1) Farming in the form of limited companies
Agricultural activity, which historically in Italy has mainly taken the form of sole proprietorships or family businesses, can also be exercised under other corporate forms. The latter, in fact, on the one hand allow the aggregate exercise of the enterprise and on the other, are able to provide greater protection of personal assets.
2) Criticism: the right of agricultural pre-emption
Agricultural pre-emption is the right to be preferred to others for the purchase of agricultural land when the owner decides to sell it.
According to the provisions of Article 8 of Law 590/1965, the right of first refusal belongs first of all to the direct farmer (or a farm in which at least half of the partners are direct farmers) who has been renting, for at least two years, the land offered for sale. In addition, pursuant to Article 7 of Law 817/1971, where the land is not leased to a direct farmer (or a farm), the right of first refusal arises for direct farmers (or farms in which at least half of the members are direct farmers) who own neighboring land. On the other hand, agricultural partnerships in which less than half of the partners are direct farmers are excluded from the right of first refusal, irrespective of whether they are professional farmers, and joint stock companies are always excluded, even if they have direct farmers as partners.
The ratio for these rules was, in the past, the need to encourage the purchase of agricultural land by direct farmers. In fact, the legislator's aim was to improve the productive structures of agriculture. In particular, the tenant pre-emption promotes (or establishes) new ownership by bringing together in the same person the ownership of the agricultural undertaking and the ownership of the land on which it is exercised, thus favoring the continuation of the same; the neighbor pre-emption enlarges direct farming ownership by combining neighboring land, thus creating larger and more efficient agricultural undertakings from a technical and economic point of view.
The lack of agrarian pre-emption for limited companies will therefore be an element to be carefully assessed in the choice of the form of company to be adopted in the specific case.
3) The requirements for a farm established as a limited company
As already mentioned, farms can certainly also be set up in the form of limited companies. In fact, our legal system provides for the possibility of S.r.l. (Limited liability company), S.r.l.s. (Simplified limited liability company) e S.p.a. (limited companies), may take on the status of “Farm” provided, however, that they meet the following three essential requirements:
a) exclusive exercise of farming activities and related activities;
b) compulsory indication of “Farm” status;
c) possession of certain professional qualifications.
A. Exclusive exercise of farming activities and related activities
As regards the first requirement, companies must have as their exclusive object the exercise of agriculture and related activities.
In this regard, Article 2135 of the Civil Code introduces a definition of these activities which, in brief, concern:
- the cultivation of the land;
- forestry;
- animal breeding;
- all other related activities.
The law literally specifies that 'Cultivation of land, forestry and livestock farming are activities aimed at the care and development of a biological cycle or a necessary stage of that cycle, of a plant or animal nature, using or capable of using land, woodland or fresh, brackish or sea water'.
With regard to related activities, these are defined as:
- activities aimed at handling, preserving, processing, marketing and adding value to products obtained mainly from the cultivation of land or forests or the rearing of animals;
- activities aimed at providing goods or services using mainly farm equipment or resources;
- other activities, e.g. management of agritourisms.
Connected activities, therefore, take place alongside the main activities and aim to make the agricultural undertaking multifunctional. In order to be considered connected, account is taken of both the objective element, i.e. the activity carried out, and the subjective element, i.e. that the activity must be carried out by the same entrepreneur as the main activity.
B. Compulsory indication of “Farm” status
The first paragraph states that the name or company name of companies whose object is the exclusive pursuit of the activities referred to in Article 2135 of the Civil Code must include the words "Farm". It should be pointed out that this is obviously not a new type of company: the companies that can be set up are still those referred to in the Civil Code, which, in the case of the exclusive exercise of agricultural activities, must bear the indication "Farm" in the name or company name.
C. Possession of professional qualifications
As to the third and last requirement, pursuant to Article 1 of Legislative Decree no. 99/2004, at least one director must be a professional farmer (or a direct farmer if he also meets the requirements for being a professional farmer). In view of the possibility that, in limited companies, the administration may also be entrusted to non-members, this could lead to the case of an agricultural company in which none of the partners is an agricultural entrepreneur or direct farmer. Even in the case of a single-member company, the presence of at least one director with the above-mentioned requisites allows the company to qualify as a farm and gain access to the related benefits.
It should also be noted that the qualification of professional agricultural entrepreneur (in Italian, I.A.P.) can be conferred by the director to only one company, in order to avoid the creation of fictitious administrative offices, with the sole purpose of obtaining the benefits due to farms.
4) The procedure for setting up a farm in the form of a limited company
The farm can therefore be set up in the form of a limited company if the three above-mentioned requirements are met.
Particular attention must therefore be paid to the figure of the qualified director.
First of all, a "professional agricultural entrepreneur (I.A.P.) is a person who, possessing professional knowledge and skills within the meaning of Article 5 of Regulation (EC) No 1257/1999, dedicates at least fifty per cent of his total working time, either directly or as a partner in a company, to the agricultural activities referred to in Article 2135 of the Civil Code and who derives at least fifty per cent of his total income from such activities".
Normally, if you are a direct farmer you also meet all the requirements to be considered a professional farmer, but this is not necessarily the case, because the legal requirements for these two professions operate on two different levels.
Below, without any claim to completeness, is the sequence of the most significant requirements for setting up a farm in the form of an ordinary and/or simplified limited liability company:
1) Setting up of the farm in the form of an ordinary and/or simplified limited liability company;
2) opening a VAT number;
3) opening of a certified e-mail address;
4) registration of the company in the ordinary section of the Companies' Register and in the REA (Economic and Administrative Register) of the province where the company's registered office is based;
5) acquisition by the company of an established farm and/or setting up of a farm by the company, by means of renting the rustic fund and/or loaning it for use;
6) submission of the application for “Inizio attività” at the Companies' Register of the province where the company's registered office is based, with simultaneous registration of the company in the “Special Farm Section”.
Finally, the most important task following the setting up of the company, the opening of the VAT number and the other tasks not included in the above list (such as the choice of the applicable VAT regime) will obviously consist in the acquisition or ex novo setting up of a farm.
