View source for The organization and governance of Firm Networks (in Italian law)

The [[Network contract under Italian Law|network contract]] made its entry into the national regulatory landscape by [https://www.gazzettaufficiale.it/eli/id/2009/04/11/09A04321/sg d.l. 5/2009], in whose art. 3, paragraphs 4 ''ter'' - 4 ''quinquies'' the reference discipline is still provided. In particular, under paragraph 4 ''ter'' cited, «''with the network contract several entrepreneurs pursue the purpose of increasing, individually and collectively, their innovative capacity and competitiveness in the market and to this end they undertake, on the basis of a common network program, to''» carry out one or more of the following activities:

* «''cooperate in predetermined forms and areas pertaining to the operation of their businesses''»;
* «''or to exchange information or services of an industrial, commercial, technical or technological nature''»;
* «''or else to jointly engage in one or more activities falling within the scope of their enterprise''».

= Firm network organs =
«''The contract may also provide (...) for the appointment of a joint body to manage, in the name and on behalf of the participants, the performance of the contract or individual parts or stages thereof''».

Art. 4 ''ter'', d.l. 5/2009

The only body that is expressly contemplated in the legislative provisions on business networks is the “common body” which is merely eventual, the establishment of which must be provided for in the contract. 

In the case it is provided by the parties, it is always the contract that must govern its management and representative powers and the rules regarding its possible replacement.

In general terms, the common body (which can also coincide with one of the member companies) is the one who is in charge of implementing the contract (or certain stages of it) and administering the asset fund (if established). In other words, it has management functions, that may otherwise, by express provision of the parties, be delegated to a so-called management committee in its absence.

When the network benefits from legal subjectivity, the common body acts on behalf of the network 

* in negotiated planning procedures with public administrations; 
* in procedures inherent in guarantee interventions for access to credit; 
* in procedures inherent in the development of the entrepreneurial system in processes of internationalization and innovation provided for by the system. 

With respect to the so-called “network-contracts”, on the other hand, the body acts as a representative of the member entrepreneurs, including individual ones, unless otherwise stipulated in the contract.

From what has been said, it can be seen how, both in the case of “network-subject” and in the case of “network-contract”, it is left to the free choice of the parties to provide for an executive body, representative of the network or of the entrepreneurs. In both cases, therefore, there may be no common body with management and representative powers, according to the contractual provisions.

= The common fund and patrimonial autonomy =
«''The contract may also provide for the establishment of a common property fund  (…)''»

Art. 4 ''ter'', d.l. 5/2009

«''The provisions of Articles 2614 and 2615, second paragraph, of the Civil Code apply to the common property fund, insofar as they are compatible. In any case, for obligations contracted by the common body in relation to the network program, third parties may assert their rights exclusively on the common fund''».

«''If provision is made for the establishment of the common fund, the network may register in the ordinary section of the business register in whose district its seat is established; with registration in the ordinary section of the business register in whose district its seat is established, the network acquires legal subjectivity''».

Art. 4 ''quater'', d.l. 5/2009

The further profile that is expressly considered by the law concerns the possibility of establishing a common fund. Even in this case, its provision is merely eventual and left to the free determination of the parties, who are allowed to endow the network with an asset fund or not. Where, however, the network is endowed with a common body and an asset fund, [https://www.brocardi.it/codice-civile/libro-quinto/titolo-x/capo-ii/sezione-ii/art2614.html Articles 2614] and [https://www.brocardi.it/codice-civile/libro-quinto/titolo-x/capo-ii/sezione-ii/art2615.html 2615] of the Civil Code, i.e., the rules governing the common fund of [[The consortium|consortia]] with external activities, apply to it (see paragraph 4 ''quater'', no. 2, cited above). This provision also provides that «''in any case, for obligations contracted by the common body in connection with the network program, third parties may assert their rights exclusively on the common fund''».

The combined provisions of the regulations extend to the business network the regime of patrimonial autonomy that characterizes consortia with external activity, regardless of whether the network has legal subjectivity or not.

What has been summarized above reveals the absolute flexibility of the legislative framework, which defers the determination of the organizational and governance profiles of the network to contractual autonomy. Therefore, a further bipartition of networks can be drawn with reference to the chosen organizational structure and in a cross-sectional sense with respect to the articulation between “networks-contract” and “networks-subject”. We can thus further distinguish between:

* structured networks: having a common organization, consisting in particular of the capital fund and the common body. Such must be the networks-subject, in order to achieve autonomous subjectivity, but networks without subjectivity can also be endowed with such an organization (which is, as seen, the rule);
* unstructured networks: having neither a common body nor a common asset fund.

= Decision making processes =
«''For the purposes of the disclosure requirements set forth in subsection 4-quater, the contract must be drawn up by public deed or by notarized private deed (…) and must indicate: (…) f) the rules for taking decisions by the participants on any matter or aspect of common interest that does not fall, when a common body has been established, within the management powers conferred on that body, as well as, if the contract provides for the amendability of the network program by majority vote, the rules on how to take decisions to amend the program''».

Art. 4 ''ter'', d.l. 5/2009

The legislative framework is very meager on this point, if not absolutely silent, limiting itself to deferring to contractual provisions the determination of rules for decision-making by the parties, on any matter or aspect of common interest as well as for changes in contractual provisions.

In order to analyze decision-making mechanisms within the network, a preliminary distinction must be made between

* decision-making by the participants;
* decision-making reserved for the common body.

In this regard, the network contract must provide, 

* the rules for the taking of decisions by the participants on any matter or aspect of common interest that does not fall, when a common body has been established, within the management powers conferred on that body, the management power being subtracted from the decisions of the adherents, precisely as a result of the appointment of the Common Body; 
* if the contract provides for the modifiability of the Network program by majority vote, the rules on how decisions to modify the program are to be made.

Therefore:

# the decision-making competence of the participants is general in nature, whereas that of the common body is residual in nature;
# the managers are proper agents; 
# a position of dominance remains in the hands of the participants with respect not only to contract amendments but also to contract implementation activities. 

As a <u>rule</u>, that is, without any other contractual provision, 

# decisions are made unanimously on both modification and implementation of the contract; 
# decisions have a binding form, that is, they must be drawn up by public deed or notarized writing. 

The legal model thus allows room for <u>private autonomy</u>: 

# the common body can be given more or less powers; 
# its appointment and replacement may not be by unanimity; 
# the managers may operate jointly or severally.

In the case of <u>gaps in the parties' provisions</u> on decision-making procedures, some authors suggest the application of the rules provided for resolutions of the assembly of joint stock companies, or more flexible models as in unlimited liability companies or the [[The European Economic Interest Grouping (EEIG)|EEIG]]. 

As the competence and discretion of the common body grows, a hiatus between ownership and management is determined, although without arriving at true organic representation as is the case in corporations, where [[Agency Theory]] is discussed. 

The question is, how far can private autonomy go? Can it even go as far as a reversal of the relationship of participating/common body powers? 

Some general principles remain inalienable: 

* each participant must be involved in the decision-making process;
* in the context of joint initiatives, there is a need for a structure of information and supervision with respect to management performance; 
* action for compensation for damage done to the joint initiative and the pooled assets.

= Voice and exit rights =
The provision of voice and exit instruments is indispensable in the governance of the network contract that aspires to be recognized. 

<u>The voice right</u>, in particular, consists of 

# taking part in the decision-making process; 
# taking part in the process of selecting and designating those in charge of the execution phase of the contract;
# carrying out monitoring and supervisory activities with respect to the activity of participation in the contract;
# activating reactions in the presence of improper fulfillment of the tasks of implementation and execution of the contract.

<u>The exit right</u>, on the other hand, consists in the dissolution of the individual contractual relationship limited to the individual entrepreneur. Suddite dissolution can be voluntary (withdrawal) or forced (exclusion). 

Given the importance of these rights, an essential question inevitably arises: what sanction applies to the contract that does not provide for them? Nullity? If so, total or partial? Or, rather, non-recognition of the contract? 

The doctrine tends to rule out the nullity thesis and consider more appropriate the non-accessibility of fiscal, administrative and financial benefits. This is because compliance with the elements stipulated by law constitutes a burden and not an obligation, insofar as it is functional to obtain a kind of statutory award. 

In conclusion, on the point:

# the recognized network contract requires the presence of voice and exit rights; 
# the conformation of these rights is left to private autonomy.

= The modification of the network contract =
Wide discretion and freedom is left to private autonomy in establishing the rules of modifiability of the Network contract and program, subject to the limit imposed by the principle of meritoriousness and through recourse to the experience of positive law and contractual practice, which from day to day produces proven dispositive norms. 

Such changes may move within the general principles of contracts in general and associative contracts with common purpose, in particular. The decisions, if the Common Body has not been appointed, may concern any matter or aspect of common interest to the Network.

As with any contract, the rule applies that it can be amended with the consent of all the contracting parties, but considering the spread and the possible number of adherents that the Network contract can gather, the law represents the possibility that the Network contract may contemplate in its contractual wording the amendability by majority vote. Hence the need to dictate, in the Network contract, the procedural rules to be applied to make amendments to the contractual regulations. 

The transtypity of the Network contract, which means that it isn’t a new type of contract, allows a reference to the rules proper to collaborative contracts, i.e., to the mechanisms provided for in associative contracts, and thus to the assembly method and to all typified regulations concerning the taking of decisions in the consortium and/or corporate sphere, as applicable.

= References =

* P. Benazzo, ''I diritti di'' voice ''e di'' exit ''nei contratti di rete «riconosciuti»'', in ''Rivista delle società'', 2012, pp. 677-710.
* F. Cafaggi, ''Il contratto di rete nella prassi. Prime riflessioni'', in ''I Contratti'', 2011, pp. 511 ss.
* G. F. Campobasso, ''Diritto commerciale'', vol. I, ''Diritto dell’impresa'', UTET Giuridica, Milano, 2022, pp. 255-291.
* G. F. Campobasso, ''Diritto commerciale'', vol. II, ''Diritto delle società'', UTET Giuridica, Milano, 2022, pp. 640 ss.
* G. F. Campobasso, ''Diritto commerciale'', vol. III, ''Contratti, titoli di credito, procedure concorsuali'', UTET Giuridica, Milano, 2022, pp. 33 ss. and 46 ss.
* A. Caprara, ''Le “modificazioni soggettive” del contratto di rete: spunti di riflessione'', in ''Il contratto di rete. Dalla teoria giuridica alla realtà operativa'', edited by G. Meruzzi, April 11, 2012, pp. 29 ss.
* M. Ceolin, ''Il contratto di rete tra imprese nella legislazione italiana: rete strutturata e non strutturata tra luci e ombre a dieci anni dalla sua introduzione'', in ''Revista de Direito da Cidade'', 2019, pp. 413 ss.
* F. Cirianni, ''Il contratto di rete'', in ''Notariato'', 2010, pp. 442 ss.
* P. Corrias, ''Cooperazione tra imprese appaltatrici e responsabilità verso terzi'', in ''La responsabilità civile e previdenza'', 2016, pp. 736 ss.
* A. Di Lizia, ''(Contratto di) Rete di imprese. Rassegna e clausole contrattuali'', in ''Notariato'', 2012, pp. 277-296.
* G. Doria, ''Reti di imprese e innovazione tecnologica'', in ''Rivista scientifica trimestrale di diritto amministrativo'', 2020, pp. 305 ss.
* A. E. Fabiano, ''Le reti di imprese: uno strumento giuridico a servizio della sostenibilità?'', in ''La Nuova Giurisprudenza Civile Commentata'', 2022, II, pp. 1364 ss.
* A. Gentili, ''Una prospettiva analitica su reti di imprese e contratti di rete'', in ''Obbligazioni e contratti'', 2010, pp. 87 ss.
* M. Libertini, ''Contratto di rete e concorrenza'', in ''Giustizia civile rivista trimestrale'', 2014.
* G. Meruzzi, ''Notazioni in tema di soggettività giuridica della rete'', in ''Il contratto di rete. Dalla teoria giuridica alla realtà operativa'', edited by G. Meruzzi, April 11, 2012, pp. 15 ss.
* G. Meruzzi, ''Complemento di diritto commerciale'', 1, ''Impresa, società in generale e società di persone'', 2° ed., Egea, Milano, 2019.
* E. Mugnai, ''“Contratti di rete” e attività di direzione e coordinamento'', in ''Rivista di diritto societario'', 2015, pp. 823 ss.
* P. Saccomanno, ''Il contratto di rete: profili di un’indagine aperta'', in ''Contratto e impresa'', 2017, pp. 673 ss.
* F. Schiavone, Governance'','' ''Reti d’imprese e distretti industriali: considerazioni metodologiche'', in ''EconomiaAziendale'', ''online'' review, www.ea2000.it, 2003. 
* P. Zanelli, ''Reti di impresa: dall’economia al diritto, dall’istituzione al contratto'', in ''Contratto e impresa'', 2010, pp. 951 ss.

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