Working Paper Series

Centre for Law and Finance
Centro di Diritto e Finanza
Working Paper Series
GUIDO FERRARINI
Origins of Limited Liability Companies and
Company Law Modernisation in Italy:
A Historical Outline
WP 5-2002

Origins of Limited Liability Companies and Company Law Modernisation in Italy: A
Historical Outline
Guido A. Ferrarini
Centre for Law and Finance
University of Genoa
1 INTRODUCTION
In this paper, which is intended to celebrate, from an Italian perspective, 400 years since the
foundation of the Dutch East India Company (Verenigde Oostindische Compagnie = VOC), I will
briefly discuss the origins of business companies in the Middle Ages and the Renaissance, and then
focus on the formation of the first Italian limited liability companies in the 17 th and 18 th centuries
under the influence of the Dutch and English models. I will then examine concisely the codification
of company law in the 19 th and 20 th centuries, and the recent reforms of corporate governance and
capital market law. In covering such a wide historical spectrum, my purpose is twofold. Firstly, I
intend to connect, within the confines of this paper, company law history to economic history, so as
to place in the appropriate context the analysis of legal institutions which have been fundamental to
the rise of modern capitalism. Secondly, I aim to offer a general view of the long path to modern
corporate governance, from the time when limited liability companies were not covered by general
private law rules, through the age of liberal codifications (starting from the Napoleonic Commercial
Code) to the present times, in which company law is closely connected with capital markets law
(and other areas of business regulation).
2 VOC’S GENOESE PREDECESSORS AND EMULATORS
In this Section, I will analyse the origins of limited liability companies, examining some
Italian analogues of the VOC. Modern companies are indentified by four defining characteristics:
limited liability for investors, free transferability of investor interests, legal personality and
centralised management 1 . The analysis included in para. 2.1 and 2.2 will show that some of these
characteristics gradually emerged in business techniques preceding the East India companies. In
para. 2.3, I shall examine attempts made during the seventeenth century to do business in Genoa
through limited liability companies along the Dutch model. The first companies were not successful
as business enterprises; however, their model, once imported, was adopted in an increasing number
1

of cases, also in other Italian cities, throughout the eighteenth century. Para. 2.4 will illustrate a few
aspects of early corporate governance from the viewpoint of some companies’ articles of
association.
2.1 Early Techniques
The commenda was the oldest technique to invest capital in a commercial venture, generally
connected with international trade 2 . An amount of money was given to a merchant by an “investor”,
who was not necessarily rich; also small savers made recourse to the commenda and a merchant
might enter into more contracts of this type for the same venture 3 . If the venture was successful, the
investor was entitled to three quarters of the profits; in case of losses, the investor had to bear them.
If capital had been contributed also by the merchant, profits and losses had to be shared
proportionally to the capital conferred 4 . Considering that, in the thirteenth century, many savers in a
city like Venice made recourse to the commenda to invest their money, the great economic historian
Carlo M. Cipolla argued: “In practice, the commenda contract, at those times, had, under different
forms, the same function as the shares of limited companies have today, by allowing a great number
of people to participate in the profits of the largest industrial, commercial and financial
enterprises” 5 .
In the fourteenth century, the commercial techniques changed, as the travelling merchants
became less numerous and were replaced by resident merchants who traded internationally through
agents and factors 6 . As a consequence, by the fifteenth century, the commenda had almost
disappeared and the compagnia was used to collectively finance business ventures 7 . At the
beginning, the compagnia was closely connected with the family. It was constituted by the members
of the same casata contributing the family’s assets to the company; they were all liable for the
company’s obligations, which were also obligations of the family 8 . As argued by Armando Sapori,
the expansion of business created new financial needs and the companies had to accept outside
financing; the inclusion of strangers concluded a stage of the compagnia’s history 9 . It also led to the
introduction of limited liability for investors contributing capital to the company, as was done in the
1
See R.C. Clark, Corporate Law, New York, 1986, p. 2; P. Davies, Introduction to Company Law, Oxford,
2002, p. 9.
2
See C. Cipolla, Storia economica dell’Europa pre-industriale, Bologna, 5th ed. 1994, p. 186.
3
Ibidem, p. 187.
4
Ibidem, p. 186.
5
Ibidem, p. 187.
6
Ibidem, p. 188.
7
Ibidem.
8
See A. Sapori, ‘Le compagnie mercantili toscane del Dugento’, in Studi di storia economica, Florence, 1955,
II, pp. 803-805; Id., ‘Dalla Compagnia alla Holding’ (1956) Rivista delle Società 72; see also U. Santarelli, Mercanti e
società tra mercanti, Turin, 2nd ed. 1992, p. 121 et seq.
9
Sapori, ‘Dalla Compagnia alla Holding’, supra n. 8, at 74.
2

old commenda: a Florentine law of 1408 regulated the accomandita, allowing for the co-existence
of unlimited and limited liability partners 10 . Another way of collectively financing an enterprise was
by accepting deposits: this led to the formation of companies which had a commercial and financial
nature at the same time, as in the famous case of the Medici’s business 11 .
2.2 VOC’s Predecessors
The compagnia and the accomandita (as well as the commenda before them), despite being
functional equivalents of limited liability companies at their own times, were profoundly different
from the latter, for very clear reasons. First, their organisation was elementary, compared with that
of the VOC, and their size was much smaller, as the financing needs were lower. Second, the
managers of the company, if not all the partners, were subject to unlimited liability for the
company’s obligations. Third, there was not a secondary market for the investmens in those
companies. If predecessors of the VOC existed at all in the Italian Middle Ages and Renaissance,
these had to be found elsewhere.
2.2.1 The Genoese Maone
According to the great German commercial lawyer, Levin Goldschmidt, modern limited
liability companies found their origins in the Italian practice of the compera delle imposte (purchase
of tax receivables) 12 . This was a technique used in the Middle Ages to finance the purchase of tax
receivables from either a State or a City with money raised amongst the public. The loans granted to
the State or City by the investors, against an assignment of tax receivables or other rights (including
trade privileges) were collectively denominated as mons (mountain) or maona (mahona). The
creditors were registered in a public registry and the loans were divided into a number of equal parts
(loca, partes), each creditor being the holder of one or more of them 13 . The loca were freely
transferable and were traded as movables: the analogy with today’s securitisations is striking.
The loca’s holders formed an organisation (societas comperarum) to collect the tax
receivables and have their loans repaid. This organisation was temporary, as it was created for the
purpose of the loans 14 . However, in the case of the Genoese Maona di Chio e di Focea, also
denominated as Maona dei Giustiniani, the organisation lasted for a long time (1346-1566). In
Goldschmidt’s opinion, this was a colonial joint-stock company, presumably the oldest 15 . The
Maona was founded to finance the acquisition and operation of 29 galleys which were employed to
10 Ibidem, 81.
11 Ibidem, 78-79, arguing that the Medici formed a group of companies, each located in a different European
country, all depending on the Florentine House, which functioned in some way as a holding company.
12 L. Goldschmidt, Universalgeschichte des Handelsrechts, Stuttgart, 1891, p. 290.
13 Ibidem, p. 292.
14 Ibidem, p. 293.
3

conquer Chio and the old and new Focea. The total debt was divided into loca, along the model of
the compera delle imposte, and the Company was granted by the Genoese Republic, as a security
for the repayment of the debt, the usufruct (dominium utile) of Chio and Focea, together with some
trade privileges 16 . The powers of the State in the colonies were exercised by Genoese magistrates.
The usufruct, however, was managed by the Maona, which came to have, towards the end of its life,
600 “shareholders” 17 .
Goldschmidt’s thesis that some of the Genoese maone were similar, in substance, to limited
liability companies was criticised by other lawyers and historians 18 . A major difference is that the
maona was an association of creditors, organised to protect them from the State as a debtor. In its
genuine form, the maona did not even collect the taxes assigned to it, which were collected by
companies of contractors on their behalf 19 . However, there are also similarities between the two
institutions. First of all, the maonae were complex organisations, with a governance structure
directed to represent the interests of a mass of investors. In addition, they were subject to a principle
of limited liability 20 . Furthermore, despite the debt nature of the maona’s obligations towards its
members, dividends were paid to the latter out of the cash flows received by the organisation,
mainly through tax collections. These dividends fluctuated depending on the amount of the
organisation’s cash flows as did consequently the prices of the loca on the secondary market 21 . With
respect to the the “colonial” maonae, it is also striking that they enjoyed trade privileges, like the
VOC, and were actively involved in the administration of their territories.
2.2.2 The Banco di San Giorgio
Goldschmidt included the Genoese Banco di San Giorgio amongst the predecessors of
modern limited liability companies 22 . This institution was founded in 1407 as Officium
procuratorum S. Georgii, to consolidate a certain number of comperae (i.e. State debts secured by
tax receivables). By 1454 the Officium administered almost the whole Genoese public debt in the
15 Ibidem, p. 295. Another company was the Genoese maona of Cyprus, founded in 1373.
16 Ibidem. On the succession of a new maona to the old one and the relevant constitutional changes, see H.
Sieveking, ‘Studio sulle finanze genovesi nel Medioevo e in particolare sulla Casa di S. Giorgio’ (translation by O.
Soardi) (1905) Atti della Società Ligure di Storia Patria, XXXV, 1st part, p. 213 et seq.
17 See Goldschmidt, supra n.12, p. 296.
18 See K. Lehman, Die geschichtliche Entwicklung der Aktienrechts bis zur Code de Commerce, Berlin, 1895,
p. 7 et seq.; H. Sieveking, supra n. 16, p. 221 et seq.; A. Vighi, ‘Notizie storiche sugli amministratori ed i sindaci delle
società per azioni anteriori al codice di commercio francese (Contributo alla storia della società per azioni)’ (1969)
Rivista delle società 663 (reprint of a paper dated Camerino, 1898); Vivante, Trattato di diritto commerciale, II, Le
società commerciali, 5th ed., Milan, 1929, p. 7.
19 Sieveking, supra n. 16, p. 212.
20 Ibidem, p. 223.
21 Ibidem.
22 Godlschmidt, supra n. 12, p. 296.
4

interest of investors 23 . Dividends were paid to the investors out of a cash flow generated by the
collection of taxes and the Genoese colonies (including Corsica), the usufruct of which was later
transferred to the House of S. Giorgio in exchange for financings to the State 24 . Therefore, the
House of San Giorgio became a sovereign entity: dominius et status, as it called itself in the official
documents 25 ; a state within a state, as it was defined by Niccolò Machiavelli 26 .
The loca issued by the House of San Giorgio were registered in public books, where also
the transfers of the loca were annotated. There was, in fact, a lively market for the loca 27 .
Certificates were issued on demand, to document the annotations in the public books 28 . The San
Giorgio’s governance structure was oligarchichal and the power belonged to the largest
“stockholders” 29 . The Banco was managed by 8 protectors, with at least 100 loca each, whereas the
supervisory and ruling powers were exercised by a Great Council made up of 480 stockholders,
with at least 10 loca each. The protectors had also civil and criminal jurisdiction, given that the
Banco was a sovereign entity. Their role was, therefore, considered to be similar to that of the
Genoese magistrates 30 .
The assimilation of the Banco di San Giorgio to limited liability companies, proposed by
Levin Goldschmidt, was rejected by other authors 31 . Heinrich Sieveking, author of the main study
on the Banco, argued that it was mainly an organisation of creditors, a “typical medieval institution”
created to carry out some of a weak State’s functions. In his opinion, “the House of San Giorgio
was a discrete political organisation to protect the capitalists’ class, which was the main holder of
gilts”, not a commercial company 32 . However, as already argued for the maonae, there were also
similarities between the Banco di San Giorgio and early joint-stock companies 33 . The issuance of
financial instruments (loca) and an active market for those instruments were meaningful, despite
their nature as debt obligations which was, anyhow, tempered by the distribution of dividends
calculated on the cash flows received from the Banco.
23
See G. Felloni, ‘La Banca di San Giorgio a Genova’, in C. Cipolla, Storia facile dell’economia italiana dal
Medioevo a oggi, Milan, 1996, p. 42.
24
Goldschmidt, p. 297, who makes reference also to the banking business of the House of San Giorgio, which
was, however, exercised to the profit of the House and not of its creditors: see Sieveking, supra n. 16, 2 nd part, p. 62 et
seq.
25
G. Felloni, supra n. 23, p. 42.
26
N. Machiavelli, Istorie fiorentine, 8, 29, cited by Costantini, p. 27.
27
Felloni, supra n. 25, p. 41.
28
Goldschmidt, supra n. 12, p. 297.
29 nd
Ibidem. For the original constitution, see Sieveking, supra n. 18, 2 part, p. 22 et seq.
30
C. Costantini, La Repubblica di Genova, Turin, 1986, p. 29.
31
Sieveking, supra n.16, p. 25; Vighi, supra n.18, p. 669 et seq.; Vivante, supra n. 18.
32
Supra n.16, p. 25
33
Supra para. 3.1; on these similarities, see also K. Lehman, Lehrbuch des Handelsrechts, Leipzig, 1908, p.
370 et seq., making reference to Id., Recht der Aktiengesellschaften 1, § 4 et seq.
5

2.2.3 Why not in Venice?
The Venetians made also use of the maonae, particularly to finance their trade with
Flanders. However, these companies had always a temporary nature, as they were created by the
merchants interested in an individual expedition, with reference to all the vessels employed. As
argued by F.C. Lane, the Venetian maonae could have been more important in the absence of the
State’s strong intervention in the merchant navy area 34 . If whole fleets of vessels had not been built
by the Venetian Government in its Arsenale (shipyard) and then chartered to traders, on the basis of
public auctions, for employment in individual expeditions (often under rules issued by the Senate),
the maonae would have been necessarily transformed into permanent organisations 35 . In other
words, limited liability companies were not created in sixteenth century Venice because the
Republic solved a great part of the financial problems inherent in international trade by building and
owning the fleets needed to carry the merchandise to and from Flanders.
2.3 VOC’s Emulators
At the end of the sixteenth and throughout the seventeenth centuries, the leadership as to
innovation in commercial techniques was taken by the Northern countries, particularly the
Netherlands and England 36 . The extraordinary development of ocean trade and the growing need for
capital to finance new ventures determined the formation of modern limited liability companies. It
is no surprise, therefore, that the first Italian limited liability companies were created along the
Dutch model in the area of shipping and international trade. One of them, in particular, was formed
to do business with the East Indies, in competition with the VOC (see para. 2.3.2.).
2.3.1 The Compagnia di Nostra Signora della Libertà
The Compagnia di Nostra Signora della Libertà (CNSL) was the first company to be
formed “all’olandese” (in the Dutch manner) 37 and is to be considered the first Italian limited
liability company 38 . It was formed in Genoa, at the end of 1638, with the purpose of developing the
use of “galee di libertà”, i.e. galleys armed with free men as rowers, instead of slaves, as was
common at that time. The CNSL’s objective was also political, as the employment of slaves was
more expensive and the recourse to free men was conceived of by the “navalist” party as a means to
34
F.C. Lane, I mercanti di Venezia, Torino, 1982 (translated by E. Basaglia), p. 245 et seq. (for the original
text, see ‘Family Partnerships and Joint Ventures’ (1944) 4 Journal of Economic History 178-196).
35
Ibidem,
36
See Cipolla, supra n. 16, p. 190.
37
S. Subrahmanyam, ‘On the Significance of Gadflies: the Genovese East India Company of the 1640s’ (1988)
17 Journal of European Economic History 559, at 564-565.
38
P. Ungari, Statuti di compagnie e società azionarie italiane (1638-1808). Per la storia delle società per
azioni in Italia, Milan, 1993, p. 3 et seq.
6

enhance the Genoese merchant marine 39 . The CNSL was approved, “not without difficulties (as for
all new things)” 40 by the Genoese Senate and the first trip to Sicily was highly profitable. This
increased the company’s appeal, so that the shareholders soon reached the number of 70 and
deliberated to emulate the successful Dutch companies 41 . However, the CNSL’s activities met fierce
opposition amongst those who were close to Spain and contrary to a new naval policy. As a result,
the CNSL rapidly went out of business, but the basic project was not abandoned by its members, as
we shall see in the following paragraph.
2.3.2 The Compagnia Genovese delle Indie Orientali
The Compagnia Genovese delle Indie Orientali (CGIO) was formed in early 1647 42 , with a
capital of 100,000 scudi which was provided, for a substantial amount, by the principal shareholders
in the earlier Compagnia di Nostra Signora di Libertà. The CGIO was created to start trade with the
East Indies, along the lines which had already proven successful for the VOC. The creation of this
company also reflected the current political orientations of the Republic of Genoa towards a
renewed naval policy and the development of international trade 43 . The Genoese aimed, in
particular, at resurrecting their maritime traditions, which had given way to the English and Dutch
fleets in Mediterranean trades. In addition, they wanted to regain a share of international trade,
possibly in co-operation and also in competition with England and the Netherlands, paying special
attention to Portugal, which had recently left Spanish domination and appeared to be open to
Genoese penetration. The Genoese ambitions were supported by a relatively peaceful European
scenario, after years of wars and revolutions, and aimed to invest the private wealth accumulated by
the leading families in lucrative trades with the East Indies and the American Continent 44 .
There were also Dutch interests involved in the CGIO’s creation, of merchants presumably
unhappy with the monopoly enjoyed by the VOC over Asian trade 45 . Soon after forming the CGIO,
39 Costantini, supra n. 30, p. 308 et seq.; on the political conditions of that time, see R. Savelli, ‘Un seguace
italiano di Selden: Pietro Battista Borghi’ in G. Tarello (Ed.), Materiali per una storia della cultura giuridica, III, 1,
Bologna, 1973, p. 18 et seq., who illustrates the difficulties created for Genoa by the wars between France and Spain in
Italy, and notes that the Genoese were divided almost into two groups, one politically conservative and close to Spain,
the other reformist and either neutralist or francofile.
40 R. Della Torre, Historie delli avvenimenti de’ suoi tempi, II, p. 1170, cited by Costantini, p. 308.
41 Ibidem, p. 1173.
42 See G. Pessagno, ‘La grande navigazione genovese al XVII secolo. La Compagnia delle Indie Orientali’
(1930) 10 Genova 641-647; earlier information in L.T. Belgrano, ‘La Compagnia genovese delle Indie’ (1875) 2
Giornale Ligustico 121-125; for more recent analyses, C. Costantini, supra n. 30, pp. 315-319; Subrahmanyam, supra n.
37, 559-581; V. Borghesi, ‘La marineria olandese come modello per la Repubblica di Genova nella prima metà del
Seicento’, paper presented at a symposium on ‘Genua, la Superba’, Utrecht, 6 may 1996, which was shown to me by the
courtesy of the author.
43 See Costantini, supra n. 30, pp. 314 et seq.
44 Ibidem.
45 See Subrahmanyam, supra n. 37, 566. One of these, Willem Meulman, a resident of Ams terdam, had a
brother Hendrik who was the Dutch Consul in Genoa in the 1640s and apparently enjoyed close relations with the
leading Genoese merchants: “The Meulman brothers promised to have the ships for the Company’s Asian voyages
7

its founders submitted an application, on the 13 th March 1647, to obtain from the Government of the
“Serenissima” (as the Genoese Republic used to be called) an authorisation of the venture and a
special privilege for at least 50 years 46 . The Government answered on the 27 th March, granting a
privilege for thirty years (“concedatur privilegium duraturum per annos triginta”) 47 . The authorised
venture covered navigation and trade of goods to the Eastern Indies, including Japan, its vicinity
and other free and practicable places. Another decree was issued by the “Serenissima” on the 22 nd
January 1648, which is considered to be the Company’s official licence 48 .
The CGIO’s trade was unsuccessful, as it encountered on the part of the VOC fierce
resistance to new entrants in its Asian lucrative business. The CGIO’s ships had been secretely built
in the Netherlands; however, even before they sailed from Genoa, the secret concerning their real
destination was out 49 . The first to know of the secret were the Portuguese, who informed, through
their ambassador in the Hague, the VOC’s seventeen directors about the planned expedition 50 . A
few days later, the seventeen directors sent a letter to the Governor-General at Batavia with the
“express charge, order and responsibility” to ensure that the monopoly rights of the Dutch in
Indonesia and other parts of Asia be protected against the Genoese 51 . The VOC’s legal arguments
were straightforward. On the one hand, the Dutch Government had, by a decree of 1632, forbidden
“any person from the United Provinces to seek employ with another Company in Asia, the more so
if he had earlier been an employee of the VOC” 52 . On the other, “the ‘exclusive treaties’ they had
signed with rulers in various parts of Indonesia were seen by the Dutch as legally binding on other
secretely constructed in Holland along the lines of the Dutch East Indiamen, and also agreed to arrange for expert
steersmen, merchants and mariners to help staff the vessels. While it is not clear whether they in fact also financed a
great proportion of the venture, the Meulmans almost certainly had a part interest” (Ibidem). Subrahmanyam’s study is
of particular interest, as it makes use of Genoese, Dutch and Portuguese sources as to the CGIO.
46
See Pessagno, supra n. 42, at 642, quoting a document found at Archivio di Stato di Genova (Maritim. fil. 2).
47
Ibidem, p. 643.
48
Ibidem, quoting a document found at Archivio di Stato di Genova (Archivio Segreto, Fondo Gavazzo, fil. 2).
This decree authorised the CGIO to sail the two vessels, which had been built in the Netherlands and were ready to sail
from Genoa, to the East Indies under the leadership of Gio. Maes, a Dutch captain, and to fight against the Turkish and
other “Infidelli” (unfaithful). Moreover, the decree mandated all the Genoese officers, either in land or at sea, to give
their assistance for the success of the expedition and made a similar petition to anyone else who might be concerned. In
addition, the decree provided for guns to be delivered to the two vessels from the “Camera” (Economic Ministry) and
submitted to the “Giunta di Marina” (Admiralty) for approval the rules for the navigating crew. For information on the
“enlistment contract”, which had to be detailed as the crew included Dutch seamen who were not subject to Ge noese
laws, see D. Presotto, Da Genova alle Indie alla metà del Seicento: un singolare contratto di arruolamento marittimo
((1979) Atti della Società Ligure di Storia Patria 71-91.
49
See Subrahmanyam, supra n. 37, 569.
50
Ibidem. As reported by the Portuguese ambassador, the seventeen directors were “amazed, because they
knew nothing of it, as it had been done very secretly; they thanked me and said that we might rest assured that they
would strive to undo the voyage and would also advise us of what would be required either from them or form us to
prevent such navigations” (Letter from Francisco de Sousa Coutinho to D. João IV, quoted by Subrahmanyam, supra n.
37, at 569).
51
Subrahmanyam, supra n. 37, 569-570.
52 Ibidem, 570.
8

parties and nations as well” 53 . Clearly, the Genoese and their Dutch partners in the CGIO had
miscalculated the risk of such a reaction by the VOC, presumably counting on traditionally friendly
relationships with the Netherlands 54 .
As a result, when the expedition, characterised by adventures and fighting, even within the
Dutch-Genoese crew and merchants, reached Sumatra and tried to enter into the pepper trade, the
Dutch authorities in that area had already been alerted 55 . Immediate action was taken by the
Governor-General van der Lijn, who sent out two fleets, each of four ships. The capture of the two
Genoese vessels proved no problem and “the Dutch fleet returned to Batavia with its two prizes on
26 April 1649, exactly a month after the first reports of the Genoese presence had been received” 56 .
This event is richly illustrated in detail by an economic historian also to underline “the importance
of violence in determining the success of the VOC”, as the Genoese had sadly to experiment in the
CGIO’s expedition 57 .
2.3.3 The Compagnia Marittima di S. Giorgio
Despite the failure of the East Indies’ venture, the Genoese plans to renew their successes in
international trade and navigation were not abandoned, but included in a more ambitious project.
The CGIO was “transformed” into the Compagnia Marittima di S. Giorgio (CMSG) , which was
made more powerful than its predecessor 58 . All the privileges which had been granted by the
Genoese Republic to the CGIO were transferred to the CMSG and were extended to other trades.
Other privileges and financings were given to the Company by the Casa di S. Giorgio (the old
Genoese bank, which was provided with State-like sovereign power) 59 . In addition, among the
CMSG’s shareholders several represented powerful interest groups, whereas its directors also
occupied offices as naval magistrates of the Republic 60 . As implicitly argued in a well known
treatise on Navigation and Commerce by Tobia Pallavicini 61 , the CMSG was near to the English
and Dutch models of public limited liability companies, and was similarly in a very close
relationship with the State. Several aspects of the Company’s mission reflected the link with the
53
Ibidem.
54
See Costantini, supra n.30, p. 318.
55
Subrahmanyam, supra n. 37, 570 et seq., where a recount of the expedition.
56
Ibidem, 576.
57
Ibidem, 581, also quoting a Genoese source such as G.B. Pallavicini, who wrote in 1653 of “the jealousy and
envy of the Flemings in fearing that others would involve themselves in that trade, by the exercise of which [the Dutch]
have transformed themselves from the inhabitants of a few marshes to the most powerful people in Europe” (Archivio di
Stato di Genova, Archivio Segreto, Lettere ministri, 2185, dated 19 th December 1653, cited in C. Costantini, pp. 318-
319).
58
See Costantini, supra n.30, pp. 319-321.
59
Ibidem, p. 319. See also the CMSG’s memorandum of association (“statuto”), found at Archivio di Stato di
Genova (Notai Giudiziari, n. 2311, Camere Gerolamo, 1658) and published by Ungari, supra n. 38, pp. 10-13.
60
See Costantini, supra n.30, p. 319.
9

Genoese Republic, such as the fight against pirates, the reintroduction of naval arts in Genoa, the
education of sailors and the organisation of schools for naval officers 62 .
As to the direction of its trades, the CGSG decided to experiment the opportunities offered
by Portugal, which lacked ships and capital for trade with its colonies. However, the Company was
to find out that the English already controlled most of the important routes and that the Genoese, in
any case, lacked the experience required to compete with them 63 . The CGSG succeeded in sending
two ships in a convoy to Brazil, but the expedition was unprofitable 64 , as the Company as a whole
turned out to be despite its ambitions.
2.4 Early Corporate Governance
After the Genoese experiences just described, other limited liability companies were formed
in Italy in the second half of the 17 th century and, above all, in the course of the 18 th century. A
collection of articles of association of Italian companies formed before company law codification
by Napoleon was published in 1993 by P. Ungari, following wide (though incomplete) research at
the relevant archives 65 . It includes the statuti of 110 companies, while giving information on an
equal number of companies for which the articles of association were not found. These statuti are
characterised by increasing uniformity, despite the absence of legislation on limited liability
companies. They also show an inclination on the part of Italian companies towards the English
model, which was more ‘democratic’ than the Dutch model as reflected by the VOC 66 . Despite the
acceptance, in some earlier companies, of a rather oligarchic structure, as evidenced either by the
general meeting’s very limited powers or by the fact that only the major shareholders were admitted
to vote 67 , a more balanced approach to the relationship between directors and shareholders later
prevailed 68 .
However, the relevance of limited liability companies in 18 th century Italy should not be
overestimated. The need for an ad hoc government decree in order for these companies to be
61
Della Navigazione e del Commercio, Considerazioni politiche, Genoa 1656, cited by C. Costantini, supra
n.30, p. 319, n. 2.
62
Ibidem, p. 320.
63
Ibidem, pp. 320-321.
64
See also Subrahmanyam, supra n. 37, 579.
65
Supra n. 38.
66
See Mignoli, ‘Idee e problemi nell’evoluzione della ‘company’ inglese’ (1960) Riv. Soc. 633, at 639 et seq.,
who compares the English companies’ democratic organisation with the Dutch companies’ oligarchic structure.
67
See e.g. the articles of the Compagnia di negozio per il commercio con il Portogallo ed il Brasile, Turin,
1681, in Ungari, supra n. 38, p. 16 et seq., dividing the governance powers between directors and supervisors, with little
consideration for the members; and those of the Compagnia Generale di Assicurazioni Marittime, Genoa, 1741,
granting full voting rights only to shareholders holding more than a stated number of shares.
68
See P. Ungari, Profilo storico del diritto delle anonime in Italia, Rome, 1974, p. 24 et seq. Early examples
are found in the articles of the Compagnia Reale del Piemonte per le Opere e Negozi in Seta, Turin, 1752, in Ungari,
supra n. 38, p. 91 et seq., including inter alia a ‘one share-one vote’ principle, and the Società Minerale di Livorno,
Leghorn, 1756, ibidem, p. 195 et seq., foreseeing half-yearly shareholders’ meetings.
10

formed, together with the poor economic and financial conditions of the country, which had
suffered a steep economic decline in the 16 th and 17 th centuries 69 , explain why the accomandita was
still successful as a business form at the turn of the century 70 .
3 COMPANY LAW CODIFICATION
In this Section, I intend to briefly analyse company law codification in Italy throughout the
19 th and 20 th century, initially under the influence of the French Code which was made applicable to
the Italian territories by Napoleon. This period is characterised by Italy’s strong economic
development, mostly after the country’s unification in the second half of the 19 th century and, above
all, in the wake of the ‘second industrial revolution’ led by the U.S.A. in the 20 th century. Another
period of Italy’s economic expansion followed the second world war. It will be interesting to see
how the successive Italian codes, adopted in 1882 and 1942 respectively, preceded by some years
the relevant periods of economic development, and included rules on limited liability companies
which soon appeared to be outdated with reference to the needs of economic reality. This will lead
to the analysis, in the following Section, of recent reforms trying to cope with the foreseeable needs
of company law in the 21 st century.
3.1 The French Tradition
The Code de commerce which was adopted by Napoleon in 1807 included a few Articles on
the limited liability company (société anonyme). This company ceased to be subject to the special
privilege of incorporation and was regulated in a general, though concise, way by the law 71 .
However, the introduction of a general incorporation regime did not mean freedom to set up limited
liability companies. Less liberal than the New York Law of 1811, which also abolished the special
charter privileges, the Code de commerce introduced an administrative authorisation regime as to
the formation of the société anonyme (Art. 37). This regime was officially justified with reference
to private law arguments, such as the protection of subscribers and third parties from speculation
and frauds; however, it also reflected more fundamental public policy concerns, as the centralism of
the Empire did not tolerate independent social powers 72 .
3.1.1 The Code de commerce in Italy
Despite the elaboration of numerous draft commercial codes in the States into which Italy
was divided before its unification, Napoleon made the Code de commerce applicable to the Italian
Regions annexed to the French Empire (including Liguria, Piedmont and Tuscany), to the Regno
69 See Cipolla, supra n. 2, p. 273 et seq.
70 See Ungari, supra note 68, p. 26 et seq.
71 See G. Ripert, Aspects juridiques du capitalism moderne, 2nd ed., Paris, 1951, p. 51.
11

Italico (of which Milan was the capital) and to the Kingdom of Naples 73 . After the Restoration, the
Code de commerce was kept in force in several regions, such as the Lombard-Venetian Kingdom,
the Grand-dukedom of Tuscany and Genoa, while other States (such as Piedmont and the Pontifical
State) adopted their own commercial codes, which, however, followed closely the French model 74 .
The Kingdom of Sardinia proceeded to a new codification of all its laws in the thirties, which led to
the adoption of a new commercial Code in 1842, still modelled on the French Code but with some
differences. This Code, dubbed as Codice Albertino (after the name of King Carlo Alberto), was
extended to the Kingdom of Italy in 1864, after the country’s unification 75 .
The rules on limited liability companies (società anonime) were still grounded on the
Napoleonic precedent. They focussed on the limitation of shareholders’ liability, on directors’
powers and responsibility, and on shares and their transferability 76 . However, the practical
relevance of the società anonima was probably very limited in the Italian States prior to unification;
these had yet to recover from the sharp economic decline of the previous centuries and were still
mainly rural, with only a few isolated cases of early industrialisation 77 . As in other countries, the
main limited liability companies at the time of the country’s unification operated railways, with the
contribution of foreign capital 78 .
Stock exchange trading was also underdeveloped. The first stock exchanges were set up
along the French model at the beginning of the nineteenth century, however they were not active for
a long time 79 . Considering the two main exchanges, at the time of unification (1861) only 10
companies were listed in Genoa and 8 in Milan; transactions in both exchanges were modest and
price manipulation was easy 80 .
3.1.2 The Commercial Code of 1865
One of the main themes of discussion as to company law reform in the new Italian Kingdom
was whether limited liability companies should be subject to governmental authorisation, as
provided by the pre-unification commercial codes along the French model. In a report written by
Tommaso Corsi, a member of the House of Representatives who worked on a company law reform
72 See Ungari, supra n. 68, p. 30 et seq.
73 See A. Padoa Schioppa, Saggi di storia del diritto commerciale, Milan, 1992, p. 137 et seq.
74 Ibidem, p. 141 et seq.
75 Ibidem, p. 149 et seq.
76 The relevant rules were indeed simple, as shown by the little space dedicated to them in legal commentaries:
see e.g. G. Marré, Corso di diritto commerciale, 2 nd ed., Florence, 1840, pp. 39-40.
77 See N. Crepax, Storia dell’industria in Italia: uomini, imprese e prodotti, Bologna, 2002, p. 93 et seq.
78 Ibidem, p. 105 et seq.
79 See S. Baia Curioni, Regolazione e competizione: storia del mercato azionario in Italia, Bologna, 1995, p.
47 et seq., with reference to the Milan Bourse, which was founded in 1808 under French influence.
80 See A. Polsi, Alle origini del capitalismo italiano: Stato, banche e banchieri dopo l’Unità, Turin, 1993, p.
142 et seq.
12

project in 1862, a proposal was made to abolish the authorisation regime as incapable of preventing
frauds and excessively limiting freedom of trade 81 . In lieu of the companies’ public surveillance, it
was recommended to regulate better the relationships between shareholders and directors, as well as
those amongst shareholders. However, this proposal was fiercely opposed also in the wake of
financial fraud cases and was later rejected by Parliament when adopting the first Italian
Commercial Code in 1865. This Code largely followed the Codice Albertino’s model and
reinforced the public surveillance regime by instituting a new Control Office (Ufficio di sindacato)
both to authorise new companies and to monitor existing ones 82 .
3.2 The Commercial Code of 1882
It was only with the second Commercial Code, adopted in 1882, that a more liberal attitude
was taken and governmental authorisation was abolished, as had already been done in France in
1867. Consequently, the conditions as to company formation were specified by the Code, and the
Commercial Tribunal was empowered to ascertain these conditions before the company’s
registration.
The Code was the result of drafting efforts which extended over more than a decade with the
participation of some of Italy’s finest scholars 83 . This was reflected by the high technical quality of
the Code which was in line with its homologues in Europe, such as the English Law of 1861, the
French Law of 1867, the German Commercial Code of 1861 (ADHG) and the Law of 1870, and the
Belgian Law of 1873, all widely considered throughout the legislative work 84 . The Code included,
for those times, advanced regulation of limited liability companies (società anonime). Amongst the
novelties was the introduction of a board of auditors to monitor the company’s management and
accounts on behalf of shareholders and creditors, along the model of English Law, and, as a
counterbalance, the abolition of the administrative surveillance regime 85 . On the whole, the Code
followed “the first systematic approach to companies. The general meeting and its functioning, the
directors and their responsibility, corporate control and the protection of minorities, the regulation
of accounts, liquidation and mergers found in these texts [i.e. the Code and its previous drafts] a
modern treatment” 86
81
See A. Marghieri, I motivi del nuovo Codice di Commercio italiano, Naples, 1885-1886, Appendix, p. 193 et
seq.
82
See Padoa Schioppa, supra n. 73, p. 213 et seq.
83
Ibidem, p. 157 et seq.
84
Ibidem, p. 226.
85
See P.E. Bensa, ‘I sindaci della società per azioni, cenni storici e comparativi’ (1883) Rassegna di diritto
commerciale 1.
86
See G. Cottino and G. Minervini, ‘La società per azioni a cento anni dal codice di commercio’, in 1882-1982
Cento anni dal Codice di Commercio, Milan, 1984, p. 112.
13

All this helps to understand why the Commercial Code and its rules on companies, in
particular, remained in force, with minor modifications, for sixty years. However, the economic
development that occurred throughout this period of time exerted considerable strain on the Code’s
regulation of limited companies. At the time of the Code’s adoption, Italy was still a rural country,
despite some notable examples of industrialisation, particularly in the Northern regions and in the
fields of mechanical and textile industries. But in the first decade of the 20 th century, Italy joined
the small group of industrialised nations: “To be true, the industrial takeoff was completed only at
the end of the first world war; in addition, a relevant part of the country was cut off from economic
development. Nonetheless, from the beginning of the century the industrial structure of our country
was consolidated and a modern society started to emerge, characterised by substantial urbanisation
and fast growth of national income” 87 . This was also a reflection of the second industrial revolution
occurring in other countries, particularly the United States and Germany 88 . New companies were
formed in Italy to produce electricity, steel, automobiles, tyres, trains, typewriters, etc., with the
financing on the part of a few large banks and the support of the State 89 .
As a result, new problems were created to company law, with which the Commercial Code
was ill-equipped to cope: the formation of company groups, cross-shareholdings, voting limitations
and multiple voting shares, controlling minorities and the separation of ownership and control 90 .
These and similar issues mainly derived from the increasing need of capital to finance the
extraordinary growth of industry. In the first decade of 1900’s, the stock exchanges were able to
provide a good portion of the financing required by the new businesses. Between 1900 and 1907 the
number of companies listed at the Milan Bourse increased from 59 to 169, with the bulk of new
listings concentrated in the last three years, a record figure in the whole century 91 . The stock
exchanges’ capitalisation amounted to 70 per cent of Italian equity 92 . However, stock exchange
trading was dominated by speculation, which was financed by the large banks, concurrently
operating as providers of equity and loans to industry 93 . In 1907, the stock markets started
declining, as a result of an international liquidity crisis which caused a credit restriction, and
continued doing so until 1920, with a drop of 80 per cent in capitalisation in real terms. This crisis
87
See V. Castronovo, L’industria italiana dall’ottocento a oggi, Milan, 1990, p. 71.
88
See A.D. Chandler, F. Amatori and T. Hikino (Eds.), Big Business and the Wealth of Nations, Cambridge,
1997, for a comparative analysis of several countries’ industrial development in the period in question.
89
See Crepax, supra n. 77, p. 37 et seq., noting that this was the American century, the age of “Fordism”, mass
production and standardisation of products (p. 40).
90
See G. Ferri, ‘La disciplina delle società nel Codice di commercio del 1882’, in 1882-1982 Cento anni dal
Codice di Commercio, Milan, 1984, p. 105. For an economic analysis of the relevant governance structures, see F.
Amatori, ‘La grande impresa’, in Storia d’Italia, Annali, 15, L’industria, Turin, 1999, p. 691 et seq.
91
See G. Siciliano, Cento anni di borsa in Italia, Bologna, 2001, p. 17 et seq.
92 Ibidem.
93 Ibidem.
14

caused significant problems to the banking system and is considered as a landmark in the history of
Italian capital markets, which subsequently ceased to develop in relative terms and remained thin
and inadequate to finance economic development 94 .
3.3 The Civil Code of 1942
Another severe crisis occurred a the beginning of the ‘30s as a result of the world economic
recession and led to an impressive rescue operation concerning the large universal banks and almost
half of the large industrial companies 95 . This operation was conducted by the Government through
the Istituto per la Ricostruzione Industriale (IRI) which became the controlling shareholder of
several industrial conglomerates (including a number of listed companies) and of the main Italian
banks. At the same time, a new banking law was adopted to introduce a tighter system of
surveillance and sever the residual links between bank and industry at the ownership level (with the
exception of IRI) 96 . Public ownership of business was originally intended as a temporary measure,
but it subsequently became a stable solution, characterising our system as a ‘mixed economy’ 97 . Not
only several industrial conglomerates, but the prevailing part of our banking system, including all
the large banks, were owned by the State until the wave of privatisations in the 1990s. On the other
hand, capital markets suffered both from the wide role of the State in the economy and from the
Fascist Government’s policy aimed at reducing the stock exchanges’ relevance in the financial
system 98 .
These comments help to put in an appropriate historical context the reformulation of
company law rules in the Civil Code of 1942, which replaced both the Civil Code of 1865 and the
Commercial Code of 1882 by unifying private law. The Code’s rules were the results of several
reform projects which had been elaborated over more than forty years, as the industrial takeoff of
the country and the diffusion of limited liability companies highlighted the limits of the
Commercial Code in this area. The main projects were published in the first quarter of the last
century and reflected either the need for improved protection of minority shareholders, widely
shared by public opinion in the light of financial crisis and scandals (Vivante Project, 1922) or the
industrialists’ wish for the maintenance of the status quo under which they enjoyed large freedom
of action (Confindustria’s Proposals, 1925) 99 . A third initiative tried to mediate between the two
94 Ibidem, quoting A.M. Biscaini Cotula and P. Ciocca, ‘Le strutture finanziarie: aspetti quantitative di lungo
periodo (1870-1970), in F. Vicarelli (Ed.), Capitale industriale e capitale finanziario: il caso italiano, Bologna, 1979.
95 See, also for references, P. Bianchi, La rincorsa frenata. L’industria italiana dall’unità nazionale
all’unificazione europea, Bologna, 2002, p. 38 et seq.
96 See G. Conti, ‘Le banche e il finanziamento industriale’, in Storia d’Italia, supra n.90, p. 483 et seq.
97 See F. Barca and S. Trento, ‘La parabola delle partecipazioni statali: una missione tradita’, in F. Barca (Ed.),
Storia del capitalismo italiano dal dopoguerra a oggi, Roma, 1997, p. 186 et seq.
98 See Siciliano, supra n. 91, p. 32 et seq.
99 See Padoa Schioppa, supra n. 73, p. 226 et seq.
15

opposing camps by adopting only the innovations needed to foster the country’s economic
development (D’Amelio Project, 1925) 100 .
However, 15 years had to elapse before the reform activity was resumed, a long delay which
can only partially be explained by reference to the conflicting views on company law reform and to
the pressure exercised by industrial circles on the Fascist Government. An additional argument can
be made with regard to the corporate governance and finance developments which took place in the
thirties, along the lines stated above. The public ownership of a large part of the industrial and
financial sectors, and a hostile policy towards the stock exchanges combined to play down the need
for company law reform. This negatively affected the outline of such a reform, which almost
ignored the connection between joint-stock companies and securities markets, and avoided some of
the main issues of modern corporate governance, including the separation between ownership and
control in listed companies 101 .
As a result, the Civil Code’s rules on limited liability companies, despite making a
distinction between private companies (società a responsabilità limitata) and joint-stock companies
(società per azioni) so as to better allocate the regulatory burdens depending on the size and
relevance of the business venture, dedicate an incomplete regulation to the latter type of companies.
The limits of the Civil Code were clearly shown, almost forty years ago, by one of the leading
commercial lawyers, Tullio Ascarelli, in his inaugural study on the Rivista delle società, where he
highlighted the wide existence of ‘controlling minorities’ in listed companies and the ensuing
separation of ownership and control 102 . This required, in the author’s opinion (explicitly inspired by
the Anglo-American experience), improving the internal governance structure of joint-stock
companies, reinforcing the shareholders’ powers and introducing a public regulator to protect
investors in listed companies: measures which were taken incrementally by the Italian Legislator
only in the last quarter of the last century, as will be shown below.
3.4 The Rise of Capital Market Law
The Civil Code’s fate was similar to that of the Commercial Code, to the extent that not
many years after the Code’s adoption Italy went through a phase of extraordinary economic
development, known as the ‘economic miracle’ 103 . Industrial productivity increased substantially,
also as a consequence of the Common Market’s liberalisation policy, and this was reflected by the
100 Ibidem, p. 240 et seq.
101 See R. Teti, ‘Imprese, imprenditori e diritto’, in Storia d’Italia, supra n. 96, p. 1274 et seq., illustrating the
lukewarm reception of protection of minorities’ principles in the Civil Code, which maintained a corporate governance
structure similar to that foreseen by the Commercial Code, despite widespread criticism of the board of statutory
auditors (collegio sindacale) and proposals to replace it with external auditors.
102 T. Ascarelli, ‘I problemi delle società anonime per azioni’ (1956) Rivista delle società 3 et seq.
103 See, instead of many, Bianchi, supra n. 95, p. 117 et seq.
16

stock market’s exceptional performance in the post-war period 104 . However, despite the stock
market’s significant contribution to the financing of industry, the former’s structural conditions (as
measured for instance by the number of listed companies) were left substantially unchanged 105 .
The renovated industrial successes of the country threw new light on the inadequacy of the
Civil Code’s rules on joint-stock companies and led to the formulation of several reform
projects 106 . However, T. Ascarelli’s proposal 107 of shareholders’ empowerment as a means for
investor protection was generally rejected. The emphasis was rather put on the distinction between
two shareholders’ groups in listed companies: those who are interested in the management of the
company’s enterprise (‘shareholders-entrepreneurs’, as the controllers or block-holders used to be
defined) and those who are only interested in investing (‘shareholders-investors’) 108 . In particular, it
was argued that the shareholders-investors would never be active in corporate governance and
would rather vote with their feet, by selling their shares in underperforming companies 109 . As a
consequence, the legislator should mainly protect their position as investors, by introducing
mandatory rules, improving disclosure and caring for the investors’ rights to dividends. Moreover, a
public regulator should be created with competencies on corporate disclosure and, under some
proposals, on the legality of corporate actions 110 .
It was under the influence of these ideas that a reform of company law and stock exchange
law took place in 1974. In lieu of focussing on the internal governance of listed companies, this
‘small reform’ (miniriforma, as it was dubbed by the first commentators understating its relevance,
as shown by later developments) sought to implement the investor protection principle through a
number of regulatory innovations 111 . On the one hand, convertible bonds and saving shares (i.e.
non-voting preferred shares) were specifically regulated to offer small investors, rather than
controlling shareholders, financial instruments which were better suited to their investing goals (an
assumption which was proven to be wrong by later developments concerning saving shares). On the
other hand, a Securities Commission (Consob) was created with competences on corporate
disclosure and stock exchange trading. In addition, information duties were placed on listed
seq.
104
See Siciliano, supra n.91, p. 35 et seq.
105
Ibidem, p. 38.
106
See, also for references, Teti, supra n.101, p. 1284 et seq.
107
Supra n.102.
108
See G. Ferri, ‘La tutela dell’azionista in una prospettiva di riforma’ (1961) Rivista delle società 177.
109
Ibidem, p. 185 et seq.
110
See Teti, supra n.101, p. 1289 et seq., also for references to the reform projects of the ‘60s.
111
See P. Marchetti, ‘Diritto societario e disciplina della concorrenza’, in Barca (Ed.), supra n. 97, p. 489 et
17

companies and companies making recourse to the capital markets. On the whole, this reform could
be regarded as laying the foundations of a securities regulation system 112 .
4 COMPANY LAW REFORM
The legal framework of Italian capital markets was completed throughout the last two
decades of the 20 th century, particularly by way of implementation of the European securities
Directives. In addition, investment funds were regulated for the first time in 1983 and takeovers in
1992, while a new regime on regulated markets was adopted in 1996 and the Italian Stock
Exchange (consolidating pre-existing regional stock exchanges) was privatised in 1997 113 . These
reforms reflected the new weight of capital markets in business financing and also their importance
to the Italian Government’s privatisations program, which was executed throughout the second half
of the ‘90s. As a result, a relatively modern capital market law came into existence, while company
law appeared to be outdated, despite numerous Civil Code amendments mainly determined by the
need to implement the European Directives. This led to further developments, which will be briefly
analysed below.
4.1 Corporate governance and the Draghi Law
First of all, the emphasis put on corporate governance at the international level, both in
practice and academia, made the 1974 reform appear inadequate, as it undervalued the internal
governance of listed companies by focussing on disclosure and public regulation. While these two
aspects still deserved consideration and improvement, also the corporate governance structure of
listed companies needed upgrading. The Draghi Law of 1998 handled the matter from within a
broader framework of capital market law consolidation. On the one hand, the Draghi Law
strengthened the board of auditors’ (collegio sindacale) powers and responsibilities, so as to
enhance its monitoring over the company’s management by the executive directors and the board of
directors 114 . On the other, the law reinforced minority shareholders’ powers, introducing, inter alia,
the right of a qualified minority (5 per cent) to sue the directors for damages caused to the company.
In addition, the Draghi Law aimed to promote corporate control contestability in listed companies
by attributing members of shareholders’ agreements the right to withdraw from the same in case of
a takeover bid, so as to tender their shares to the bidder. This provision, together with other rules on
takeovers, reflected the Draghi Law’s additional concern for the external governance of listed
112
See G. Rossi, Trasparenze e vergogna. Le società e la borsa, Milan, 1982, p. 113 et seq.
113
See, also for references, G. Ferrarini, ‘La riforma dei mercati finanziari e il testo unico’, in G. Ferrarini and
P. Marchetti (Eds.), La riforma dei mercati finanziari, Milan, 1998, p. 25 et seq.
114
Italian governance structure consists of a board of directors and a board of statutory auditors, despite the
fact that in listed companies accounting audits are performed by external auditors.
18

companies and marked an important change in the Italian system, which had traditionally favoured
corporate control stability over contestabilty 115 .
4.2 Pending Company Law Reform
By reforming the corporate governance of listed companies, the Draghi Law widened the
regulatory differences between listed and unlisted companies and added arguments to the mounting
criticism of traditional company law. An extensive overhaul of the limited liability company rules is
now being conducted on the basis of a 2001 law empowering the Italian Government to adopt a
reform the principles of which are loosely fixed by the same law. Among those principles is a
clearer distinction between private companies (società a responsabilità limitata) and joint-stock
companies (società per azioni). As to the former, the regime presently in force will be deregulated
to the extent necessary to simplify the formation of these companies and allow more freedom in
their organisation, so as to reflect their nature of closed companies. On the other hand, joint-stock
companies’ rules will be reformulated on the assumption that these companies are allowed to make
recourse to the equity markets, while stricter rules will be applicable to the same companies if they
actually do so, thus becoming ‘public companies’. Also the joint-stock companies’ present regime
will be, at least in part, deregulated and simplified. Moreover, three new governance structures will
be available: one reflecting the structure presently in force, which consists of a board of directors
and a board of statutory auditors (in addition to external auditors auditing the company’s accounts);
another reflecting the German two-tier structure, however adapted to the Italian context; and a third
one inspired by the Anglo-Saxon unitary board, with a majority of independent directors and a
mandatory audit committee. The possibility to choose between these three different systems is
intended as a substitute to regulatory competition, as the choice , for example, of the unitary board
might work functionally as a (partial) equivalent to the choice of U.K. Law.
5 CONCLUSIONS
As shown in Section 2 of this paper, the origins of limited liability companies were closely
linked to a particular stage of capitalistic development, which saw the Nordic countries dominate
international trade which had, by that time, become ‘global’ after the discovery of the American
Continent 116 . Italy was in a peripheral position with respect to the new trades with the East and the
West Indies, as witnessed by the unsuccesses of the early Genoese companies formed in the Dutch
115
For an analysis of the philosophy of the Draghi Law see P. Marchetti, ‘Osservazioni sui profili societari
della bozza di TU dei mercati finanziari’ (1998) Rivista delle società 140.
116
See F. Braudel, Espansione europea e capitalismo 1450–1650, Bologna, 1999, p. 52 et seq. (translation by
G. Zattoni Nesi of ‘Expansion européenne et capitalisme (1450-1650)’, in R. Ayala and P. Braudel, Les Ambitions de
l’Histoire, Paris, 1997).
19

manner and by the limited relevance of this type of companies until the 19 th century. The scenario
had been quite different in the first half of that millennium, when Italian cities dominated
Mediterranean trades and some of the limited liabilities companies’ functions were exercised by the
commenda (initially) and by the accomandita (at a later stage). However, the joint stock
companies’ closest predecessors were found in the Genoese maone and the Banco di San Giorgio,
which were involved in international trade and in the administration of colonies similarly to the
VOC, in addition to issuing financial instruments largely traded on secondary markets.
Limited liability companies became important in Italy only in the 19 th century after the
country’s unification. Nonetheless, company law codification trailed several decades behind the
diffusion of limited liability companies in economic reality, as explained in Section 3. The first
code to include rules on limited liability companies was the Code de commerce, imported in Italy
by Napoleon. Subsequent Italian codes were clearly influenced by this precedent, with the
exception of the 1882 Commercial Code which was drafted along with the most recent European
company laws. This Code carried remarkable regulatory novelties and liberalised the companies’
formation by suppressing the administrative controls foreseen by previous legislation. Liberalisation
was no doubt instrumental to rapid economic development at the turn of the century, when Italy
joined the second industrial revolution. However, the diffusion of limited liability companies and
the listing of their shares on the stock exchanges created problems which the Commercial Code was
inadequate to cope with. These problems also depended on the governance structures of many
Italian companies, which were already dominated by minority shareholders through cross-holdings,
voting pacts and pyramidal groups, while small shareholders were largely passive. In addition,
German-type universal banks concurred to the control of companies either directly or as proxies of
their clients 117 .
Another feature of Italian corporate governance was the role played by the State in
economic development. Initially this role was limited to supporting industrial growth through
protectionism, subsidies and the supply of goods and services to the State by private firms. At a
later stage, the same role was extended through the acquisition of banks and industrial companies
by the State 118 . This had an influence on company law reform and its repeated postponements,
because public ownership of large sectors of the economy, as well as the equity markets’ limited
role in the financing of industry, made company law modernisation less important from a policy
perspective. As a result, the rules on limited liability companies, which were included in the Civil
117 While banking law reform in the ‘30s operated to sever the links between banks and industries, other
corporate governance features that first appeared at the beginning of the last century were carried over to the present
times: see M. Bianchi, M. Bianco and L. Enriques, ‘Pyramidal Groups and the Separation between Ownership and
Control in Italy’, in F. Barca and M. Becht (Eds.), The Control of Corporate Europe, Oxford, 2001, p. 154 et seq.
20

Code of 1942 following private law unification, were very mild in protecting minorities and largely
ignored the joint-stock companies’ role in the capital markets. More than thirty years elapsed before
the introduction of disclosure rules for listed companies and a securities regulator.
Corporate governance reform was delayed until the end of the ‘90s, as shown in section 4,
while a general reform of company law is now expected by the Government. The Draghi Law took
care of the listed companies’ internal governance, by enhancing the board of auditors’ role in the
quasi-two-tier structure typical of Italian joint-stock companies and by reinforcing minority
shareholders’ powers. Also the external governance of listed companies was dealt with by the
Draghi Law, aiming to lower barriers to corporate control contestability and improve the role of the
corporate control market. On the whole, this law tried to modernise the listed companies’ rules
taking into account the traditional aspects of Italian corporate governance, such as ownership
concentration, pyramidal groups and shareholders’ coalitions through voting agreements 119 . In the
near future, general company law reform will revise the joint stock companies’ rules, along the lines
of the Draghi Law and also for aspects not covered by the latter, while a new regime will be
adopted for private companies to meet the needs of small and medium enterprises, still representing
the backbone of the Italian economy.
118 See F. Amatori, supra n. 90, p. 696 et seq.
119 It is difficult to assess the Draghi Law’s impact on the Italian securities market. According to B. Bortolotti
and D. Siniscalco, ‘Importare la corporate governance?’, in Centro Nazionale di Prevenzione e Difesa Sociale, Le
nuove funzioni degli organi societari: verso la corporate governance?, Milan, 2002, p.120 et seq., this impact might
have been modest. While minority shareholders’ protection was improved by international standards, the stock market
capitalisation increased by a lower percentage than that predictable under law and finance theory (reference is made to
R. La Porta et al., ‘Legal Determinants of External Finance (1997) 52 J. Fin.1131). This assessment, however, is open
to argument, being based on oversimplification of the investor protection criteria and of their impact on the capital
markets.
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