Partnerships, unlike joint stock companies, don't have "legal personality" therefore they are not legally distinct from natural persons and have "imperfect assets autonomy" or there is the unlimited and joint liability of any of the partners (except for "accomandandante" partner in S.a.s partnership) .
In partnerships, with some exceptions governed by law, the shareholders have "unlimited liability" (in addition to the equity of the company, the shareholder is also liable for company's debts with all his present and future assets) and "solidarity" (the creditor can act against the assets of the company or against any of the partners with unlimited liability).
Partnerships are characterized by a much more flexible "accounting regime" and "governance" than joint stock companies.
Italian Civil Code provides for three types of partnerships:
- simple partnership - società semplice (S.S.) - non-commercial activity (articles 2251 - 2290)
- general partnership - società in nome collettivo (S.N.C.) - commercial and non-commercial activity (articles 2291 - 2312)
- limited partnership - società in accomandita semplice (S.A.S.) - commercial and non-commercial activity (articles 2313 - 2324)
Simple partnership - società semplice (S.S.) - non-commercial activity (articles 2251 - 2290)
The simple partnership is the only one of the three foreseen forms that can carry out exclusively non-commercial activities, therefore it isn't used so much except for the establishment of partnership for only agricultural activity or to act as simple "holding" of shares, equity or as a container for real estate properties. In the latter case they can be used to plan the transfer of assets as part of the generational transition within a family.
In simple partnerships, all shareholders are directors and can exercise their powers separately without the consent of the other director; everyone can always represent society separately.
The creditors of the simple partnership, who has the "imperfect assets autonomy", can enforce their rights on the assets of the company and jointly with the shareholders who have acted in the name and on behalf of the company unless otherwise agreed with other shareholders. (Article 2267 Civil Code) The creditors, unlike of what happens in the general partnership and in the limited partnership, can directly take the assets of the individual shareholder without having previously enforced the corporate assets.
New shareholder who has entered in an already operational company is responsible (together with the other shareholders) also for the social obligations prior to the purchase of the shareholder status (Article 2269 of the Italian Civil Code).
The simple partnership is not subject to bankruptcy as it cannot exercise commercial activity, a requirement instead required by Article 1, paragraph 1 of the bankruptcy law in order to declare the company bankrupt.
General partnership - società in nome collettivo (S.N.C.) - commercial and non-commercial activity (articles 2291 - 2312)
The general partnership is largely modeled on rules of the simple partnership, but unlike the simple partnership it can carry out a commercial activity.
In a general partnership, the administration, unless otherwise agreed, is the responsibility of each shareholder separately from the others. Therefore, as in a simple partnership, each managing partner can act in the name and on behalf of the company without the need for the expression of a parallel decision by the others.
As in the simple partnership, also in the general partnership there is the joint and unlimited liability of all the shareholders for the social obligations (Article 2291 of the civil code) however, unlike the simple partnership, this liability is subsidiary to the lack, in alternative way, of assets of the company that can satisfy the creditor. Therefore, the shareholders are protected by the "benefit of preventive enforcement" provided for by art. 2268 of the Italian Civil Code.
Unlike simple partnerships, there is no possibility of excluding one or more shareholders from their personal responsibilities and in the event that a contrary agreement has been established, to relieve a shareholder from paying a debt, this has no effect towards third parties.
The general partnership, unlike the simple partnership, is subject to bankruptcy; bankruptcy affects all shareholders.
Limited partnership - società in accomandita semplice (S.A.S.) - commercial and non-commercial activity (articles 2313 - 2324)
The limited partnership largely follows the rules of the general partnership, but with some notable differences and particularities regarding the administration and the joint and unlimited liability of the partners. It can carry out both commercial and non-commercial activities and is distinguished because within it there're two different types of partners who have different rights, powers and responsibilities: general partners and limited partners. General partners are liable indefinitely for the social obligations while limited partners are liable limited to the company's capital quota assigned.
- general partners
- have the powers of administration of the company
- can / must insert their name in the company name
- have unlimited liability for the debts of the company, with their present and future personal assets
- limited partners
- cannot have administrative powers
- cannot insert their name in the company name
- have limited liability to what is conferred in the company
- if they carry out administrative acts or allow the inclusion of their name in the denomination, they become unlimitedly liable for corporate debts
- they can negotiate or conclude single business in the name of the company and must be authorized by a special power of attorney issued by the general directors
- can perform their manual or intellectual work within the company under the direction of the directors
- contribute to the appointment and withdrawal of directors when the articles of association provide for their designation a separate deed with respect to the articles of association
In the event of the bankruptcy of the limited partnership, the limited partner (who has limited legal liability) is liable only within the limits of his shareholding, without putting his personal assets at risk. The limited partner, however, in order to have limited legal liability, must, at the time of the establishment and until the declaration of insolvency of the company, have paid it's shareholding quota.