Financial instruments in Italian co-operative companies

Art. 2511 of the Italian Civil Code defines co-operatives as companies “with variable capital and mutual purpose”. Therefore main characteristics of co- operative companies are: capital variability and most of all the pursuit of a mutual purpose. The cooperative company, while pursuing a mutual purpose, carries out in any case a business activity. Lawmakers has intervened at various times on the financial structure of cooperative companies, providing access to increasingly articulated funding sources. A turning point in this regard has been represented by Law n. 59 of 1992, which provided two special classes of shares reserved for cooperatives: investment shares and voting capital shares in the co-operatives. Both categories are addressed to special subjects, even without the requirements identified by the statute for the admission to the company, not interested in the pursuit of the mutual purpose but to the return on capital invested. Investment shares are freely transferable and may have a preferential treatment with regard to the distribution of profits that can go so far as to the identification of an interest rate increased by two percent compared to that for the cooperative members; voting capital shares in the co-operatives however, are similar to savings shares, as they do not entitle to vote and have special capital franchisees as regards the distribution of profits and repayment of capital. Para- graph 1 of Article 2526 of the ICC allows the statute of co-operative companies “to provide for the issue of financial instruments in accordance with the regu- lation on limited shareholder companies”. Therefore the question arises: what kind of financial instruments are governed under this law and if the reference is to the participatory financial instruments introduced by Legislative Decree no. 6/2003 on public limited companies?