantee for creditors 2- it is an organising function because it is used to determine whether there are profit or loss. Share capital must be kept separate from the asset of the company Diﬀerences Only companies have the legal personality With partnership, their members have an unlimited and joint liability for partnership debts Partnership Simple partnership-can only exercise and non-commercial activity General partnership -both commercial and non-commercial activity All partners are jointly and severally liable without limitation for partnership obligation Limited partnership -general partners who are jointly and severally liable without limitation for the partnership obligation and limited partners who are liably limited for the quota conferred Incorporation In the simple partnership, the agreement is not subject to special form except those required by contribution. For this type of partnership is also required the subscription in the business register with the eﬀect of legal publicity. The incorporation of the simple partnership is governed by a higher simplicity in form and substance For the corporation of general partnership are provided rules concerning the form and the content of the partnership agreement. These rules are stated for the sole purpose of partnership registration in the business register. The registration is a condition for the regularity of the general partnership that is not a condition for existence or its validity. The relationship between the partnership and third parties will be governed by the discipline of the simple partnership. A general partnership is regular when inscribed in the business register Is irregular what is not described in the business register and the rules applicable are of the irregular general partnership Until the general partnership is register in the business register, the relation between the partnership and the parties, shall be regulated by the provision relating to the simple partnership The partnership agreement can be amended only with the consent of all the partners unless otherwise agreed Publication -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 public deed certified by the notary 2. Contribution and liabilities The partner is obligated to execute the contribution in the partnership agreement. If the contribution are not determined, it is presume 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 asset which can be considered as contribution. So, with partnership all asset that can be economically valued and they are useful for the achievement of the corporate purpose can be conferred. Art 2303- The same rule states that if there is a loss in the partnership capital distribution of profit may take place until the capital is replaced or reduce accordingly. 3. Partner participation in profit and loss. Profit- unless otherwise agreed each partner is entitled to receive his share of profit after the approval of the account. So all the members have the right to participate in profit and losses of partnership, they are free to determine each partners portion and the division could not necessarily be made proportionally to the contribution. Leonine pact- any agreement leading to partners being fully excluded from profit sharing or from participation in losses shall be deemed null and void Allocation of gain and losses 1-partner share in gain and losses are presumed to be proportional to contribution 2-if the value of the contribution is not determined in the agreement shall be presumed equal 3-the share due to the contributing partner, if not determine by the contract, should be determined by the court according to equity 4- if the contract that minds 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 partners to have their profit arise with the approval of the financial statement unless otherwise provided in the partnership agreement In the general partnership the document it’s a real financial statement. This must be drawn up by the managing partners and must be approved by the partners with the majority determined according to the portion in the profit attributed to each of them. 4.Partners liability for partnership obligation(debts) In both partnership, the partnership asset are the primary guarantee for the partnership creditors In simple partnership, the personal liability of all the partners is not a mandatory principal, the liability of the partners who don’t have the power to represent the partnership may be excluded or limited with an appropriate agreement: liability for corporate obligation-creditors of the partnership may claim the rights toward the corporate asset. For corporate obligation also shall be liable personally jointly and several of the partners who have acted in the name and on behalf of the partnership their agreement must be brought to the knowledge of the parties by suitable means. Limitation of liability of some partners -any agreement limiting the liability of some of the partner is possible but is enforceable against the third parties only if brought to their knowledge by appropriate means. Preventive execution of partnership asset -a partner required to pay corporate debts can request even if the company is in liquidation the preventative enforcement of the corporate asset. Beneficium exuccionis- doesn’t work automatically. Partnership creditors can address the request to the partners, and it is the latter who must oppose the beneficium excussionis a person who join an already incorporated partnership is liable with the other partners for corporate obligation prior to the acquisition of the status of partner. 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 General partnership The personal liability of all the partners is not derogable. So an agreement does not have any eﬀect against the third parties and cannot be opposed to them but as a factor between partners. Liability of some partners -an agreement limiting the liability of some of the partners is possible but as only an internal eﬀect Liability of partners -corporate creditors even if the partnership is in liquidation may not demand the payment from individual partners except after the execution of the company asset Beneficium excussionis- works automatically. The partnership creditors first have to execute the partnership asset and all in the case these are insuﬃcient may address the requested to members. 6. Partners personal creditors. Partner personal creditor can never directly attack the asset of the partnership. He has a sort of protection in both partnership he may: 1) assert is right to the profit due to the partner 2) perform a conservative act on the quota due to the partner in the liquidation Simple partnership If the debtor asset are insuﬃcient to satisfied the debtor claims, the partner person creditor may also ask at any time the liquidation of his debtor’s quota. The quota must be liquidated within three months by the request, unless the dissolution is resolved General partnership A partner person creditor cannot demand the liquidation of the quota of the debtor also in the case you can give the proof that the other asset of the partner are not suﬃcient to satisfy his credit. Partners can pass a resolution to approve the extension of the duration but if the opposition is accepted the partnership must, within three months by the decision, liquidate the quota of the debtor. 7.Administration of partnership The instrument of incorporation may provide that the power of administration is reserved only to some partners arising the distinction between the managing partners and non-managing partners. This disjunctive administration oﬀer some benefits in terms of speed of the decision but also it could be dangerous because the single managing partner could fulfil operation that can undermine the interest of the partnership without the knowledge of the other partners. Joint management Individual managers cannot take any decision on their own, except in the case of urgency to avoid the damage to the partnership. 8. Administration and representation The power of representation is the power to act with the third parties on behalf of the partnership acquiring rights and assuming obligation for the partnership. This power involve the external management activity, that is the stage of implementation whit third parties in partnership operation. In general partnership limitation of managing partners power of representation are not enforceable against the third parties if they are not recorded in the business register or if it is not proved that third parties at has actual knowledge of them In the irregular general partnership and simple partnership Should be regulated by the provision relating to the simple partnership. Limitation to the power of representation that cannot be opposed to third parties unless it can be proven that they were aware of it. In simple partnership original limitation 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 removal of the managing partner appointed in the instrument of incorporation involves an amendment to the latter that must be decided by the other partners. The removal has no eﬀect without a just cause. The directors are jointly and severally liable towards the partnership for the fulfilment of the obligation 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, other partners have deep power in information and control: 1-the right to have information from the directors about the partnership operation 2-the right to consult the documents relating to the administration and the accounting records 3-the right to obtain a financial statement 11. Partners non-competition duties. A partner may not, without the consent of the other partners exercise a competitive activity. The violation of this implies the compensation for damages to the partnership and entitles the other partner to decide on his exclusion. However, the provision is not absolute since it can be removed by the other partners if the competitive situation exists before the incorporation of the partnership and the other partners were aware of it. MODIFICA 12. The amendment to the instrument of incorporation. The instrument of incorporation can be amended only with the consent of all the partners, no agreement can be changed without the consent of all the partners and also in the event of the transfer of quota it will be necessary the consent of all the partners unless otherwise provided -in general and simple partnership, the amendment 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. -In irregular general partnership, the amendment of the instrument of incorporation must be brought to the knowledge of third parties and cannot be opposed to those who have without fault ignored them The consent is not the only important part for the instrument of incorporation because to execute the agreement there is the need of good faith and the respect for the equal treatment of partners 13. Dissolution of the relationship between partner and partnership. Dissolution can be for death withdrawal and exclusion a) death of the partner- unless the partnership agreement provide otherwise, in the event of the death of one of the partners, the other must liquidate the quota to the heirs, unless they prefer to dissolved the partnership or to continue it with the heirs. b) 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 at least with three month notice. The right of withdrawal can be exercise when there is a just cause and must be communicated to the other partners too. C)Exclusion The exclusion can be exclusion by law or optional exclusion The exclusion by law, there is when: 1-is declared bankrupt 2-against one of his personal creditors has obtained the liquidation of the quota The three kind of causes for which a partner can be excluded are: -Causes related to the breach of social obligation -Cause related to the loss of legal capacity -Cause related to the contribution Exclusion is decided by the majority of the partners. The decision must be motivated and communicated to the excluded partner. Within this period the excluded partner can claim against this decision in front of the court. The partners cannot ask for the restitution of the goods conferred to the partnership also if they are already existent in the partnership asset. The financial situation of the partnership must be determined attributing to asset their actual value as well as taking into account the value of the partnership asset and of profit and losses from ongoing operation The payment of the quota attributed to the partner must be fulfilled within six months , the ceased partner or the heir continues to be personally liable for the partnership obligation that arise until the day in which the dissolution occurs. 14.The dissolution of the partnership The ground of dissolution for simple partnership and general partnership are: 1-the expiration of the term fixed in the instrument of incorporation. The continuation of the partnership is a possible the extension of the deadline can be both expressed or tacit. 2-the achievement of the corporate purpose or by the supervising impossibility of achieving it 3-the will(consent) of all partners 4-the lack of the plurality of partners 5) other causes provided for in the partnership agreement 5bis) the opening of the controlled liquidation procedure Tacit extension The partnership is tacitly extended indefinitely when the partners continue to carry out the corporate operation. When a cause of dissolution occurs, the partnership enters automatically in the liquidation status. The partnership is not immediately extinguished. First, partnership creditor must be paid and the remaining asset must be distributed among the partners. After the dissolution of the partnership is occured, the partners maintain the power of administration until the necessary steps are taken for the liquidation 15. The liquidation procedure and the extinction of the partnership. Liquidators-if the partnership agreement does not provide for the liquidation of the partnership but the liquidation is done by one or more liquidators appointed with the consent of all the partners or by the court Inventory- the directors shall hand over to the liquidators the partnership asset and managing documents of the company and draw up together with the directors, the inventory showing asset and liabilities of the partnership asset Powers of liquidators-the liquidator may fulfil all the acts necessary for the liquidation and the they may also sell the partnership asset in bloc and make transaction and compromises. They also represent the partnership court. Payment of partnership debts -if the available funds are insuﬃcient to pay the partnership debt, the liquidators made demand from the partners the payment still due on their respective quotas. In the same proportion the debt of the insolvent partner shall be divided among the other partners. The law provides some limitation for the liquidator : -They cannot engage in new operations -They cannot distribute the corporate asset among the partners Once all the partnership debts are paid, the liquidation proceedure goes to end with the distribution of any remaining asset converted in money among partners. There is not that specific rule for the end of the liquidation proceed in the simple partnership. In the general partnership, liquidator must draw up the final financial statement and the distribution plan. With the approval of the financial statement liquidators are free from their responsibility and the liquidation proceeds 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 Cancellation of the partnership -having approved the final liquidation financial statement the liquidators shall apply for the cancellation of the partnership from the business register. Limited partnership Limited partnership has two categories of partners: -General partners who are personally jointly and unlimitedly liable for the corporate obligation -Limited partners who are liable limited to the quota conferred Limited partners are excluded from the management of the business activities. The limited partnership is the sole type of partnership that consent 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. 1. incorporation and partnership name. The instrument of incorporation of the limited partnership is subject to the inscription in the business register too, but the failure to register only result in the partnership irregularity A diﬀerence between a general partnership and the limited one regard the partnership name. 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. The name of the limited partner cannot be included in the partnership business name. Indeed, the limited partner who allows his name to be included in the business name is liable towards third parties unlimitedly jointly and several with the limited partner for partnership obligation. 2. Limited partners and partnership administration. Limited partners -limited partners may not perform act of administration in the name of the partnership, excepted by virtue of special power. Limited partners cannot enact the power of representation. For the limited partners it is forbidden to act on behalf of the partnership like a general representative. Limited partners who reaches the provision of interference will be liable towards the third parties unlimitedly jointly and severally. To the limited partners, however, are attributed by the law, some rights and powers of an administrative nature : they can contribute with the general partner to the appointment and the removal of the managing partners, they may transact or conclude business in the name of the partnership but only under a special attorney, they may perform their work in the partnership under the direction of managing partners, they can have authorisation for certain operation and they have the right to have the annual communication of the financial statement and to control its accuracy. 3. The transfer of quotas Applies the rules provided for the general partnership The diﬀerence is the rule provided for the transfer of the limited partners quota: Their quota is freely transferable due cause of death hence without the consent of the remaining partners Regarding the transfer between living person, it’s required a consent of the partners who represent the majority of the partnership capital unless otherwise provided in the instrument of incorporation 4. Dissolution of the partnership. This type of partnership dissolves when only limited partners or general partners remain unless within the period of six months the ceased partner has been replaced. Moreover, if all the general partner cease the limited partner shall appoint a temporary director that has limited powers and it doesn’t assume the status of general partner. For the liquidation there are the same rule of the general partnership however once the limited partnership has been cancelled from the business registered partnership creditors who have not been paid can claim for his credit against the limited partners only to the extent of what they have received as liquidation quota,since they are not partners with unlimited liability 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 5) for other courses provided in the partnership agreement 5bis) for the opening of the control liquidation procedure 5. The irregular limited partnership. Not inscribed in the business register. Also in the irregular limited partnership, the limited partner remain liable limited unless they participated in the running of business activity. Italian Company Law Italian and European Company Law – A.A. 2023/2024 Dott.ssa Giulia Serafin Under Italian Company Law there are two main categories of entities which may be incorporated: partnerships and companies. Both include three form. Categories of legal entity: - Partnerships (società di persone): - simple partnership (società semplice) - general partnership (società in nome collettivo - s.n.c.) - limited partnership (società in accomandita semplice - s.a.s) - Companies (società di capitali): - companies limited by shares (società per azioni - s.p.a.) - companies limited by quotas (società a responsabilità limitata - s.r.l.) - partnership limited by shares (società in accomandita per azioni - s.a.p.a.) Italian Company Law provides another kind of company named cooperative company, which mainly can be distinguished from the other companies for the purpose: companies follow the profit purpose, cooperative companies follow the mutualistic purpose. Article 2247. (Partnership/company agreement) «By a partnership/company agreement two or more persons contribute goods or services for the joint exercise of an economic activity in order to share the profits deriving therefrom». This rule applies to both partnerships and companies (with the exception of the first part for the s.p.a. and the s.r.l.) Common features between partnership and companies: 1. Joint exercise of a business activity (this is based on the concept of entrepreneur, art. 2082 c.c., so, to have this characteristic, partnerships and companies have also to comply with that definition). The form of simple partnership can be used only to the joint exercise of non-commercial enterprise (i.e., agricultural enterprise). The others forms of legal entities can be used both for agricultural and commercial activities. 2. Contributions granted by the members. 3. Profit sharing Main difference between partnerships and companies: - Companies have the legal personality (they are legal persons) - Partnerships don't have legal personality, but they are still a legal subject (see art. 2266 c.c.: «partnership acquires rights and undertakes obligations through its members»; see also art. 2256 c.c.) In partnerships there is only a partial segregation of the partnerships' assets. Indeed, in simple partnerships and general partnerships, by default, all partners are unlimited, jointly and severally liable for the partnership obligations (debts). Be careful. The liability for partnership obligations is primarily that of the partnership and subsidiarily that of the partners: liable is, first and foremost, the partnership with its assets. What does it mean unlimited liability of the partners? It means that partners are liable with all their personal assets. Art. 2740, par. 1, c.c. (Asset liability). The debtor is liable for the fulfillment of obligations with all his/her present and future assets. What does it mean joint and several liability (responsabilità solidale) of the partners? Joint and several liability refers to the situation in which two or more parties are obliged to the same performance. Under Article 1292 of the Civil Code, each debtor may be forced to perform for the entire obligation. Art. 1292 c.c. (Concept of joint and several). An obligation is joint and several when several debtors are obligated all for the same performance, so that each of them can be forced into performance for the whole and performance by of one frees the others; or when among several creditors each of them has the right to demand the performance of the entire obligation and the performance achieved by one of them frees the debtor towards all creditors. Simple partnership (società semplice) and General partnership (società in nome collettivo) Partnerships agreement Incorporation Art. 2251. (Partnership agreement). In the simple partnership, the agreement is not subject to special forms, except those required by the nature of the assets contributed (contributions). 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. 2295. (Instrument of incorporation). The instrument of incorporation of the general partnership shall state: 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 and any branch offices; 5) the corporate object; 6) the contributions of each partner, the value attributed to them and the method of valuation; 7) the services to which the worker partners are obliged; 8) the rules according to which profits have to be distributed and the share of each partner in profits and losses; 9) the term of the partnership. Art. 2296. (Publication). The instrument of incorporation of the general partnership, with certified signatures of the parties by the notary, or a certified copy if the stipulation was made by public deed, shall be filed for registration, within thirty days by the directors, in the Business register office in whose district the headquarters of the partnership is established. If the directors fail to file within the period specified in the preceding paragraph, each partner may provide for it at the partnership's expense, or request that directors be ordered to do so. If the stipulation is made by public deed, the notary is also obliged to execute the deposit. Art. 2297. (Failure to register). Until the general partnership is registered in the Business register, the relations between the partnership and third parties, without prejudice to the unlimited and joint and several liability of all partners, shall be regulated by the provisions relating to the simple partnership. (see, e.g., the rules on the application of the beneficium excussionis and the rules about personal creditors of a partner) → Irregular general partnership → Regular general partnership Contributions and liabilities Art. 2253. (Contributions). The partner is obliged 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 corporate object. → Assets which can be conferred (cash, assets in kind, work…): everything that can be economically valued → Contributions go to form the partnership capital → Regulation of the partnership asset for general partnership (art. 2303 and 2306 c.c.) Partners’ participation in profits and losses Art. 2262. (Profits). Unless otherwise agreed, each partner is entitled to receive his/her profits after the approval of the financial accounts. Art. 2263. (Allocation of gains and losses). Partners' participation in gains and losses are presumed to be proportional to contributions. If the value of the contributions is not determined by the agreement, they shall be presumed equal. The participation due to the working partner, if not determined by the contract, shall be determined by the court according to fairness (equità). If the contract determines only the participation of each partner in the gains, to the same extent shall be presumed to be determine the participation in losses. Art. 2265. (Leonine pact). A pact by which one or more partners are excluded from all participation in profits or losses is null and void. Liability for partnership obligations and limitation of one or some partners liability Art. 2267, c.c. (Liability for partnership obligations). simple partneship Creditors of the partnership may claim their rights towards the corporate assets. For partnership obligations also shall be liable personally and 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 the joint and several liability is not enforceable against those who did not have knowledge of it. Art. 2291, c.c. (Notion). general partneship In a general partnership all partners are unlimitedly and jointly and severally liable for corporate obligations. An agreement to the contrary has no effect against third parties. Liability's limitation of one or 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. Beneficium excussionis in simple partneship Art. 2268. (Preventive execution of partnership assets). A partner required to pay corporate debts can request, even if the partnership is in liquidation, the preventive enforcement of the corporate assets, indicating the assets on which the creditor can easily satisfy himself. Beneficium excussionis in general partnership Article 2304. (Liability of partners). Partnership creditors, even if the partnership is in liquidation, may not demand payment from individual partners, except after the execution of the partnership's assets. Beneficium excussionis → Simple partnership: the beneficium excussionis doesn't work automatically. Partnership creditors can address their request to the partners and are 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 event these are insufficient may address the request to the partners. Partner's personal creditors Article 2270. (Personal creditor of the partner). Applicable to all A partner's personal creditor, as long as the partnership partnerships lasts, may assert his rights to the profits due to the debtor and perform conservative acts on the participation due to the latter in the liquidation. If the debtor’s other assets are insufficient to satisfy the Applicable only to simple credits, the partner’s personal creditor may also ask at any partnerships time the liquidation of his debtor’s quota. The quota must be liquidated within three months by the request, unless is decided to dissolve the partnership. Applicable only to Article 2305. (Personal creditor of the general and limited partner). partnerships A partner's personal creditor, as long as the partnership lasts, cannot may demand the liquidation of the participation of the debtor partner. Art. 2307. (Extension of the partnership). Applicable only to general and limited partnerships A partner's personal creditor may object to the extension of the partnership, within three months after the registration of the extension resolution in the Business register. If the opposition is accepted, the partnership must, within three months of the judgment, liquidate the participation of the debtor partner. In case of tacit extension, each partner may always withdraw from the partnership, giving notice in accordance with Article 2285, and the personal creditor may demand the liquidation of the quota of his debtor in accordance with Article 2270. Corporate activity Article 2257. (Disjunctive administration). The management of the enterprise shall be carried out in compliance with the provision of Article 2086, second paragraph, and is the exclusively responsibility of the directors, who carry out the operations necessary for the implementation of the corporate object. Unless otherwise agreed, partnership management shall be entrusted to each partner, severally from the others. If management powers are exercised severally by different partners, then each managing-partner has the right to object to any operations proposed by another managing-partner before it is completed. On the objection shall decide the majority of the partners, determined according to the portion in the profits attributed to each of them. Art. 2258. (Joint administration). If management is entrusted to several partners jointly, then all managing-partners must give their consent for partnership operations to be carried out. If it is agreed that for the management or for certain acts it is required 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 manager cannot take any decision on their own, except in the case of urgency to avoid a damage to the partnership. Art. 2266. (Representation of the partnership). The partnership acquires rights and assumes obligations by means of the partners who are its representatives and stands in court in the same persons. In the absence of any provision to the contrary in the partnership agreement, the representation is assigned to each managing-partner and extends to all acts within the corporate object. Modification and extinction of powers of representation are regulated by Article 1396 (agency contract). Art. 2298. (Representation of the partnership). The director who has the representation of the partnership can perform all acts that fall within the corporate object, unless limitations result from the instrument of incorporation or the power of attorney. Limitations 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 knowledge of them. Regular general partnership Irregular general partnership Art. 2297, par. 2, c.c. […] each partner acting for the partnership is presumed to have partnership representation, including the processual representation. Agreements granting representation to some partner only or that limit the powers of representation are not enforceable against third parties, unless it is proved that the latter know it. → managing partners - Appointment (instrument of incorporation; separate act) - removal - management relationship - powers, duties, liabilities - remuneration → non-managing partners - information and control powers Amendments of the instrument of incorporation → Default rule (art. 2252 c.c.) → The transfer of participations → Publicity Applicable to all partnerships Dissolution of the social relationship: - Death of the partner - Withdrawal of the partner - Exclusion (automatic causes/optional causes) → Liquidation of the quota of the leaving 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 is three ways in this case: →liquidation of the quota to the heirs →dissolution of the partnership →continuation of the partnership with the heirs (it requires the consent of the partners and heirs) Art. 2285. (Withdrawal of the partner). Any partner may withdraw from the partnership when it is contracted for an indefinite period or for the lifetime of one of the partners. He may also withdraw in the cases provided for in the partnership agreement or when a just cause exists. In the cases provided for in the first paragraph, the withdrawal must be communicated to the other partners with at least three months' notice. The right of withdrawal can be always exercised by the partner if the partnership agreement does not provide for a term or if the term exceeds the lifetime of the partners. In such cases, notice of termination must be given at least three months in advance. The right of withdrawal can be always exercised when there is a just cause. Finally, the right of withdrawal can be exercised for the causes provided in the partnership agreement. Article 2286. (Exclusion). → optional causes Exclusion of a partner may take place for serious breach of obligations arising from the law or the partnership agreement, as well as for the interdiction, incapacitation of the partner or for a criminal judgment that involves the disqualification from public office, even temporary. A partner who has contributed his work or the enjoyment of a good to the partnership may also be excluded for the supervening inability to do the work conferred or for the loss of the good due to causes not attributable to the directors. Likewise, a partner who has obligated himself by the contribution to transfer the ownership of a good may be excluded if this has perished before the property is acquired to the partnership. Under these rules there are three kinds of causes for which the partner can be excluded: 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. Art. 2287. (Exclusion procedure). Exclusion is decided by the majority of the partners, not counting in the number of them the partner to be excluded and takes effect after thirty days from the date of notice to the excluded partner. Within this period, the excluded partner may file an appeal to the court, which may suspend the enforcement of the decision. If the partnership consists of two partners, the exclusion of one of them shall be pronounced by the court at the request of the other. Art. 2288. (Exclusion by law). (→automatic causes = those causes operate automatically and do not need a decision of the members) A partner against whom judicial liquidation procedure has been opened… is excluded by right. Likewise, a partner against whom one of his personal creditor has obtained the liquidation of the quota under accordance with Article 2270. Liquidation of the quota to the leaving partner or the heirs → right to the liquidation of the quota (in what it consists of and what the limits are) → determination of the amount → time → Liability of the ceasing partner or of the death partner’s heirs (art. 2290 c.c.) Limited partnership (società in accomandita semplice) Article 2313. (Notion). In a limited partnership, the general partners are jointly and severally, and unlimitedly liable for corporate obligations, and limited partners are liable limited to the contribution. The partners' quota cannot be represented by shares. Art. 2315. (Applicable rules). The provisions relating to general partnerships shall apply to the limited partnership, insofar as they are compatible with the following rules. → Why establish a s.a.s.? → Danger of abuse… → Incorporation…business name (ragione sociale) → General partners: unlimited liability and the power of management → Limited partners: their powers and rights → Transfer of participations → Irregular limited partnership Article 2316. (Instrument of incorporation). The instrument of incorporation shall specify the general partners and limited partners. Article 2314. (Business name). The limited partnership acts under a business name consisting of the name of at least one of the general partners, with the indication of limited partnership, save as provided in the second paragraph of Article 2292. The limited partner, who allows his name to be included in the partnership name, is liable before third parties unlimitedly and jointly with the limited partners for partnership obligations. → principle of trust Art. 2318. (General partners). General partners have the rights and duties of the general partnership partners. The administration of the partnership can only be given to general partners. Article 2319. (Appointment and removal of directors). Unless the instrument of incorporation provides otherwise, for the appointment of the directors and for their removal in the event they were appointed with a separate act, it is necessary the consent of all the general partners and the approval of so many limited partners who represent the majority of the capital subscribed by them. Art. 2320. (Limited partners). → prohibition of interference Limited partners may not perform acts of administration or transact or conclude business in the name of the partnership, except through a special power of attorney for given business. A limited partner who breaches this prohibition assumes unlimited and joint and several liability for all corporate obligations and may be excluded under Article 2286. Limited partners may, however, perform their work under the direction of the partner-directors and, if the instrument of incorporation permits, give authorizations and opinions for certain operations and perform acts of inspection and supervision. In any case they shall have the right to have annual notice of the balance sheet and of the profit and loss account, and to check their accuracy by consulting the books and other documents of the partnership. Art. 2322. (Transfer of quota of limited partners). The limited partner's quota is transferable by death. Unless otherwise provided in the instrument of incorporation, the quota may also be transferred, with effect towards the partnership, with the consent of the partners representing the majority of the capital. Art. 2317. (Failure to register). → irregular limited partnership Until the partnership is registered in the business register, the relations between the partnership and third parties shall be governed by the provisions of Art. 2297. However, for corporate obligations the limited partners are liable only to the extent of their quota, unless they have participated in the partnership's operations. The dissolution and liquidation of partnerships Art. 2272. (Causes of dissolution). Applicable to all The partnership is dissolved: partnerships 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. Article 2308. (Dissolution of the general partnership). The general partnership is dissolved, in addition to the causes indicated in Art. 2272, by order of the governmental authority in the cases established by law, and for the opening of judicial liquidation proceedings. Art. 2323. (Causes of dissolution). The limited partnership is dissolved, in addition to the causes provided for in Art. 2308, when only limited partners or general partners remain, unless within the period of six months the partner has been replaced. If all the general partners fail, for the period indicated in the preceding paragraph the limited partners shall appoint a temporary director to carry out acts of ordinary administration. The temporary director does not assume the status of a general partner. Applicable to all partnerships Art. 2274. (Powers of directors after dissolution). After the dissolution of the partnership has taken place, the directors maintain the power to manage, limited to the urgent activities, until the necessary steps are taken for the liquidation. Applicable to all Article 2275. (Liquidators). partnerships If the 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 a just cause upon the request of one or more members. Applicable to all partnerships Article 2276. (Obligations and liability of liquidators). The duties and liability of liquidators shall be governed by the provisions established for directors, unless otherwise is provided by the following rules or by the partnership agreement. Applicable to all Article 2277. (Inventory). partnerships The directors shall hand over to the liquidators the assets and the corporate documents and submit to them the account of the management for the period following the last account. The liquidators must take over the assets and the corporate documents, and draw up, together with the directors, the inventory showing the assets and liabilities of the corporate assets. The inventory must be signed by the directors and the liquidators. Applicable to all Art. 2278. (Powers of liquidators). partnerships The liquidators may perform the acts necessary for the liquidation and, if the partners have not provided otherwise, they may also sell the corporate assets in bloc and make transactions and compromises. They also represent the partnership before the court. Art. 2279. (Prohibition of new transactions). Liquidators may not engage in new transactions. In contravening this prohibition, they shall be liable personally, and jointly and severally for the business activity undertaken. Applicable to all partnerships Art. 2280. (Payment of corporate debts). The liquidators may not distribute the corporate assets even partially, among the partners, until the creditors of the partnership are paid or the sums necessary to pay them are set apart. If the available funds are insufficient to pay the corporate 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 their 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. Applicable to all partnerships Article 2282. (Allocation of assets). Having extinguished the corporate 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 share in the gains. The valuation of non-cash contributions is determined in accordance with the valuation that was made in the contract or, failing that, according to the value they had at the time they were made. → Return of assets conferred in use (art. 2281 c.c.) → Distribution of assents in kind (art. 2283 c.c.) Applicable only to general and limited partnerships Article 2311. (Final liquidation balance sheet and distribution plan). Once the liquidation is completed, the liquidators shall draw up the final balance sheet and propose a distribution plan to the partners. The balance sheet, signed by the liquidators, and the distribution plan must be communicated by registered letter (raccomandata) to the partners, and shall be considered approved if they have not been contested within two months of the communication. If the balance sheet and the distribution plan are contested, the liquidator may request that matters relating to the liquidation be examined separately from those relating to the division, to which the liquidator may remain extraneous. With the approval of the balance sheet, the liquidators are released before the partners. Applicable only to general and to limited partnerships Art. 2312. (Cancellation of the partnership). Having approved the final liquidation balance sheet, the liquidators shall apply for the cancellation of the partnership from the Business register. From the cancellation of the partnership, corporate creditors who have not been satisfied may assert their claims against the partners and, if the lack of payment is due to the lack of the liquidators, also against them. […] Accounting records and documents must be conserved for ten years from the date of the cancellation of the partnership from the business register.

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