Some of the most important legal profiles and practical aspects linked to the loans made by shareholders in favor of the companies they own, in the light of the widespread use of this instrument, have often led to critical issues, that have not been adequately assessed ex ante, as well as the emergence of controversial topics. This is even though the legislator and the case law have tried, over the years, to provide a partial regulation and an interpretation of the matter that is as much as possible straightforward and in line with practice.
Article 2467 of the Italian Civil Code - which provides the express subordination of these credits deriving from financing with respect to the repayment by the company of the credits claimed for different reasons by other creditors - addresses, in fact, the problem of their qualification with the awareness that, even though the fact that in many cases they appear, in the form and intentions of the lending shareholder, as loan capital disbursements (therefore subject to a theoretical obligation of restitution by the borrower), in substance, however, they must be more correctly framed as contributions of risk capital because they have been made in moments of the company life when it would have been reasonable to expect the contribution of risk capital.
However, the same rule has not been sufficiently precise in identifying in which precise moment the existence of the conditions of "excessive imbalance of indebtedness with respect to the shareholders' equity" or of "financial situation of the company in which a contribution would have been reasonable" must occur for the functionality of the subordination mechanism, and the case law has therefore intervened in this grey zone, clarifying, in brief, that "the company is obliged to refuse the shareholder the reimbursement of the loan, in the presence of the indicated situation, where existing at the time of the financing arrangement of the loan and at the time of the request for reimbursement" as well as "until the Court decision, since it is condition of non-performing of the loan” (in this sense Court of Cassation 12944/2019 and, inter alia, Court of Milan July 9, 2021, Court of Milan October 21, 2020, Court of Rome February 6, 2017 and Court of Milan June 13, 2016).
The aforementioned rule, the case lax interpretations provided over time and the particular nature of the these loans raise therefore concrete critical issues to be taken into due consideration when assessing whether or not carrying out the financing and which are the costs and benefits for the granting shareholder.
The issue and the related risks must therefore be carefully considered by the shareholder, understanding that, in order to avoid or, at least, mitigate the risk of subordination with respect to the other company creditors, it is not only relevant the time at which the loan was granted, but also every possible subsequent change in the company's equity and financial situation in relation to the punctual or untimely repayment of the loan. Up to the possible total loss of the conferred capital in the event that the beneficiary company should not recover from the phase of supervening financial difficulty.
A further issue to be considered is the need to agree with the beneficiary company the methods and terms of repayment of the loan provided through the signing of a detailed agreement.
From an operational point of view, when carrying out a loan in favor of an owned company, it is advisable to proceed with the necessary cautions, especially if the shareholder is not authorized, as director and legal representative of the beneficiary company, to independently arrange the repayment of the loan in his capacity.
Such cautions should consist of:
in the adequate prior understanding of the economic-legal assumptions for the application of subordination, briefly discussed here;
in the execution of specific loan agreements between the shareholder and the company where the possible interest rate applied (in the case of interest-bearing loan) and, above all, the terms, conditions, methods and timing of repayment of the loan by the lending shareholder are expressly provided for.
In other words, it is not sufficient to make a simple bank transfer in favor of the company (as very often happens in practice), even if with a detailed reason of the transfer indicated, as well as it is extremely risky not to agree on a specific repayment term. In fact, in case of failure to provide for such a term and in case of failure to reach an agreement with the beneficiary company, the lending shareholder, in the event of a dispute, will have to take proceedings against the company in order to request the judicial establishment of a term for the repayment of the loan pursuant to article 1817 of the Italian Civil Code (a rule that is often not adequately taken into consideration).