Italy: Assets Destined To A Specific Business

Last Updated: 23 April 2004
Article by Augusto Praloran

The recent so-called Reform of the Italian Corporate Law (i.e., Legislative Decree no. 6 of January 17, 2003), introduced a new way to provide a corporation with the benefit of a further limited liability in addition to the general one derived from the corporation’s status.

More specifically, the Reform added a new subparagraph (sections 2447-bis through 2447-decies) in the newly amended Title V of Book V of the Italian Civil Code, designating the so-called "asset destined to a specific business."

Two aspects of this legal institution are expressly regulated:

1) Section 2447-bis, 1st paragraph, letter a) states that a corporation may exclusively link part of its assets to the realization of a specific business, subject to certain conditions specified in sections 2447-ter through 2447-novies;

2) Section 2447-bis, 1st paragraph, letter b) states that a corporation may enter into a financing agreement for a specific business, and repay the debt exclusively (or primarily) by all or part of the profits generated by the business itself, provided that the requirements of Section 2447-decies are met.

Linking assets to realization of specific business

If all legal requirements are met, assets linked to a specific business constitute a segregated portion of the whole corporation’s assets. As a consequence, general creditors of the corporation do not have any rights vis-à-vis such assets nor vis-à-vis the profits generated by the specific business other than those pertaining the company. Also, creditors for obligations stipulated for the realization of the specific business, unless otherwise resolved by the relevant board resolution (as analyzed below), cannot attach the corporation’s assets not included in the segregated portion in case their credits are originated by a contractual relationship. If such credits are derived from a tort liability in the realization of the specific business, then no limited liability may be opposed to them and the company also is responsible for its residual assets. Creditors for stipulated obligations also cannot attach assets that are linked to other specific businesses.

In any case, the segregated portions in relation to one or more specific businesses cannot exceed 10 percent of the total company’s net asset.

To obtain this benefit, the law provides for several requirements:

A) First, the board of directors must resolve the segregation of assets with the absolute majority of its members. The relating resolution must be filed with the Registrar of Enterprises. This public notice is necessary to ensure that the corporation’s creditors learn of the thinning of the company’s total assets, which constitutes the primary guarantee of their credits. It must be noted that the corporation still owns the segregated assets, but its powers of disposal are reduced as they relate to the specific business. Such creditors, which are known as general creditors, have the right to contest the board’s resolution within two months from the date it is filed with the Registrar of Enterprises. This particular opposition is well known under Italian Corporate Law as it also can be used in the procedure of so-called reduction of corporate capital due to superabundance, as well as in mergers. This opposition is aimed at preserving the assets at the corporation’s disposal to fulfill its obligations. Notwithstanding the pending of an opposition, the Court may permit the attainment of the resolution, upon issuance of an adequate guarantee by the company.

It is worthwhile to highlight two differences with the case above. First, in addition to the recording rules, the company must adopt accounting and cashing systems, because the segregated asset is based on expectations of future profits, which highlight and keep separate the cash flows of the specific business and the company itself.

Secondly, the bankruptcy of the corporation will not automatically halt the specific business. If bankruptcy prevents the company from the realization of such specific business, then the financier acquires the right to file a request against the company as general creditor for the unpaid portion. The financier, in fact, will face typical entrepreneurial risk, but such risk is annulled in case of bankruptcy. The financier will not receive any payment if the business is unable to generate profits. If the company will impede the business being operated, then it is appropriate that the financier is treated as a normal creditor for the residual credit.

B) The resolution constituting the segregated asset needs must indicate: (i) the specific business the company is willing to realize, (ii) the assets (goods or contracts) that will be destined to it, (iii) a business plan indicating, inter alia, that the segregated asset is adequate for the realization of the relating business, (iv) possible third parties’ contributions and their control on the management as well as the conditions for their shares of profits, (v) the possibility to issue securities representing the participation to the business, with the specific indication of the relating rights, (vi) the appointment of an external auditor, if not yet appointed and if the company issues securities "on the patrimony" prominently spread among the public, and (vii) the rules to record the specific business in the accounting books.

C) Moreover, all contracts stipulated for the specific business must contain express reference to the specific business. Otherwise, the company will be deemed liable for the fulfillment of the relevant obligations with its generic (residual) assets.

D) The specific business’ accounting books must be provided. The corporation’s financial statements must indicate separately the assets part of the segregated portion and highlight the common costs and revenues, which may arise if resources are shared between the company’s activity and the specific business.

In the event the business has been realized, there is no chance that it could be realized or any qualified circumstance exists as an ending event in the board resolution occurs, or the company goes bankrupt, then the directors must draw a final report and file it with the Registrar of the Enterprises. Creditors of the segregated assets, if not fully satisfied, may request liquidation within three months of the final report’s submission. Once all the creditors of the segregated assets are satisfied, then the remaining segregated assets are considered the general assets of the company.

Segregated asset as financing arrangement

The second situation in which a segregated asset repays a financing is different. In this case, the corporation can provide in a financing contract for a specific business that the interest payment as well as the granted loan are exclusively or primarily secured by all or part of the profits generated by the financed business itself.

If all the legal requirements are met and the contract reflects the minimum content of the constituting resolution of the board of directors, with the necessary adjustments, then the profits relating to the specific business will form part of the segregated assets. The general creditors will not have any rights in relation to them, and the financier may claim the reimbursement only vis-à-vis the segregated assets as defined earlier if no further guarantee is provided.

As a general comment, most provisions seem very clear and appropriate to grant the benefit of a further limited liability. However, some sections are problematic.

Starting from the most peculiar problem, in relation to the very denomination of the new institution itself, the word "business" (i.e., in Italian "affare") has already been used in the Italian Civil Code, but there is no definition of it. Accordingly, it would probably be wrong to attempt to provide a definition arising from an interpretation of the regulations. On the other hand, it seems necessary to compare the "business" meaning with the word "activity," which is used to indicate the object and purpose of the enterprises and of the companies.

As to this comparison, it seems that the word "business" denotes a narrower concept than the word "activity":

1) From a lexical point of view, the discipline provides for the "realization" of the business. In fact, it is difficult to imagine the realization of the entrepreneurial activity. In relation to the segregated asset as a financing arrangement, the contract must indicate a description of the financed "operation," which term is probably an even narrower concept than the word "business."

2) From an operational point of view, the limit to the constitution of segregated assets is set at 10 percent of the total net asset of the company. This suggests a sphere of application too limited for the "wide" entrepreneurial activity, as defined in Section 2082 of the Italian Civil Code, which stresses the "professional" and not occasional nature of the activity itself.

Accordingly, the partition line between activity and business must be examined according to the expectations created by them. The specific business is not a reiterated or potentially "eternal" operation or group of operations. It is characterized by limits consisting not in quantitative elements, but in the feeling or perception that it is something inherently realizable.

Just to give an example, a company structured into different divisions will perform different activities, but the launch of a new single product (not a category of products) from a single line of production may be considered a specific business.

Many other aspects seem uncertain, due to the fact that this kind of segregated asset is a new scenario in the Italian Corporate Law. In fact, one cannot omit the problem arising from the issuance of securities connected to the specific business if provided in the resolution of the board of directors. It is impossible to insert such particular securities in the categories of equity and debt. On one side, the peculiar participation to a business hardly qualifies them as shares of corporate capital, but, on the other side, the term "participation" seems also to suggest something different from a simple bond. Accordingly, the only category it seems to belong to is that of the so-called hybrid securities, indeed out from the usual dichotomy between equity and debt.

In order to complete the scenario in this section, it must be noted that Section 2350 of the Italian Civil Code, 2nd paragraph (as amended by the Reform) provides that, in cases other than those described by sections 2447-bis and following, the corporation may issue what can be reasonably interpreted as tracking shares. Tracking shares, in the American experience, are a subset of the ordinary shares of a listed company, which are linked to the performance of a particular business unit. This is achieved by "ring fencing" the assets and the liabilities of the business unit in accounting terms, requiring separate accounts to be calculated for the tracking shares. In the United States, such securities never experienced much success, mostly because they were supposed to highlight the most profitable and rapidly growing activities, but public investors never separated (probably correctly) the tracking activities from those of the company as a whole. The negotiation of the tracking shares on the stock market proved unable to gather large funds if the issuing company was performing well only in the tracked activities.

Notwithstanding the similarities in relation to the accounting requirements, tracking shares and assets destined to a specific business, are, as highlighted by the wording of Section 2350, 2nd paragraph ("in cases other than"), quite different cases. Tracking shares are securities that represent shares of corporate capital, whereas the latter do not. However, in both cases no new legal entity is created, so the tracked activity or specific business cannot be considered separately from the whole company’s activity.

In conclusion, the essence of both cases of destined assets is that they provide the benefit of the limited liability without the need of a new legal entity. Accordingly, their success, measured on the appeal they will express vis-à-vis the Italian entrepreneurial scenario, will mostly depend on the capabilities of this new institution to deal and compete with other institutions that may result in a somewhat similar outcome.

In particular, the financing for a specific business will have more opportunity to become a popular tool for the entrepreneurs. Several efficient qualities allow it to provide solutions previously obtained only through a specifically incorporated new company, without the limitation of the 10 percent of the total company’s net assets provided for the first case considered, which limitation may indeed be of essence. For example, the segregation of future cash flows, which in a common project financing structure is obtained through the incorporation of the so-called Special Purpose Vehicle, may also be achieved simply by providing for such peculiar financing contract, destining the eventual income to the same creditors who would have benefited from the "specific purpose" of the Special Purpose Vehicle.

For further information please contact the author at

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions