The applicability of Article 2467 of the Italian Civil Code to "closed" joint-stock companies
The Italian Supreme Court, with decision No. 21936 of July 21, 2023, ruled that Article 2467 of the Italian Civil Code - according to which the repayment of credits claimed by shareholders against the company is subordinated to the repayment of the other creditors of the company, if such credits derive from loans granted at a time when there the company was too indebted in relation to its equity or when the company was in such a financial situation in which a capital injection would have been reasonable - is applicable not only to limited liability companies but also to joint-stock companies, provided that the latter are small sized or have a small corporate structure.
The case
The case originates from the failure to recognize - upon admission to the bankruptcy state of liabilities of a joint-stock company - the mortgage preemption that the shareholder of the bankrupt company claimed to have against it as a result of entering into a (i) land loan and (ii) a subsequent loan agreement, secured by a second mortgage on the same property on which a mortgage had been registered under the land loan.
In the first instance, the Tribunal ordered the admission of the shareholder's liabilities, recognizing, however, that his credits were unsecured and subordinated to the credits of other unsecured creditors, pursuant to the provisions of Article 2467 of the Italian Civil Code. This was because the Tribunal believed that the loans were provided in a situation of recognizable crisis of the company, which later bankrupt.
The shareholder who had applied for the admission to the bankrupt company's state of liabilities, after unsuccessfully opposing the same, appealed to the Supreme Court, arguing, inter alia, that since it was a joint-stock company, Article 2467 of the Italian Civil Code could not be applied, since there is not a specific provision for joint-stock companies similar to the one set forth in Article 2467 of the Italian Civil Code, provided for sole limited liability companies.
The decision
The Supreme Court confirmed the decision of the Tribunal, rejecting the appeal brought by the shareholder in its entirety.
In particular, the Supreme Court has ruled that Article 2467 of the Italian Civil Code is also applicable to other types of companies, as inferred from Article 2497-quinquies of the Civil Code, which extends the application of Article 2467 of the Italian Civil Code to loans made by companies that carry out management and coordination activities, regardless of the type of the company, since the rationale of the rule is to tackle the phenomena of nominal undercapitalization of closed companies. Therefore, for the purposes of the applicability or non-applicability of credit subordination, the "closed" character of the joint-stock company is relevant. According to a case-law of the Supreme Court, confirmed by the current judgment, a joint-stock company can be considered "closed" when it is of small size or, alternatively, when the structure of social relations (family or restricted membership) is suitable to justify the application of Article 2467 of the Italian Civil Code.
In such cases, therefore, Article 2467 of the Italian Civil Code also applies to joint-stock companies, since the position of the shareholder providing loans, because of the specific structure of the company or because of the position he actually holds in it, is substantially equivalent to that of the shareholder of a limited liability company.