Reforming for business

Gioacchino Attanzio  is managing director of AIdAF (FBN Italy).

Restrictions on succession issues potentially limit the profitable continuity of Italian family businesses. However, recent legislative changes have paved the way to substantially improve the situation, as Gioacchina Attanzio reveals

In the current social and economic context, the system pertaining to the procedures and provisions of the law regulating estate taxes in Italy has proven to be rigid and inefficient in its application, especially with regard to the Italian economic and productive structures, mainly comprising family businesses.
 
The ban on succession agreements and the fact that wills and their legal provisions may be modified any number of times represents a restriction that complicates succession practices. This compromises the profitable continuity of family businesses, which are the driving force of the Italian economy. AIdAF (the Italian Association of Family Businesses, FBN Italy) is dedicated to resolving this issue.
 
The European Union was aware of this problem 12 years ago and urged those countries other than Italy (France, Belgium, Portugal and Spain) where succession agreements were still banned to eliminate or at least mitigate this prohibition, which "unnecessarily complicates good management of patrimony".

The recent approval of the parliamentary bill concerning family agreements has substantially changed the situation, since it enables the entrepreneur to plan and define the control and management of the company, both now and for the future. It also safeguards family unity, which has always been an important value in family businesses. For entrepreneurs, the future of the business is a constant source of concern, with regard to management and control, as well as to ownership structure. Family cohesion is equally important – entrepreneurs are fully aware of the problems the business will face without it.

The next steps
It has been said that family agreements do not solve arguments. However, these agreements can help to avoid conflict, and to a certain degree, prevent it, as long as the owner draws up the agreement with the involvement of all future beneficiaries. Family agreements have also been known to generate conflict. This is unlikely, though, as entrepreneurs, professionals and experts in the family business field seem to agree that family agreements are beneficial to all parties involved. There is no doubt that the recent modification in the law clarifies the legal aspects of these agreements to enable easier implementation.

Thanks to this procedure, once businesses can be transferred either through testaments, legitimate wills or contracts, it may soon be possible to open a debate about further legislation that would abolish the prohibition of succession agreements. This would mean the testator could allocate control of the business while he or she is still living, via a contract between all the legitimate beneficiaries and the testator – although it would not be implemented until the time of succession. We also believe the legislator should be able to evaluate the possibility of an extension of the available inheritance quota for family businesses.