Italy introduces landmark new law on B Corps – February 2016

Italy has become the first country outside the USA to approve the introduction of a new law on benefit corporations, which allows companies to register as B Corps.

The approval of the B Corp legislation, which entered into force in Italy on January 1^st 2016 together with the Stability Law, could have important consequences for the Italian third sector as a whole.

SOCIETÀ BENEFIT

B Corps, which will be known as ‘Società Benefit’ in Italy, are for-profit companies which have completed a rigorous certification process to meet standards of social and environmental performance, accountability and transparency. The proposed law aims to allow for-profit companies to have profit distribution as their final goal, but to achieve a public benefit at the same time, in a responsible and transparent way. Whilst there is an increasing appetite and interest in the B Corp movement globally, the recently approved legislation puts Italy at the forefront of international developments.

THE NEW B CORP LAW AT A GLANCE

The draft legislation is very concise and clear.

The core principles in the legislation are as follows:

• B Corps shall aim at the distribution of profits, but, at the same time, pursue one or more common benefit goals in favour of other stakeholders in the business, including people, communities, territories and environment, cultural heritage, social activities, entities and association, by working in a responsible, sustainable and transparent manner;

• B Corps shall pursue their dual purpose by balancing the interests of their shareholders with those of their stakeholders;

• B Corps shall list and specify their common benefit goals within their company objects;

• The Articles of Association of each B Corp shall identify how directors will balance interests of shareholders and stakeholders and common benefit goals; and

• B Corps shall draft an annual report regarding the achievement of common benefit goals, to be attached to the annual financial statement, including a description of the objectives and list actions implemented in order to achieve them, and an analysis of generated impact.

EMPHASIS ON ENTREPRENEURSHIP

During the last few years the core debate around social business has shifted from a debate about the choice of legal structure to a debate about the type of activities to be undertaken – there is increased emphasis on “what a company does”, rather than “how a company is structured”.

Until now, Italy has lagged behind the rest of Europe and the US in developing legislation suitable for social enterprises – for example, the UK introduced Community Interest Companies in 2005. It will be interesting to see how the Italian third sector reacts to the new legislation, which has the potential to transform the way social enterprise and social business movement develops in Italy.

Visit the Member Resources section to see Roberto’s article on the future of the Italian third sector.

Roberto Randazzo

Board Member of ESELA

Partner of R&P Legal in Italy