ITALY Trends and Developments Contributed by: Luciano Castelli, Elisa Rizzi and Ludovica Accolla, LCA Studio Legale
Functional equivalents to veil piercing under Italian law Italian legal doctrine and case law have long recog - nised that, in certain circumstances, the protection afforded by a company’s separate legal personality and financial autonomy may be limited or overcome. By way of example, a number of doctrinal theories can be cited, some of which have also been invoked by the courts. The theory of the “hidden entrepreneur” describes a situation in which the business activity is in fact man - aged by a concealed dominus, while formally the busi - ness is conducted under the name of a nominee. The dominus reaps the benefits and makes the decisions, while the nominee remains liable towards creditors. From this perspective, both must be considered liable, with the result that the hidden entrepreneur may also be subject to bankruptcy proceedings. A similar figure is that of the “tyrannical shareholder”, who, even without holding the entire share capital, manages the company as though it were a personal instrument, conflating personal and corporate assets and pursuing exclusively egoistic interests. In so doing, the company’s patrimonial autonomy is merely a façade, and the shareholder, by abusing the cor - porate veil, exposes themselves to personal liability. This theory has also been endorsed by case law, where the concept of “tyranny of the majority share - holder” has been elaborated among the instances of abuse of legal personality. It has occasionally been invoked in order to declare the forfeiture of the share - holder’s benefit of limited liability. Another significant theory is that of the so-called “de facto super-company”, which exists where there is a common management by all shareholders directed univocally towards achieving the profit of the overall entity, such that, in substance, the economic resourc - es of the various parties involved in the super-compa - ny are promiscuously used to balance, from time to time, the profits and losses of the entity as a whole. From a legislative perspective, lawmakers have shown some openness to the theory under consideration with the new Italian Code of Business Crisis and Insol -
of statutory remedies and judicial doctrines that pur - sue substantially similar objectives. These mecha - nisms aim to prevent abuse of legal personality and to ensure that the corporate form is not used as an instrument of fraud or injustice. The relevant question is therefore not whether Italy recognises the doctrine under the same name, but whether Italian law accepts the underlying objective of preventing abusive use of the corporate structure. The answer appears to be in the affirmative. This approach is particularly evident in the regulation of corporate groups, where the Italian legal system addresses situations of structural and managerial abuse by imposing targeted liability rules, rather than by applying a general judicial doctrine of disregard of legal personality. From a functional perspective, Article 2497 of the Ital - ian Civil Code provides a key statutory response to potential abuses within corporate groups under Italian law. Although it does not affect the controlled com - pany’s separate legal personality, it enables liability to be attributed to the entity exercising direction and co-ordination powers if these powers are exercised in breach of the principles of proper corporate and entrepreneurial management, thereby causing harm to the managed company. In this sense, the provision may have effects that, economically speaking, resemble the consequences of “piercing” or “lifting” the corporate veil in other jurisdictions, in that liability may extend beyond the formally liable entity. From a comparative law perspective, it is notable that the Italian legislature has addressed these situations through a structured liability regime based on specific conditions, such as the existence of direction and co- ordination, a breach of proper management principles and a causal link between the conduct in question and the resulting damage. This reflects a model in which the extension of liability is governed by defined legal criteria rather than broader equitable assessments.
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