Unified Section, 12th March 2013, no. 6070
(Mr. Preden, the president and Mr. Rordor, the speaker)
Termination– Deletion from companies register– Shareholders– Succession – Proceeding repercussions– Limits (article no. 2495 Civil Code; legislative decree no. 203, 6th November 2007)
Summary. A company terminates after cancellation from the company’s register meanwhile its legal relationship still exists. This is a sort of succession whereby companies’ liabilities are transferred to its shareholders who are liable to the extent of collected amount resulting from, or unlimited liable if “pendente societate” they were or not unlimited liable for company debts. Both rights and properties not included in the liquidation balance sheet of the terminated company, are correspondingly transferred to shareholders, joint proprietorship or undivided joint ownership But neither claims enforced or enforceable before, nor rights to recover uncertain or illiquid debts to be entered in that balance sheet after a subsequent action both extra-judicial or judicial whose non-fulfilment by the liquidator leads to consider that company waived its right. In addition, voluntary deletion from the companies’ register at its termination date, prevents such company from reasonable entitlement to act or to be sued. If company termination and relevant cancellation from register occur during a pending decision, this is an interrupting event of ongoing proceeding pursuant to article no. 299 and subsequent articles of the Civil Procedure Code, with its possible further continuation or resumption by or against shareholders. When interrupting event did not comply with the terms laid down in the above-mentioned articles or it was impossible to act according to such terms, the appeal of the judgement issued against that company shall be made by or addressed to the shareholders otherwise ineligible. When interrupting event did not comply with the terms laid down in the above-mentioned articles or it was impossible to act according to such terms, the appeal of the judgement issued against that company shall be made by or addressed to those successor shareholders otherwise ineligible. (Unofficial summary).
Joint Chambers of the Supreme Court of Cassation issuing its judgment no. 6070/2013 has been called to rule on company termination, cancellation from companies register, debtors’ relationships and legal proceedings. Particularly, the Court of Appeal of Naples reforming a first instance judgement, condemned the Municipality “A” to pay a relevant consideration amounting to 402,649.22 Euro plus interests to an unlimited liability company in liquidation which has received the works assignment by the local government.
The delivered judgement was challenged by an action for annulment which was itself contested, because that unlimited liability company in liquidation had assigned that amount to third parties and based on the assumption that such company “had to be considered terminated at the date of cancellation from companies register. Consequently, the appeal could not be addressed to it. The proceeding was also widened after notification to both Municipality “A” and the unlimited liability company in liquidation, submitted by the company lawyer to pay proceeding fees.
Therefore, Joined Chambers of the Supreme Court of Cassation are called to review “the cases of pending proceedings when a company (in this case unlimited liability company) is cancelled from companies register. The relevant issue connected with the effects of cancellation from the companies’ register, is once more addressed, a new rule after the company law reform, pursuant to legislative decree no. 6/2003 and subsequent amendments and additions. The effects of companies’ termination have been also recently addressed by the case-law. Specifically, the Cassation Court recalled judgements (Cassation no. 4060, 4061 and 4062/2010) underlined the innovative value of article no. 2495 of the Civil Code and precisely: “Cancellation of the company. When final liquidation statement is approved, the liquidators shall request the company’s cancellation from the companies’ register. Without prejudice to the company’s termination after its cancellation, the company creditors may assert their enforceable claims against the shareholders up to the full amounts collected according to final liquidation statement, and against the liquidators if those are responsible for the relevant non-payment. Within one year after cancellation, such claim may be notified to the last company address”.
It is underlined that the company cancellation leads to company clearance (in contrast to the past regulation before company law reform). The provision states that the cancellation of the unlimited liability companies from the companies’ register is different from limited liability companies’ cases. The first ones purely declare it and can be overcome by proof to the contrary. It is also stated that in order to overcome the assumption of a company’s termination “it is needed the proof of a dynamic event, i.e. company continues to operate, therefore it exists, after its cancellation from the register”. The Cassation Court admitted the cancellation of the cancellation by issuing another judgement (Cassation court no. 8426/2010).
Having this said, Joint Chambers focus their attention on the relationships’ consequences that may arise from a terminated company but still pending because ignored or occurred, by analysing rights and obligations of the parties.
Regarding to the latter, the paragraph no. 2 of the above-mentioned article no. 2495 of the Civil Code, states that the corporate creditors who have not obtained satisfaction “may assert their enforceable claims against the shareholders up to the full amounts collected according to the final liquidation statement and against the liquidators if those are responsible for the relevant non-payment. It is also established one-year deadline after deletion as mandatory time limit for such right. The relevant regulatory framework does not show the will of the regulator to declare terminate the relationships with the deletion of the company because this event would seriously undermine the unpaid creditors at the time of company’s deletion.
According to the judgement, as natural consequence of non-paid debts, after termination of the company, those shall be transferred to its successors, thereby constituting a hypothesis of an inter vivos act.
The judges state that the content of the rule (…) has the purpose of avoiding that a debtor company may escape a creditor and remove his/her right acting unilaterally. However, this outcome is possible only if it is recognized that corporate debts are transferred to shareholders, without prejudice to the liability limits mentioned in the regulation”.
It is also stated that the impact on ongoing relationships regarding shareholders’ legal position, is a natural consequence of the company termination. This means there is an inver vivos acto succession (title assigned by doctrine in case of extraordinary merger, before the company law reform).
The succession thesis is confirmed by those circumstances when shareholders are liable for the relationship of terminated company and not due to a new legal situation not attributable to them originally.
In the grounds of the judgement, the judges have also addressed the shareholders responsibility in limited liability companies where in most cases (without prejudice to the general partner of a specific limited company, s.a.p.a.) they are liable intra vires, namely for assets received. Such circumstance is not sufficient to nullify relevant succession relationship.
Then, within one-year time it is possible to exercise such right. It has been also underlined the connection between article no. 2495 of the Civil Code and article no. 303 of the Civil Procedure Code regarding proceeding continuation. The latter states that within one year after the party is dead, it is possible to notify the resumption of the proceeding at the last domicile of the deceased. Consequently “shareholders may be liable of corporate unpaid debts within this term”.
Conversely, as to assets (non-liquidated assets and unexpected receivables) existing at the date of company deletion from the companies’ register, according to some this formality should be interpreted such as “tacit will of the party to renounce to them”: cancellation of the company should be interpreted as “unique will to renounce to this credit (…) in favour of a rapid conclusion of the extinguishing proceeding.
According to some others it would be applied the above-mentioned succession due to liabilities succession while others believe there it would be the case equally applied to vacant succession with the need of appointing a specific curator.
It is stated that is reasonable to assume that the ownership of assets and residual rights are directly attributable to those who belong to company substrate: “the fact that those assets or rights are not paid and whose economical value should be shared among shareholders lead to their joint or undivided proprietorship regime once the company is terminated, including its management will follow the regime of joint or undivided proprietorship”.
Joint Chambers states once a company is terminated “liabilities are transferred to its shareholders who are liable to the extent of collected amount resulting from, or unlimited liable if “pendente societate” they were or not unlimited liable for company debts. Both rights and properties not included in the liquidation balance sheet of the terminated company, are correspondingly transferred to shareholders, joint proprietorship or undivided joint ownership But neither claims enforced or enforceable before, nor rights to recover uncertain or illiquid debts to be entered in that balance sheet after a subsequent action both extra-judicial or judicial whose non-fulfilment by the liquidator leads to consider that company waived its right”.
Regarding the proceeding profile once the company is terminated, this does not exist anymore and consequently it cannot be a “party of proceeding”. It cannot initiate a new proceeding or act as defending party, namely it cannot contest a judicial order. If the deletion of the company from the companies’ register occurs during a pending judgement, there is an interrupting event of the proceeding under articles no. 229 and subsequent of the Civil Procedure Code, with the entitlement to pursue or occur a resumption of proceeding against or on behalf of the shareholders.
According to the judges the principle of succession for corporate debts enables the implementation of the provisions of article no. 110 of the Civil Procedure Code. “For the purpose of prosecution”: “when a party is not available due to its death or for other reason, the proceeding may be pursued by its universal successor” also in the event of legal proceedings. According to Joint Chambers, in the event of a terminated company it is unacceptable that a no longer existing company may dispute the validity of a judgment. The proceeding prosecution shall be undertaken by a “fair party”.