Società in nome collettivo

General Partnership (Commercial)

What it is

The commercial general partnership (società in nome collettivo, or SNC) is the basic business model for the operation of a business. The articles of association must be prepared as a public or private agreement authenticated by a notary.

The articles of association must be recorded with the Registrar of Companies. Registration in the Register of Companies, while not a condition of existence of the company, is however the condition of being in order. Registration in the Register of Companies makes it possible for third parties to know – and thus to be able to rely on – the essential elements of the articles of association and, afterwards, changes and significant events in the life of the partnership.

If the articles of association are not entered in the register of companies, the SNC is still in existence (SCN not in order); however, the failure to register means that relations between the partnership and third parties will not be governed by the rules laid down for the SNC, but by the rules for an SC (above) which are less favourable to partners because of the lack of public knowledge concerning the existence of this entity that entry in the Register of Companies entails.

The partnership name (company name) must contain the name of at least one of the partners and an indication that it is an SNC.

There is no minimum amount of capital.

Characteristics

The commercial general partnership has no legal personality and is characterised by unlimited joint and several liability of the partners for the partnership’s obligations. In contrast to the non-commercial general partnership (SC above), it is not possible for partners to make an agreement to exclude the personal liability to third parties of any partner or partners. It is possible to exclude the liability of one or more partners with effect only among the partners themselves; in this case, therefore, the creditors can also demand that each partner pay the debt in full. If there is a specific agreement in the contract to exclude the liability of a partner, and it is he who pays the creditor, then he can demand that the other partners reimburse in full the payment made by him.

In any case, the creditor of the partnership cannot demand payment of the partnership’s debt directly of a partner, but must first attach the company’s assets.

This general partnership is subject to bankruptcy which also leads to the bankruptcy of all partners.

The law does not provide for a shareholders’ meeting; to amend the articles of association or partnership agreements, the consent of all partners is required, unless otherwise specified in the articles of association.

Administration and representation

Administration and representation are generally vested in each member separately from the others. Contrary agreements are allowed, however, and the partners, at the time the partnership is set up, may decide to choose a co-management arrangement for both ordinary and extraordinary activities, or separate authority only for ordinary matters and joint for extraordinary matters. It is also possible to limit management to only some of the partners.

In an SNC partnership any restriction on signature powers cannot be enforced with third parties unless they are recorded in the Companies Register.

Winding Up

The general partnership is wound up at the expiration of its duration, or by having achieved its purpose or the impossibility of achieving it, or by the desire of all the partners, or when there is no plurality of partners for a period of six months, or for any other reason provided for in the original contract, or by reason of a government decision or a declaration of bankruptcy.

In the event of dissolution a liquidator may be appointed who will collect the remaining receivables, pay the remaining debts and liquidate the partnership, distributing the remaining assets among the partners and, at the end of the liquidation, seek removal from the register of companies (a removal that, therefore, does not take place at the time of the decision of the partners to wind up the company and appoint a liquidator).

The liquidation can be avoided if, when the cause of dissolution occurs, there are no debts and the partners decide to share out any remaining assets in proportion to their respective interests. In this case, the partnership may be removed from the Register of Companies as soon as the partners decide to wind up the partnership.