Social Enterprise (Italian Law)

Definition and legal framework

Social enterprises were introduced into the Italian legal system by Legislative Decree 24 March 2003 no. 155. Art. 1 defined them as 'all private organizations, including the bodies referred to in Book V of the Civil Code, which carry out, on a stable and principal basis, an organized economic activity for the purpose of producing or exchanging goods or services of social utility, aimed at achieving aims of general interest, and which meet the requirements set out in Articles 2, 3 and 4' of the same decree.

This decree was repealed by Legislative Decree 3 July 2017 No. 112 on the 'revision of the regulations on social enterprises', which sets the current regulations on the matter.

Pursuant to Article 1(1) of Legislative Decree 112/2017, 'all private entities, including those established in the forms set out in Book V of the Civil Code, which, in accordance with the provisions of this decree, carry out on a stable and principal basis a business activity in the general interest, without profit and for civic, solidarity and socially useful purposes, adopting responsible and transparent management methods and favoring the widest involvement of workers, users and other stakeholders in their activities, may acquire the status of social enterprise'. The status of Social Enterprise can therefore be acquired by private entities, such as associations and foundations, and companies that carry out on a stable and principal basis a business activity in the general interest, without profit and for civic, solidarity and socially useful purposes. Social Enterprises include, by right, Social Cooperatives and their consortia.

A Social Enterprise can only permanently and principally carry out the business activities of general interest provided for in Article 2 of Legislative Decree 112/2017. An enterprise activity in the general interest is considered to be carried out on a principal basis if its revenues exceed seventy per cent of total revenues. Also considered of general interest, independent of its object, is the business activity in which, for the pursuit of civic, solidarity and socially useful purposes, very disadvantaged workers and disadvantaged or disabled persons are employed, as well as persons benefiting from international protection, homeless persons, who are in a condition of poverty such that it is not possible for them to find and maintain a home of autonomy.

Incorporation and Registration with the Business Registry

The social enterprise is established by notarial deed and the relevant articles of incorporation must make explicit the social character of the enterprise in accordance with the rules of Legislative Decree no. 112/2017, indicating in particular the corporate purpose and the absence of the purpose of profit-making.

The articles of incorporation, their amendments and other deeds relating to the company must be filed by the notary or the directors with the Office of the Business Registry in whose district the registered office is established, for registration in the appropriate section, within thirty days of their completion.

The annual balance sheet (Article 9 of Legislative Decree 112/2017) and the social balance sheet drawn up according to specific Guidelines (see below) must be filed at the same Register.

Social Enterprises and Third Sector Entities.

Legislative Decree No. 117/2017 (the so-called 'Third Sector Code' or 'TSC') introduced and regulated Third Sector Entities (“TSE”), which now enjoy a more articulated and comprehensive discipline than that traditionally reserved for non-profit entities in Book I of the Italian Civil Code. Generally speaking, it can be stated - with a good degree of approximation - that, by virtue of the provisions of the TSC, the set of TSEs encompasses a heterogeneous set of types of entities:

• certain named types of entities, some of which were already subject to a special regulation that, in some cases, was repealed and replaced with a new one (as in the case of social enterprises: see Article 40, paragraph 1, TSC; Article 17, paragraph 3, Decree 112/2017) and, in other cases (such as mutual aid societies), remained governed by the original regulations, without prejudice, however, to the possibility of transforming into entities now regulated by the TSC. Other entities, on the other hand, have been regulated ex novo despite being de facto already widespread in the 'third sector' market (e.g. the so-called 'associative networks' and philanthropic entities).
• Non-typical TSEs, the establishment of which is permitted by the residual provision set out in Article 4 of the Third Sector Code: this, however, provided that the entities in question - in addition to being private in nature and meeting the constituent elements laid down by the legislator in general for typical TSE - never take corporate form.

Social enterprises are therefore included among the typified types of TSEs. This has led to the establishment of a special section of the Single National Register of the Third Sector, in which TSEs must be registered, dedicated to social enterprises and, among them, to social cooperatives, which, being social enterprises by law, are also third sector entities by law (see Art. 46, par. 1, lett. d), Legislative Decree No. 117 of 2017). From the point of view of the legal framework, they are therefore subject in the first place to the special rules laid down by Legislative Decree 112/2017, as well as to the rules of Legislative Decree 117/2017, insofar as they are compatible with the provisions of Decree 112/2017. In their absence and for the aspects not regulated, the rules of the Civil Code and its implementing provisions concerning the legal form in which the social enterprise is established apply to them.

References

E. Cusa, Frammenti di disciplina delle cooperative con la qualifica di impresa sociale, in Nuove leggi civ. comm., 2021, p. 267 et seq.;

A. Fici, Tipo e status nella nuova disciplina dell’impresa sociale, in Contr. impr., 2023, p. 112 et seq.;

D. Foresta, Sugli enti del terzo settore. Tipi e funzione nell’articolazione del registro unico, in Nuove leggi civ. comm., 2022, p. 1461 et seq.;

M. L. Vitali, Riforma del terzo settore, nuova disciplina dell’impresa sociale e regole societarie, in Osservatorio del diritto civile e commerciale, 2020, p. 79 et seq.

Websites

For further information and links, see the following site: https://italianonprofit.it/risorse/definizioni/imprese-sociali/

For the legal framework, with direct links to the current regulations, see: https://www.lavoro.gov.it/temi-e-priorita/terzo-settore-e-responsabilita-sociale-imprese/focus-on/impresa-sociale/pagine/default