Accounting structures, sustainability and corporate crises in partnerships

by Giuseppe Antonio Policaro* and Andrea Miglionico**

ABSTRACT: This article provides a critical analysis of the reforms to the Italian Business Crisis and Insolvency Code as applied to partnerships, with particular focus on the requirements for accounting and organisational structures. It argues that the timely monitoring of financial distress and the long-term sustainability increasingly depend on reliable accounting records and forward-looking financial management. This article addresses the challenges faced by partnerships, highlighting the need for accurate financial data, effective cash flow forecasting, and performance monitoring. It also explores the implications of EU Directive No. 25 of 2025, which establishes stricter standards of transparency and reporting for partnerships. This regulatory shift represents a fundamental move towards greater harmonisation in European company law, while fosters a culture of financial awareness and sustainable enterprise management.

SUMMARY: 1. Introduction. – 2. Insolvency regulation and market confidence. – 3. The regulatory framework on corporate crises. – 3.1 Accounting structures, accounting records, and the emergence of crises in partnerships. – 3.2 The inventory-balance sheet for general partnerships (s.n.c.) and limited partnerships (s.a.s.). – 3.3. Reporting in simple partnerships. – 4. The Directive (EU) No. 2025/25: a turning point for transparency in partnerships. – 5. Systemic challenges, evolutionary prospects, and comparative models in the regulation of accounting structures in partnerships. – 5.1. The transformation of accounting structures in the crisis of partnerships and the evolution of Italian regulations: the duties of directors. – 5.2. Problems and limits of the European regulation on insolvency: missed opportunities and systemic risks. – 5.3. From normative formalism to best practices: proactive governance, soft law, and innovation in partnerships. – 6. Conclusive remarks.

1. It is universally considered nowadays that corporations and company structures require transparency, fairness, equal access, competition and financial soundness.[1] Currently, a very strong case, substantiated by the partnerships, can be made for asserting that the corporate industry has underestimated the value and importance of accounting and sustainability factors (e.g., Environmental, Social and Governance criteria).[2] For instance, in the corporate scandals, such as Enron and WorldCom, investors have suffered from a continuous lack of transparency and information asymmetries, which reflect a fundamental imbalance between market participants.[3] Consequently, investors find it difficult to choose the right business transaction because there is no appropriate system of disclosure and they lack proper financial knowledge. This gap is made worse by the total absence of co-operation between the parties to financial contracts (i.e., managers and investors) and a lack of adequate rules on internal controls.[4]

The central question is how to reduce informational asymmetry in the corporate sector between market participants. Therefore, the crucial issues are market confidence and management credibility; one of the principal factors for the growth of the enterprises is the integrity and competence of its members. In other words, the reputation of company members need to be characterised by the right culture of sustainability with the regulations. The credibility of market participants in terms of reputation and integrity is a fundamental principle of correct regulation.[5] As a first approximation, the relationship between managers and investors tends to reduce information asymmetry and, at a deeper level, to increase the benefits of innovation in terms of risk evaluation. It is worth noting that investors represent a huge proportion of corporate actors, and a complete regulatory system that can adequately protect the parties to business transactions is a necessity. Members’ reputation will be a chief factor in enhancing market confidence, because it is only if there is clear accountability between participants that it will be possible to rebuild a fiduciary relationship in the financial markets.[6]

At this point, particular attention must be paid to the information gap to which corporate transactions are generally subject; the imbalanced relationship between managers and investors is principally determined by lack of financial knowledge and causes a distortion of investors’ choices, particularly at the time when the investment operation is executed. In other words, market credibility can be measured in terms of intermediaries’ accountability, not only from the point of view of the suitability of market actors, but also of effective enforcement. Particularly, the role of internal controls, for example the function of audit committees, represents the best expression for the adoption of forms of self-regulation, not only in the sense of detailed duties but also in terms of better reputation. In essence, the monitoring function encompasses risk management^[7] but it also covers reputational risk, legal risk^[8] and operational risk^[9]; the intermediaries’ actions determine the profitability of the securities market, while helping increase or reduce the credibility of the firm, and the investor protection that is fundamental for two reasons, namely market confidence and maintenance of trust in the sense of financial choices.

For example, the intermediaries’ behaviours in corporate transactions are not only enforced by law, through mandatory disclosure, but also by reputation efficiency as it determines the correct business operation (i.e., a financial transaction). By the same token, the importance of self-regulatory measures – having their origin in confidence, trust and right culture – lies in the role that they can play in bringing about sound financial stability and “market efficiency”, which requires a high quality of information together with a high degree of credibility on the part of the actors concerned.^[10] In addition, opportunistic behaviours by market participants could be avoided by means of the accountability system, as a measure falling within the category of internal self-controls, which could limit the need to regulate by statute law and reduce mandatory disclosure costs. In substance, whilst the disclosure regime reduces the costs of capital and information, voluntary self-disclosure systems presuppose perfect alignment of manager and investor interests; in order to achieve allocative efficiency on the securities market, firms must be fair and competing.^[11]

A system that enables direct action to be taken against persons involved in breaches of mandatory disclosure may help to promote substantive compliance according to the spirit of the law^[12]; indeed, compliant persons ensure real enforcement of the management’s fiduciary duties.^[13] The social value of disclosure, together with the social benefits of sustainability principles, enhance the social interest of the corporate sector market in terms of investor protection.[14] A modern approach to the regulatory system cannot ignore the importance of management’s choices, particularly, through the corrective effect that available information has on securities governance. This regulatory approach informs the Italian Business Crisis and Insolvency Code as applied to partnerships, which reflect the challenges of accounting and organisational structures.[15]

This article argues that the timely monitoring of financial distress and the long-term sustainability increasingly depend on reliable accounting records and forward-looking financial management. It is observed that accurate financial data, effective cash flow forecasting, and performance monitoring need to drive the rationale of regulatory intervention in the insolvency proceedings. The article also provides an overview of the EU Directive No. 25 of 2025,[16] which establishes stricter standards of transparency and reporting for partnerships. Specifically, the EU legislation highlights the need for accurate financial data, effective cash flow forecasting, and performance monitoring.

The article is structured as follows. After the introduction, section 2 discusses the developments of insolvency regulation at the EU level with focus on market confidence and its effects among corporate members. Section 3 explores the regulatory framework on corporate crises by analysing the accounting structures, accounting records, and the emergence of crises in partnerships. It illustrates the inventory-balance sheet for general partnerships and limited partnerships, while addressing the reporting in simple partnerships. Section 4 examines the tenets of the Directive No. 2025/25, which represents a turning point for transparency in partnerships. Section 5 sets an analysis on the transformation of accounting structures in the crisis of partnerships and the evolution of Italian regulations with particular attention on the duties of directors. It canvasses problems and limits of the European regulation on insolvency along with missed opportunities and systemic risks. The core arguments span from normative formalism to best practices in order to show the need for proactive governance, soft law, and innovation in partnerships. Section 6 provides conclusive remarks.

2. Market confidence can be considered the key objective, in terms of investor protection, on account of its fundamental role of achieving soundness of the corporate sector. Consequently, by avoiding the legal risks, the market reduces the risk of failures (and hence of reputational risk). Generally speaking, the role of EU regulators in the corporate sector has assumed formidable dimensions in terms of supervision and regulation. The need for proper supervision system in the corporations enhanced by EU regulators and domestic authorities is manifest; the framework of insolvency law has underscored the existence of a complex, confused structure characterising the approach to supervision, not only at European level, but also at national level.[17] There has been a strong call at EU level for an ongoing dialogue between institutions and a constant exchange of information amongst the individual supervisory authorities:[18] manifestly, this objective could be achieved with an integrated supervision approach under which the supervisory function should be effective, transparent and accountable to the political institutions.

It can also be cogently argued that such a supervisory solution would supply a plausible, definitive solution to the risk of monitoring loopholes and provide a response to the emergent co-operation between national supervisors and European regulators. It can also be reasonably argued that a strong improvement of risk management, together with the enforcement of internal compliant behaviours, should be implemented when tackling the new challenge of the reform of supervision. In other words, in introducing a single supervisory body for insolvency procedures it will be necessary to implement continuing co-operation and coordination of functions with a permanent dialogue between national and European authorities.[19] A notable example is the 2015 EU Insolvency Regulation^[20] which aims to harmonise pre-insolvency restructuring mechanisms among Member States. It also intends to incentivise firms to reduce the volume of deteriorated assets although ‘it creates a refuge for failing firms that should be liquidated’.^[21] However, in the absence of harmonised resolving tools among corporations, it seems difficult to adopt a common approach of restructuring mechanisms for partnerships in distress.

In this context, the EU Directive No. 25 of 2025 represents an innovative step forward in the European framework of corporate crises. The effectiveness of internal controls in the corporations can allow action to be taken against behaviours amounting to misconduct and can permit a sound system of risk management to be applied. In addition, the implementation of substantive accounting enables best practices to be incorporated into the market-based regime, which will result in a new system of governance of the partnerships. A possible path of financial reform could consist in improving effective fairness in respect of business conducts so as to reduce the reputational risk of the firm. Predictability, legitimacy, accountability, certainty: these concepts constitute the benchmarks of an efficient market where consumer confidence and investor protection are the fundamental corollaries of transparent behaviours; however, a certain amount of effectiveness is lost if there is no proper regulatory system.

3. It is widely recognised that, following the enactment of Legislative Decree No. 83 of 2022, amended by Legislative Decree No. 136 of 2024, the Business Crisis and Insolvency Code (“CCII”) underwent further substantial revision in Italy.[22]

A complex and multifaceted set of provisions is now in force, marked by the coexistence of two regulatory regimes: the “old” bankruptcy law continues to apply to all proceedings pending at the time of entry into force (despite some earlier provisions of the Code already being effective), while, as specified by Article 389 CCII, the new law governs all appeals filed subsequently. These changes impact business entities in far-reaching ways: companies must now confront a host of new concepts and legal issues, including the definition of “crisis” set forth in Article 2(1)(a) CCII (understood as an economic and financial disequilibrium likely to result in insolvency, and, for enterprises, manifesting through inadequate prospective cash flows to regularly meet forecasted obligations), as well as the adequacy of internal structures, particularly accounting and reporting systems, intended to enable prompt crisis identification (see Article 3 CCII)[23], which warrants special attention in light of the amendments it introduced compared to the previous text.

Notably, paragraph 2 provides that “the collective entrepreneur is required to organize an administrative and accounting structure appropriate pursuant to Article 2086 of the Civil Code for the timely identification of a crisis and the adoption of suitable measures”[24]. Newly introduced paragraph 3 further provides, “in order to ensure the early prediction of the emergence of a corporate crisis, the actions under paragraph 1 and the structures specified in paragraph 2 must enable: a) detection of all financial or economic imbalances with respect to the business’s specific traits and operational reality; b) verification of debt sustainability and the outlook for business continuity covering at least the subsequent twelve months, and identification of the warning signs outlined in paragraph 4; c) acquisition of all information necessary to utilize the official checklist and carry out a practical test for the reasonable feasibility of recovery, under Article 13, paragraph 2”. [25]

The newly fourth paragraph sets out specific early warning indicators for the predictive process described in paragraph 3. These include: (a) wage arrears of at least thirty days that exceed half of the company’s total monthly payroll; (b) supplier debts overdue by at least ninety days, amounting to more than those currently outstanding; (c) credit exposures toward banks and other financial intermediaries that are overdue by more than sixty days or have exceeded the approved credit limit for a period of sixty days – provided these exposures account for at least five percent of total liabilities; and (d) the existence of one or more debt exposures identified under Article 25-novies, paragraph 1.[26] These indicators, crucially, can only be identified and effectively monitored if the enterprise is functionally organised, a prerequisite that depends on the presence of efficient, well-maintained accounting and reporting systems (or equivalent controls). In practice, such signals may serve as a genuine “litmus test” of any inertia or delays on the part of directors, often arising from a failure to implement adequate organisational structures.[27]

Article 3 of the CCII has largely retained its first two paragraphs; however, the article’s title now explicitly references “measures” applicable to sole proprietorships, with the introduction of paragraphs 3 and 4. Specifically, the third paragraph, as described above, addresses the anomalies that the measures described in paragraph 1 and the organizational structures set out in paragraph 2 must be capable of detecting. The fourth paragraph, in turn, enumerates the specific warning signs of crisis to which those measures and structures must be responsive.[28]

Despite their limited corporate organization, partnerships must also comply with these new rules, which apply to all collective entrepreneurs as well as to individual entrepreneurs.[29] Companies will need to undertake significant efforts to restructure their management and operations in response to this legislative overhaul, which demands, among other things, a renewed and more conscientious cultural approach. Every entrepreneur, without exception, is now required to assess whether the business is financially sustainable; the real challenge ahead lies in determining how each firm will organize its structures to comply with this specific, non-negotiable obligation, which calls for a new level of engagement and understanding in corporate management and performance.[30]

Any required reorganisation must account fully for the decisions made by partnerships regarding both the preparation and presentation of accounting records, and especially the financial statements (or, for simple partnerships, the relevant annual reports). The indicators outlined in Article 3 of the CCII are intended not only as signs of impending crisis for the entity, but also as broader benchmarks of financial sustainability[31]: a collective enterprise found to be unsustainable is, if not already in crisis, at the very least highly likely to enter a crisis state in the near future.

3.1 It has been observed that the newly amended Article 3 of the Business Crisis and Insolvency Code, introduced by Legislative Decree No. 83 of 2022, requires collective entrepreneurs to adopt an organizational, administrative, and accounting structure consistent with Article 2086 of the Civil Code, for the purpose of promptly identifying any state of crisis and taking appropriate remedial action, an obligation expressly extended to partnerships by Article 2257 of the Civil Code.[32] The latter constitutes an exclusive responsibility assigned to the directors, who are thereby no longer responsible for the entirety of company management (which may also fall to shareholders)[33], but instead for the sphere relating solely to the establishment of adequate structures.[34]​

The design and maintenance of such accounting structures is, moreover, critically important both in relation to access to the negotiated crisis settlement provided for in Article 17(1) of the Business Crisis and Insolvency Code and with respect to the feasibility test established in Article 13 of the same Code. Both procedures, in fact, presuppose a substantial body of accounting data and information drawn from financial statements and accompanying notes – though, it should be noted, the latter are not, as a matter of law, required for partnerships.[35]

Turning to the issue of accounting records, Article 2214(1) of the Civil Code mandates that business entrepreneurs must keep a journal and an inventory book.[36] The latter, as expressly stated in Article 2217, culminates in the preparation of a balance sheet and a profit and loss account, both of which must present a true and fair representation of profits earned and losses incurred.[37] Thus, the distinction is clear: for commercial entrepreneurs (and, by extension, commercial partnerships, but not simple partnerships)[38], financial statements must include only the balance sheet and income statement, while neither explanatory notes nor – still less – the cash flow statement are required. Similarly, directors are not required to prepare a management report under Article 2428, since, pursuant to Article 2261, individual shareholders who do not participate in administration retain the right to monitor the actions of directors and to request information from them[39]. These features highlight a problematic aspect regarding the availability and extraction of accounting (and non-accounting) information necessary for access to the negotiated crisis settlement under Article 17(1) and for the feasibility test required by Article 13.

Under Article 2217(2) of the Civil Code, the inventory (and thus the financial statements of partnerships) must be prepared in accordance with the criteria established for corporations.[40] In my view, Article 2426 should serve as the primary reference point, as it sets out the criteria for valuing balance sheet items as will be further clarified below. Yet even this reference, in a subordinate sense, entails the application of both internal accounting standards[41] and of other rules elaborated by business economics scholars.[42]

It should be observed that the legislator “measures” or “perceives” the company’s state of crisis and thus its sustainability primarily based on financial data, yet the information necessary for these assessments is not always available.[43] Moreover, for partnerships engaged in business activities, the partners who act as managers are required to prepare financial statements (although without explanatory notes). Firstly, there is no obligation to file these documents with the Companies’ Registry; and secondly, for tax purposes, only economic data – not financial statements – are required from partnerships operating under simplified accounting regimes.[44] The real issue is not simply that partnerships’ financial statements are often missing or incomplete, but more importantly that the absence of asset accounting records undermines the availability of vital information needed to identify a crisis – or, secondly, to assess its seriousness.[45]

What is needed, by contrast, is a forward-looking approach requiring the company to provide[46]: (i) a periodic cash flow statement and a financial and cash budget forecast[47];
(ii) monitoring of the variances between the forecast and actual data in the statements;
(iii) calculation and ongoing tracking of two performance indicators, EBITDA (earnings before interest, taxes, depreciation, and amortization) and NFP (net financial position), such that both profitability and debt sustainability can be assessed.^.[48]

The accounting records of a partnership should be complete and accurate enough as to be deemed adequate, and while it is true that the adequacy of structures should be proportionate to the size and nature of the business (including for accounting records), adequacy can reasonably be held to obtain at least when the accounting structure is able to define the very instruments and figures just mentioned. Accounting records, in this context, can rightly be seen as a component of the broader accounting structure.[49]

It can be affirmed that while accounting records are inherently retrospective – serving primarily to reconstruct and record the company’s economic and financial activities – organizational structures are oriented towards future developments, with a specific focus on crisis detection and the prevention of threats to business continuity. The approach now required is, quite clearly, decidedly forward-looking.[50] To be considered financially sustainable, a company whether a partnership or a corporation requires not only up-to-date and comprehensive accounting records, but above all, adequate accounting structures.[51] Without such structures, the indicators and data necessary to assess financial sustainability would be unavailable, and, irrespective of any director liability for failing to comply with Article 2086 of the Civil Code[52], the company could not truly be deemed “in balance.[53]

A further question is whether, in light of the combined regulatory provisions discussed above, partnerships are actually able to sustain – not only financially but also in terms of increased internal compliance – the demands now required of them. The establishment of organizational, and in particular accounting and administrative, structures may indeed place a significant burden on their operations, potentially distancing partnerships from their inherently “lean” operational model and traditional “flexibility”.[54] Obviously, the rules of the C.C.I.I. require serious reflection on this latter paradigm, which today appears, perhaps, a little less relevant: in the past, the partnership model was chosen as a flexible ‘tool’ with minimal formal constraints, but it is worth asking whether today this consideration may be affected by the ‘new’ burdens in terms of structures.

From this perspective, it seems limiting to think that the only financial statements suitable for assessing the financial sustainability of a corporate enterprise (and of partnerships, in particular) are the financial statements for the financial year.[55] In fact, it seems necessary for partnerships to have precise plans and programs capable of monitoring at least prospective cash flows, ultimately structuring an accounting organization that is not only able to document corporate events, but also to assess their financial sustainability (preventing crisis situations)[56]: one could even go so far as to argue that the company organization cannot do without the accounting organization, which is therefore an essential element for the identification of the company.[57]

Among partnerships, a specific assessment should also be carried out with reference to agricultural companies: as is well known, these are exempt from keeping accounts[58], although they are also subject to the provisions on early warning systems for the emergence of crises (despite the deletion of the previous Article 12, paragraph 7, of the Italian Civil Code relating to alert procedures, the reporting obligations on the part of the supervisory body (if present and only for joint-stock companies) according to Article 25-octies of the Italian Civil Code and by qualified creditors pursuant to Article 25-novies of the Italian Civil Code), as well as the obligation to adopt adequate measures aimed at the timely emergence of the crisis. In fact, the aforementioned Article 3 of the Italian Civil Code expressly provides that every entrepreneur (whether individual or collective) must adopt measures or structures, including accounting ones, without distinguishing the nature, size, and purpose of the business.[59]

Broader interpretative challenges persist concerning the obligation for simple partnerships to maintain proper accounting structures; for example, Article 2261 of the Italian Civil Code stipulates that the financial statement should be drawn up when there are non-executive partners “only” upon completion of the business for which the partnership was established, or, if the company’s activity extends beyond one year, “at the end of each year, unless the contract specifies a different deadline.” In light of the recent rules on business crisis, however, this provision should now be interpreted as requiring the preparation of the report in any case, without derogation or exceptions.

Not only that, but in light of the crisis regulations and irrespective of the aims set out in Article 2262 of the Italian Civil Code (that is, to determine the result for the period, a financial statement must still be drawn up even where all partners are directors) this accounting document should be viewed as a “true and proper” financial statement, comprising both the balance sheet and not merely the income statement.[60] Furthermore, especially when the report is addressed to non-managing partners pursuant to Article 2261 of the Italian Civil Code, the document should be supplemented by a range of non-financial information, thus assuming the de facto function of a “report” to shareholders and, in some respects and mutatis mutandis, resembling the management report required for corporations.[61]

On the other hand, it is important to note that the financial statements of simple partnerships (as well as the accounting documents of other partnerships) are prepared retrospectively, employing a backward-looking perspective. Therefore, additional information (forward-looking data aimed at certifying financial sustainability) could be included in a supplementary report. Such a report, regardless of the presence of non-managing partners, would serve to complement the purely quantitative data that appear in the main statement itself. These considerations can be assessed once the new rules are fully implemented, which may then lead to the proposal of corrective measures or solutions capable of reconciling the distinctive characteristics of partnerships with the regulatory obligations now imposed upon them.

3.2 The obligation to prepare financial statements in general partnerships is inferred from Article 2302 of the Italian Civil Code, which provides: “the directors must keep the books and other accounting records required by Article 2214.” This rule is obviously also applicable to limited partnerships (for which the specific rules refer back to those governing general partnerships).[62]

Accordingly and further developing the previous analysis it becomes necessary to examine both the overlap between the inventory and the financial statements, as well as the specific formats technically required for the latter. On this point, a section of business doctrine has taken a negative position, arguing that the inventory ought to exclude those items which, though allowed in the financial statements, do not constitute assets or liabilities that can be physically verified (i.e., assets that directly contribute value to the company’s equity, or at least indirectly guarantee creditor protection); this would include, for example, items requiring significant estimation, such as start-up and expansion costs, provisions for risks, accruals, and deferrals.[63] This argument, however, seems unconvincing, especially in light of Article 2217 of the Civil Code[64]: it appears clear that the financial statements of the commercial entrepreneur (and, consequently, commercial partnerships as well)[65] must consist of a balance sheet and an income statement (but do not necessarily require explanatory notes).[66]

Directors are not obliged to file the management report under Article 2428, since individual shareholders who do not participate in administration have both the right and the ability to independently monitor directors’ actions and to request information from them under Article 2261 of the Civil Code.[67] This right is similarly conferred on limited partners in limited partnerships; in fact, Article 2320, paragraph 3, of the Civil Code provides: “limited partners have the right to receive the annual communication of the financial statements and profit and loss account, and to verify their accuracy by reviewing company books and documents”.[68]

Turning again to the accounting documents of commercial partnerships, legal doctrine has also asserted that the form and content of the inventory must correspond to those prescribed by law for the balance sheet; any difference lies chiefly in the greater level of detail found in the inventory, given its primarily descriptive purpose.[69] Conversely, it is not deemed necessary to follow the format of the income statement required for joint-stock companies; in practice, this statement may be presented using a side-by-side (contrasting) format rather than a scalar approach. There is no dispute that commercial entrepreneurs must comply with the mandatory rules governing the financial statements of joint-stock companies at least as far as the balance sheet is concerned; with regard to the income statement, however, greater discretion is allowed for presenting accounting items in a manner that is clearer and more accessible.[70]

Furthermore, upon closer examination, Article 2217, paragraph 2, of the Civil Code appears to support this interpretation, since it stipulates that, in preparing the financial statements, valuation criteria established for joint-stock companies should be applied even though applying these rules in the context of partnerships is not always straightforward.[71] The main point of reference on the preparation of financial statements should not be found solely in Article 2426 which, as is well known, determines the criteria for specific balance-sheet items[72]; rather, such reference must be balanced by considering the features and business activity of the partnership. Moreover, this cross-reference also requires resorting to internal accounting standards[73] as well as to other rules that have been distinctly developed within the discipline of business economics. This interpretation is further reinforced by Article 111-duodecies of the Rules for the Implementation of the Civil Code and the related transitional provisions.[74]

It is evident from reading this provision that the duty to prepare and publish consolidated accounts concerns only general and limited partnerships with participation from joint-stock companies, and not those which are themselves group holding companies. At any rate, this exception by which commercial partnerships draw up accounts according to the templates of Articles 2424 and 2425 confirms what has been said, namely that partnerships are not required to use pre-set formats for their own accounting documents. The only companies of unlimited liability referred to by this rule are partnerships, since one-member companies even if they possess unlimited liability pursuant to Article 2325(2) are included among those subject to joint-stock company accounting rules.

The preparation of financial statements in accordance with the core principles for corporations (albeit incompletely and with the differences indicated) cannot be separated from the existence of adequate accounting systems able to produce reliable accounting records within the company. This requirement (adequate accounting systems) is reinforced by the rules on business crisis; even if formally required before 2019, it was often disregarded in practice.

3.3 For simple partnerships, Article 2261 of the Italian Civil Code provides that “partners who do not participate in the administration have the right to receive information from the directors regarding the management of the partnership’s business, to examine management documents, and to obtain the financial statements upon completion of the business for which the partnership was established. If the management of the partnership’s business extends for more than one year, partners are entitled to receive the management report at the end of each year, unless the contract provides otherwise”.[75]

According to Articles 263 et seq. of the Italian Code of Civil Procedure, reporting obligations derive from the legal or contractual duty of one party (the managing partner) to inform the other (the non-managing partner) about the results of management. The purpose of the oversight exercised by non-managing partners is thus to verify the directors’ proper conduct and to ensure the correct functioning of the partnership.

Furthermore, Article 2261 of the Civil Code effectively provides statutory justification for the common practice of making monthly advances to partners, particularly those actively involved in management as anticipated profit distributions (commonly referred to as “salaries” or by similar terms)[76]. It should be noted, however, that the financial statements of simple partnerships are not directly regulated, an issue that has prompted much debate in both practical and academic literature over time.[77]

The question at stake is: Should the financial statements of simple partnerships consist only of an income and expenditure statement, or, like other partnerships, should they be structured to include a full balance sheet?[78] The financial statements and the general accounting documents of partnerships may be prepared using formats different from those prescribed by Articles 2424 and 2425 of the Italian Civil Code.

The nature and size of the enterprise are decisive factors. For instance, in the case of a small agricultural partnership, a typical example of a simple partnership, it may be sufficient to provide a single income statement in the form of a management report, particularly in light of the absence of any formal obligation to keep detailed accounting records.[79] By contrast, partnerships with more complex or entrepreneurial operations will require more robust accounting practices: it is unlikely that their economic situation can be adequately represented by an income statement alone – a balance sheet will also be necessary.

The purpose of financial statements for simple partnerships is not limited to measuring profitability (which presupposes accurate and comprehensive accounting records and typically results in the drawing up of a balance sheet, even if not fully detailed). Equally vital is their function in enabling partners – especially non-managing partners as provided for in Article 2261 – to assess their exposure to partnership debts.[80] Thus, when it comes to the debts of simple partnerships, a balance sheet is indispensable[81]: the limited protection (beneficium excussionis) provided by Article 2268 of the Civil Code makes partners more exposed, hence the necessity for transparency regarding liabilities, in particular via the balance sheet[82]. While a simple income and expenditure statement may, in very modest operational contexts, suffice to present the partnership’s results, a more comprehensive accounting system is strictly required if the partnership – even an agricultural one – is run with an entrepreneurial, rather than merely collective, approach.[83]

Even if the preparation of a balance sheet is not deemed strictly necessary, the compilation of any reliable financial statement nevertheless requires the maintenance of adequate accounting records tools which enable the entrepreneur to provide timely and accurate financial information. This requirement has now been expressly reinforced by the Business Crisis and Insolvency Code: such obligations cannot be disregarded, even by small entrepreneurs, since monitoring financial equilibrium (which itself presupposes the preparation of a balance sheet) has become mandatory. The combined effect of Articles 2086 and 2214 of the Civil Code imposes organisational and accounting obligations on all entrepreneurs, including sole proprietors and farmers. As a consequence, the previous exemption under Article 2214, paragraph 3 has effectively become obsolete. The obligation to maintain suitable accounting structures is thus generalized for all entrepreneurs, irrespective of size or sector.[84]

Even the simplest partnerships must have accounting systems capable of capturing all significant economic and financial data, and must prepare reliable annual financial statements.[85] While in the past, non-compliance with this obligation was not subject to heavy sanctions, particularly since insolvency proceedings are not applicable to simple partnerships, the mandatory application of corporate crisis law has now changed this landscape. It is evident that professionals, being fully aware of the possible sanctions facing entrepreneurs, must adjust their practices when advising on all forms of partnership.

4. The regulation of partnerships in the European legal system – as in Italy – has long been characterised by a substantial difference compared to that of corporations, especially in terms of publicity and transparency of documents. However, this disparity no longer appeared compatible with the needs of an integrated single market, in which the circulation of information is essential to ensure trust and security in transactions.

In this context that Directive (EU) 2025/25 fits in[86]: it will introduce a regime of enhanced transparency for commercial partnerships, imposing the obligation to prepare and file financial statements (similar to what happens for corporations), together with the disclosure of a series of structural and organizational information in the business registers. This is a highly significant regulatory intervention, destined to have long-term effects on both the economic and legal aspects.[87]

Specifically, the directive is part of a process of progressive harmonization of company law at European level. With Directive (EU) 2017/1132, subsequently amended by Directive (EU) 2019/1151, the EU legislator had already initiated a process of digitization of procedures and interconnection of business registers.[88] In this regard, the new text addresses a critical issue that had remained unresolved: the lack of a uniform disclosure regime for partnerships, which, despite being registered in national registers, often provide incomplete or fragmentary data. This shortcoming, moreover, hinders the cross-border exchange of information and limits transparency in economic relations.[89]

Directive 2025/25 focuses on general partnerships and limited partnerships, which in Italy represent an estimated 700,000 companies.[90] Simple partnerships are excluded, as their function, limited to non-commercial management, does not justify the imposition of additional bureaucratic burdens.[91] The core of the reform is the obligation to prepare annual financial statements according to the European accounting directives (86/635/EEC, 91/674/EEC, and 2013/34/EU). In addition, companies will also have to disclose identifying information (name, registered office, registration number), information on shareholders and their powers of representation, as well as the articles of association and any amendments thereto.[92]

Further importance is attached to compliance with requirements relating to extraordinary events affecting the company, such as dissolution or the appointment of liquidators, which must be communicated within fifteen days of the event.
This will allow creditors and stakeholders to objectively assess the financial soundness of the company: transparency thus becomes a general requirement for all companies operating in the market, overcoming a historical regulatory asymmetry with respect to joint-stock companies. The deadline for transposing the directive is 31 July 2027, while the obligations will come into force on 31 July 2028. The transitional period will allow Member States to adopt detailed legislation and companies to adapt to the new accounting and IT standards.[93]

The directive promises mixed effects. On the one hand, companies will be burdened with a greater administrative load; on the other, they will benefit from easier communication with banks, institutions, and foreign partners, strengthening their competitiveness. Looking ahead, the harmonisation of corporate data aims to consolidate the European single market, making it more transparent and attractive for investment. Furthermore, the expansion of corporate disclosure will undoubtedly allow for more effective control by the authorities, facilitating the prevention of illegal activities and increasing the protection of third parties. Ultimately, Directive 2025/25 represents a turning point, primarily in terms of harmonization, in European company law: perhaps, rather than a simple technical measure, it appears to be an evolutionary step in the very concept of corporate transparency, destined to have a profound impact on both business practices and the legal culture of the European Union.[94]

Once the directive comes into force, the accounting of partnerships (commercial and non-commercial) will increasingly be considered not only as an evidentiary or fiscal tool, but as a pillar of corporate organisation: it will certainly allow them to ensure that the adequacy of their accounting structure, together with their ability to produce forward-looking information, becomes the minimum requirement for operating correctly, detecting crises in a timely manner and, ultimately, guaranteeing business continuity.[95]

The renewed focus of European legislators on transparency and sustainability in accounting marks a genuine transition from a purely formal view of corporate governance to a management model grounded in economic and financial awareness. Partnerships traditionally regarded as “simple” structures are now called to evolve towards a culture of accountability, in which the proper reporting of accounting data becomes not only a legal obligation but also a fundamental tool for stability and development.

While Directive 2025/25 marks a significant advancement in the harmonization of transparency standards for partnerships, several critical issues deserve further reflection. Comparative legal scholarship indicates that similar reforms adopted in other European jurisdictions, such as France, Germany, and the United Kingdom, have fostered greater market confidence and stronger protections for creditors and stakeholders.[96] Nevertheless, these measures can also result in a heavier administrative burden on smaller partnerships and may challenge the traditional organizational flexibility of these entities.

Moreover, the actual impact and effectiveness of the directive will depend on its implementation at the national level and the supervisory practices adopted by each Member State. Future empirical studies and cross-country case analyses will be essential to assess whether harmonized reporting requirements truly foster earlier crisis detection and promote resilience across the European partnership sector. Integrating lessons learned from market practice and regulatory enforcement will be critical to realizing the full potential of these reforms.

The enhanced transparency obligations introduced by Directive No. 25 of 2025 should be viewed not as mere formalistic requirements, but as a strategic opportunity for partnerships to strengthen internal governance, promote financial and managerial accountability, and align with the highest international best practices. The challenge for policymakers and practitioners will be to ensure proportional implementation, especially for small and medium-sized enterprises, while safeguarding the innovative and flexible character of partnerships. Further research should focus on comparative effectiveness and on the interplay between legal compliance, market trust, and operational capacity among partnerships. Only by bridging legal harmonisation with practical flexibility can the objectives of stability, competitiveness, and long-term business sustainability be truly achieved within European corporate law.

In line with the broader international scholarly debate on transparency and sustainability in corporate governance, recent legislative developments have engendered a heightened focus on the organizational and accounting structures of partnerships, underlining the imperative of sustainability practices and robust financial monitoring.[97] Sustainability management accounting is increasingly recognised for its role in connecting organizational procedures with evolving societal expectations and regulatory demands.[98] Moreover, contemporary research underscores that transparency and stakeholder trust are fundamental outcomes of advanced sustainability accounting, facilitating corporate accountability far beyond traditional financial disclosure.[99] Further doubts persist in legislative frameworks and operational practice, which need clarification by lawmakers as well as the development of protocols that align with elevated standards of governance and reliability.[100] An integrated approach remains crucial for the implementation of these reforms while fostering genuine sustainability and stability.

5. In light of the Directive 2025/25 which imposes new transparency obligations also on partnerships, there is a need for a critical reflection on the systemic challenges and evolutionary prospects of the regulation of accounting structures. In this context, the analysis of comparative European models (France, Germany, United Kingdom) assumes particular relevance, offering significant insights to understand how to effectively integrate advanced accounting structures and ESG criteria in the management of corporate crises.

The regulation on corporate crisis with reference to partnerships has undergone a radical transformation in recent years, above all due to the effect of national reforms and of the growing impulse toward harmonisation at European level. The Business Crisis and Insolvency Code and the latest Community directives have in fact raised the level of attention on accounting structures, understood no longer solely as instruments of formal compliance, but as a genuine pillar of governance and managerial transparency. An updated, rigorous, and constantly monitored accounting is today the key to detecting early economic-financial imbalances, directing strategic choices, and sustaining business continuity even in contexts of greater uncertainty.

At the centre of these evolutionary processes is also placed, moreover, the theme of integration between accounting reporting and ESG criteria, now considered indispensable both by the national legislator and by the European one. The adoption of the Corporate Sustainability Reporting Directive (CSRD) further strengthens the obligation for partnerships to document and communicate not only economic performance, but also environmental impact, social impact, and the quality of corporate governance.^[101] This revolution in the paradigm of reporting represents a challenge particularly felt by partnerships, called to measure themselves with sustainability indicators and to equip themselves, also structurally, to respond to the new expectations of stakeholders and the market.​

Looking at the international panorama, the French experience represents one of the most advanced reference points: the “loi sur le devoir de vigilance”, introduced in 2017 and progressively strengthened, imposes on large enterprises (also if partnerships) the drafting of annual vigilance and ESG risk management plans, with the reporting obligation extended along the entire supply chain and the responsibility to monitor respect for human rights, environmental rules, and business ethics not only internally, but also through partners and subcontractors. This model favours the construction of integrated and transparent accounting structures, in which numerical data is accompanied by a structured reflection on sustainability policies.

Germany has recently equipped itself with one of the strictest regulations concerning corporate due diligence along the supply chain: the Lieferkettengesetz (LkSG), applicable to all enterprises of larger size (including partnerships), obliges them to establish concrete systems of detection, evaluation, and mitigation of environmental, social, and governance risks for all activities of the supply chain, both at national and international level. The fulfilment of these obligations requires an extremely refined accounting structure, capable of producing timely and detailed information on the flows of goods, services, and information, guaranteeing traceability and accountability under the profile of ESG standards.^[102]

In the United Kingdom, the regulation on Non-Financial Reporting Requirements has for several years represented a reference model, providing that all enterprises above a certain size, partnerships included, prepare annual reports that include specific data on environmental policies, social impact, climate risks, and governance profiles. Particularly innovative is the introduction of the obligation of climate-related disclosure, which requires the publication of strategies for the containment of environmental impact, the description of the main governance actions, and transparent reporting on the results obtained.^[103]

The analysis of these experiences demonstrates how the integration between advanced accounting structures and ESG reporting systems, supported by advanced national regulations, favours the anticipated management of crises, credibility toward the market, and the growth of a corporate culture oriented toward sustainability. For Italian partnerships, especially the smaller ones, the path is not without obstacles: competencies, resources, and regulatory flexibility are needed to prevent innovation from translating into a mere burden of bureaucracy. These three models demonstrate how the integration between accounting and sustainability, although declined differently according to national priorities, now represents an irreversible trend in the European and global panorama.

5.1 The redefinition of the Italian and European regulatory framework on the crisis of partnerships has imposed a radical rereading of the duties of directors, of accounting governance, and of the role of organisational structures.

Recent decades have seen the passage from a model centred on the mere keeping of corporate books and on personalistic management, typical of partnerships, to a vision that requires predictive instruments, risk monitoring logics, and integrated and dynamic financial planning. The Italian reform culminated in the Business Crisis and Insolvency Code (CCII), but prepared by a long work of transposition of EU directives, has made “adequate” accounting and organisational structures mandatory, imposing on directors strict responsibilities, a duty of active vigilance, and the necessity to prepare balance sheets and reports capable of intercepting crisis signals in a timely manner. This normative push, firmly linked to theoretical and empirical developments on corporate prediction models^[104], has brought to the forefront the theme of prevention.

It is no longer a matter of reacting to the emergence of patrimonial or financial imbalances, but of anticipating, through early warning indicators (payment delays, liquidity tensions, bank ratings, impaired credits), possible negative evolutions. In Italian partnerships (especially small and medium-sized ones) adaptation to this regulatory architecture has encountered multiple obstacles: accounting culture is not always mature, dedicated resources often are scarce, and internal relationships between partner-directors can give rise to conflicts and to the instrumentalization of obligations as procedural levers.^[105]

The jurisprudence in Italy has reacted decisively, establishing that the lack of valid structures is in itself a serious irregularity and justifying the removal of directors even in the absence of actual distress.^[106] However, research shows that this institutional response risks producing a race toward formal compliance more than a genuine managerial evolution. The most virtuous partnerships are those that have invested in digital control instruments, in training, in the adoption of management software, and in constant collaboration with accountants and auditors: only in this way is it possible to give concrete meaning to the principles of transparency, accountability, and responsibility that now pervade the legal system.

5.2 If the Italian framework presents both lights and shadows, the European dimension offers even richer insights for reflection, but also highlights profound limits and risks of ineffectiveness. The proposal for a European directive on insolvency (Insolvency III), conceived with the ambition to unify ex ante intervention models, is however characterised by a series of definitional uncertainties that undermine its capacity to generate convergence between the systems of Member States.^[107]

The directive establishes basic rules such as the 90-day deadline to initiate insolvency proceedings that appear apparently rigorous, but in fact prove insufficient to resolve the problem of the variability of national legal systems: different definitions of “insolvency”, of “director”, of “procedure”, and even of “company” make possible a differentiated and stratified reception.^[108] It is worth noting the analysis of the liability of directors: the European directive aims to ensure that directors are called to answer for possible delays in the activation of crisis mechanisms, but leaves to national legislators the task of identifying in detail who the involved subjects are, what the useful procedures are, and what the operational thresholds are. In the world of Italian partnerships this creates great uncertainty: while in corporations the governance framework is generally clear, in partnerships the distinction between director, managing partner, and de facto director can be fluid and not very transparent.^[109] The concrete risk is that the European rule, born to protect the single market and creditors, ends up generating a “race to the bottom” or a fragmentation of protections, penalizing precisely the less structured realities.^[110]

The regulation, moreover, seems to ignore the role of supervisory bodies, of influential partners, and of other key figures in the life of partnerships. In France and Germany, instead, paths of gradualism, clear definition of roles, and periodic audits have allowed a more effective internalisation of obligations. However, the debate remains open on the capacity of European rules to adapt to the challenges of digitalisation, of the rapidity of information flows, and of the multidisciplinary required by modern governance.^[111] Moreover, it is evident how the tendency, on the part of the European legislator, has been that of privileging a ‘minimal’ approach, in the hope that general principles could subsequently be filled with content by the jurisprudence of Member States. However, this strategy has collided with the profound cultural, juridical, and operative differences that characterize the different European countries, making necessary a reflection on the limits of the top-down method in the juridical harmonization in matters of corporate crisis law.

5.3 In the face of these limits, juridical literature and international practice converge on a reform proposal aimed at integrating the rigid normative dimension with soft law instruments and best practices. Precisely from the shortcomings of normative regulation is born the increasingly widespread proposal to reform the system of accounting and managerial obligations by integrating the rigidity of rules with soft law instruments, operative guidelines, and structural incentives for those who demonstrate ex ante a genuine implementation of proportionate organisational models and innovative technologies.^[112]

International comparison and specialized doctrine indicate the path of “dynamic” governance: continuous training programs, professional audits, budgeting and predictive reporting are now the real engines of success of partnerships that manage to survive and develop even in moments of tension and crisis. In this context, the function of prevention law expands: no longer only material compliance, but a participated process of self-diagnosis, stakeholder engagement, and development of resilience and sustainability solutions.

The Anglo-Saxon experience, due to the role of the Guidelines UK Bribery Act and to models such as the Corporate Governance Code, clearly demonstrates that only the identification of best practices and the possibility of ex ante documentary defense by directors favour the combination between flexibility and rigor of rules.^[113] Italy, still in a transition phase, can draw lessons from French and German models, where the gradualism of adaptation and the constant accompaniment of operators have proven more effective than the sanctions apparatus alone. The enactment of Directive 2025/25 represents, in this sense, an opportunity for Italian partnerships to align themselves with the highest European standards of transparency and prevention, transforming reporting obligations into concrete instruments of governance and competitiveness.

The contemporary challenge for the world of partnerships is not only that of adapting to an increasingly complex regulatory system, but of promoting a culture of innovative, responsible, and proactive management, founded on transparency, interdisciplinarity, and openness to new technologies. Corporate crisis, far from representing only a failure, can become the terrain of experimentation for new models of success, resilience, and growth, in line with the expectations of European and global markets.^[114] Only through a coherent integration of national governance, European harmonisation, and technological innovation can Italian partnerships transform regulatory complexity into opportunities for growth and competitiveness. It will be essential to integrate new technologies (artificial intelligence, blockchain, big data) into the management of accounting structures, transforming compliance into a genuine competitive advantage.

6. The movement towards a risk-management culture, based on voluntary forms of regulation, has definitely changed the regulatory strategy of corporate rescue mechanisms. In particular, the implementation of moral corporate practices, such as the sustainability criteria, has altered the spirit of the risk-based regime: from ethical and formal behaviours to enforced effective norms of conduct.

The effectiveness of internal controls can allow action to be taken against behaviours amounting to misconduct and can permit a sound system of risk management to be applied. In addition, the implementation of substantive accounting structures enables best practices to be incorporated into the market-based regime, which will result in a new system of governance of the partnerships. A possible path of corporate reform could consist in improving effective fairness in respect of business conducts so as to reduce the reputational risk of the firm. In this connection, the system of members’ credibility has proved to be inefficacious for ensuring that fairness and good faith are properly applied.

A risk-based approach along with coordination and collaboration with regulatory authorities entails the active participation of corporate members; in other words, it entails making principles accountable. But risk assessment involves forward-looking financial management and timely monitoring of actions, which stimulate the effective detection of non-compliant behaviours. An innovative tool for insolvency regulation has to do with the predictability and accountability of the market actors e.g., managers, shareholders, stakeholders which need to be embedded into the sustainability requirements.

Authors

Andrea Miglionico is Associate Professor of Banking and Finance Law, University of Reading, School of Law.

Giuseppe Antonio Policaro is Associate Professor of Commercial Law, University of Turin, School of Management and Economics.

This article is the result of joint reflections and fruitful collaboration. Sections 3-5 have been drafted by Giuseppe Antonio Policaro; sections 1-2 and 6 have been drafted by Andrea Miglionico.

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[1] Jay Lawrence Westbrook, ‘Transparency in Corporate Groups’ (2018) 13(1) Brooklyn Journal of Corporate, Financial & Commercial Law 33.

[2] Steven Huddart and Pierre Jinghong Liang, ‘Accounting in Partnerships’ (2003) 93(2) American Economic Review 410; Philipp Pattberg, ‘Partnerships for Sustainability: An Analysis of Transnational Environmental Regimes’ in Pieter Glasbergen, Frank Biermann and Arthur P.J. Mol (eds), Partnerships, Governance and Sustainable Development (Edward Elgar 2007) 173; Barbara Gray and Art Dewulf, ‘Partnerships to save the planet? Motivations, types and impacts of sustainability partnerships’ in Satu Teerikangas, Tiina Onkila, Katariina Koistinen, and Marileena Mäkelä (eds), Research Handbook of Sustainability Agency (Edward Elgar 2021) 230.

[3] Jonathan R. Macey, ‘Efficient Capital Markets, Corporate Disclosure, and Enron’ (2004) 89(2) Cornell Law Review 394.

[4] Larry E. Ribstein, ‘Partnership Governance of Large Firms’ (2009) 76(1) The University of Chicago Law Review 289.

[5] Julia Black, ‘An Economic Analysis of Regulation: One View of the Cathedral’ (1996) 16(4) Oxford Journal of Legal Studies, 699. The author analyses Anthony Ogus’ work (‘Regulation: Economic Theory and Legal Form’), in which regulation is described “as a politico-economic concept, characterized by a collective system of economic organization”.

[6] Matthew Harding, ‘Fiduciary relationships, fiduciary law, and trust’ in D. G. Smith and Andrew S. Gold (eds.), Research Handbook on Fiduciary Law (Edward Elgar 2018) 58-59. Robert Cooter and Bradley J. Freedman, ‘The Fiduciary Relationship: Its Economic Character and Legal Consequences’ (1991) 66 New York University Law Review 1045; Tamar Frankel, ‘Fiduciary Law’ (1983) 71(3) California Law Review 795;

^[7] Michael Power, The Risk Management of Everything. Rethinking the Politics of Uncertainty (Demos, London 2004) 43. The author observes that “Reputational risk management can provide a potentially important channel between organizations and social value systems, and may in some circumstances represent a desirable social amplification of risk by forcing companies to confront social impacts”. See also Alan Waring and A. Ian Glendon, Managing Risk (International Thompson Business Press 1998) 65-68; Roger McCormick, Legal risk in the Financial Markets (Oxford University Press 2006) 233-234.

^[8] Roger McCormick, ‘Legal risk, law and justice in a globalising financial market’ (2007) 1(4) Law and Financial Markets Review, 283-284.

^[9] See ‘Legal and compliance risk in financial institutions’ (materials and proceedings from joint colloquia held by the London School of Economics and Herbert Smith LLP), (2008) 2(6) Law and Financial Markets Review, 9.

^[10] The theory of market efficiency has been developed by Ronald J. Gilson and Reinier H. Kraakman, ‘The Mechanisms of Market Efficiency’ (1984) 70(4) Virginia Law Review, 549. In particular, the authors observe that “The investment banker’s role as an informational and reputation intermediary can dramatically affect the efficiency of the market’s response to an innovative security” (p. 620); also the idea that information costs may be reduced by a proper compliance with mandatory disclosure tends to validate the fundamental idea of a self-regulation approach. In this context, see also Zohar Goshen and Gideon Parchomovsky, ‘The Essential Role of Securities Regulation’ (2004) Columbia Law School Working Paper No 259, where the authors observe that “Mandatory disclosure reducing the risks of asymmetric information and agency costs has a positive effect on liquidity and promotes the allocative efficiency of securities market” (p. 47).

^[11] J.C. Coffee Jr., ‘Market Failure and the Economic Case for a Mandatory Disclosure System’, (1984) 70(4) Virginia Law Review, 734. Specifically, it is argued that “If the securities market is intended as the principal allocative mechanism for investment capital, the behaviour of securities prices is important not so much because of their distributive consequences on investors but more because of their effect on allocative efficiency”; in particular, the author makes a critical analysis of the trend toward deregulation, in terms of price dispersion and volatility that must be monitored carefully.

^[12] Doreen McBarnet and Christopher Whelan, ‘The Elusive Spirit of the Law: Formalism and the Struggle for Legal Control’ (1991) 54(6) The Modern Law Review, 848 and 870, who argue that “Creative compliance means using the law to escape legal control without actually violating legal rules; it demonstrates the manipulability of the legal system, and the system can be used not just by playing with the substance of law, as in the construction of specific formalist devices to avoid control, but by using the mechanisms of law to force out narrow rules, and using its ideologies as justification”.

^[13] Merritt B. Fox, ‘Civil Liability and Mandatory Disclosure’ (2008) ECGI Law Working Paper, No 109. The key point stressed by the author is the relationship between mandatory disclosure regimes and the civil liability system; in fact, the former “Intend to promote corporate transparency, increasing social welfare by enhancing economic efficiency through better governance and increased liquidity”, and the latter “Can create incentives to encourage compliance”. In sum, by imposing personal liability on the managers, it is possible to reduce the costs of damages for losses suffered by investors.

[14] Barnali Choudhury, ‘Social Disclosure’ (2016) 13(1) Berkeley Business Law Journal, 188-189.

[15] See Legislative Decree No. 14 of 2019 which enacted the Italian Business Crisis and Insolvency Code.

[16] Directive (EU) 2025/25 of the European Parliament and of the Council of 19 December 2024 amending Directives 2009/102/EC and (EU) 2017/1132 as regards further expanding and upgrading the use of digital tools and processes in company law.

[17] Vanessa Finch, ‘The Recasting of Insolvency Law’ (2005) 68(5) Modern Law Review 713.

[18] Proposal for a Directive of the European Parliament and of the Council harmonising certain aspects of insolvency law (COM/2022/702 final).

[19] Adrian Walters, ‘Modified Universalisms & the Role of Local Legal Culture in the Making of Cross-Border Insolvency Law’ (2019) 93 American Bankruptcy Law Journal 47.

[20] Regulation (EU) 2015/848 of the European Parliament and of the Council of 20 May 2015 on insolvency proceedings (OJ 2015 L 141, p. 19).

[21] Horst Eidenmüller, ‘Contracting for a European Insolvency Regime’ (2017) 18 European Business Organization Law Review, 276.

[22] Legislative Decree No. 83 of June 17, 2022 – which transposed the European Insolvency Directive and was enacted pursuant to Article 42 of Decree Law No. 36/2022 (subsequently converted into Law No. 79/2022) – was published in Official Gazette No. 152 of July 1, 2022. Legislative Decree No. 136 of September 13, 2024, published in Official Gazette No. 224 of September 25, 2024, entered into force on September 28, 2024. The former introduced significant revisions to earlier versions of the CCII, notably modifying rules concerning early warning systems and crisis resolution, and abolishing the OCRI, which was never actually implemented. For a regulatory overview of the C.C.I.I., see Cerrato, Crisi, assetti adeguati e business judgement rule, in Corporate Governance, 2022, 2, 304 et seq.

[23] Accounting structures consist of the systems by which business transactions are recorded in order to provide a true and fair view of the company’s financial position, operational results, and cash flows according to the applicable regulatory framework. These structures encompass relevant accounting standards and include both general and cost accounting.

[24] The first paragraph, on the other hand, is aimed at sole proprietorships, which “must take appropriate measures to detect the state of crisis in a timely manner and take the necessary steps to address it without delay”.

[25] The practical test, conducted via the digital platform managed by the Chambers of Commerce, comprises a comprehensive checklist of operational guidelines for drafting the recovery plan, a practical assessment to verify its reasonable feasibility, and a protocol for managing the negotiated settlement. Both the entrepreneur and the professionals he appoints have access to these resources. The technical parameters for these procedures are detailed in Article 3 of Decree Law No. 118 of August 24, 2021, as amended and converted by Law No. 147 of 2021.

[26] Specifically, paragraphs 3 and 4 were introduced by Article 2 of Legislative Decree No. 17 of June 17, 2022.

[27] See Arato, Il diritto della crisi, espansione ed evoluzione, in Studi in Onore di Paolo Montalenti, edited by Callegari, Cerrato, Desana, 2022, III, 1775. On this point see also Krivogorsky, Institutions and Accounting Practices after the Financial Crisis, New York, 2021, 132 et seq.; Tabara, The role of accounting in the global financial crisis, in Economics & Management, vol. 29, 2011, 16 et seq. For an international perspective on risk disclosure practices during economic downturns, refer to Lajili, Chourou, Li, Dobler and Zéghal, Corporate risk disclosures in turbulent times: An international analysis in the global financial crisis, in Journal of International Financial Management & Accounting, 2023, vol. 34, 230 et seq. On the relationship between corporate crisis and the need for continuity within international investment law, see Vadi, Crisis, Continuity, and Change in International Investment Law and Arbitration, in Michigan Journal of International Law, 2021, vol. 42(2), 321 et seq. On adapting corporate law to systemic crises, see Listokin and Mun, Rethinking Corporate Law During a Financial Crisis, in Harvard Business Law Review, 2019, 231 et seq.

[28] Legal scholars have questioned whether “measures” and “structures” can be considered as different elements. It seems preferable to consider the phrases “appropriate measures” and “adequate structures” referred to in Article 3, paragraph 3, of the Italian Civil Code as essentially similar concepts: in any case, they are instruments aimed at preventing crises – as indicated by the law – for different types of companies, namely collective companies (structures) and individual companies (the measures). On this point, see Cerrato, L’obbligo di istituire assetti adeguati nel prisma della “crisi” (dal Codice al d.l. 24 agosto 2021, n. 118), in N. dir. soc., 2021, 8, 1309 et seq. See also Montalenti, Il Codice della Crisi d’impresa e dell’insolvenza: assetti organizzativi adeguati, rilevazione della crisi, procedure di allerta nel quadro generale della riforma, in Giur. comm., 2020, I, 836. However, Di Cataldo and Arcidiacono express a different opinion in Decisioni organizzative, dimensioni dell’impresa e business judgment rule, in Giur. comm., 2021, I, 69, according to whom the measures should be understood as less burdensome and binding than the structures, so as not to place an excessive burden on the obligations of individual entrepreneurs.

[29] A further question arises as to whether entities that do not conduct business activities—such as professional partnerships or occasional companies—are likewise subject to the obligations set forth in Article 3 of the Italian Civil Code. On the one hand, paragraph 2 explicitly refers to collective enterprises (as does Article 2086 of the Civil Code in reference to entrepreneurs); on the other hand, entities not engaged in business activities are not subject to insolvency proceedings.

[30] The provision in the Crisis and Insolvency Code requiring entrepreneurs to establish appropriate measures and structures effectively introduces a new dimension within the general statute of entrepreneurs. It will therefore be important to delineate the precise scope and implications of this rule: for example, whether the business judgment rule is applicable; which types of entities are required to establish such structures, including distinctions between various forms of companies and entities; what oversight mechanisms exist regarding their implementation; and, crucially, what sanctions may be imposed in cases of failure to set up adequate structures, particularly when a crisis or insolvency arises. See Cagnasso, Qualche spunto in tema di sostenibilità e PMI alla luce del Codice della crisi,Report for the annual conference of the Orizzonti del Diritto Commerciale association 2023, p. 10 (paper kindly provided by the author). On this point, see also Russo, Scritture contabili e statuto dell’imprenditore commerciale: un nesso ancora attuale?, in N. dir. soc., 2021, 5, 805 et seq.; Achim, Financial Crisis and Accounting Information: The Need for Corporate Social Responsibility in Accounting Profession, ERSJ, 2010.

[31] Article 22, paragraph 1, of the Italian Civil Code also provides, with reference to negotiated settlements for the resolution of corporate crises, for the presence of conditions of financial or economic imbalance that make crisis or insolvency likely, as well as the reasonable possibility of restructuring the company.

[32] In its previous version – under the now-outdated Legislative Decree No. 147 of October 26, 2020 – Article 3 of the Italian Civil Code appeared to overlook the importance of maintaining accurate and up-to-date accounts as a key factor in the timely assessment of potential crisis situations for collective enterprises, referring exclusively to organizational structures. Pursuant to the amended Article 2257, paragraph 1, of the Italian Civil Code, for partnerships, “the establishment of the structures referred to in Article 2086, second paragraph, is the sole responsibility of the directors” This rule is identical to that provided for joint-stock companies (see the new wording of Articles 2380 bis and 2409 novies of the Italian Civil Code) and limited liability companies (see Article 2475 of the Italian Civil Code); on this point, see Abriani and Rossi Nuova disciplina della crisi d’impresa e modificazioni del codice civile: prime letture, in Società, 2019, 393 et seq.; Patriarca and Capelli, , La governance nelle società di persone, in Governance e mercati. Studi in Onore di Paolo Montalenti, edited by Callegari, Cerrato, Desana, 2022, II, 1328; Capelli, La gestione delle società di persone dopo il Codice della crisi d’impresa e dell’insolvenza: una prima lettura del nuovo art. 2257, primo comma, c.c., in Orizz. dir. comm., 2019, 315 et seq.; Id., Commento all’art. 2257 c.c., in Patriarca and Capelli, Società semplice, in Commentario del Codice Civile e codici collegati Scialoja-Branca-Galgano, edited by De Nova, 2021, 127 et seq., according to which “by assigning the establishment of structures exclusively to directors, the provision introduces for the first time, in partnerships, a clear division of powers between those who hold the position of director and non-director partners”.

[33] It is possible, in fact, for the articles of association to confer upon shareholders the authority to make decisions in relation to specific areas of management or, in certain cases, with respect to particular transactions; the articles may also grant them the power to authorize defined corporate acts. See Cagnasso, La predisposizione degli assetti adeguati nelle società di persone in N. dir. soc., 2022, 1, 11. On this point see also Krivogorsky, Institutions and Accounting Practices after the Financial Crisis: International Perspective, New York, 2019. For recent developments and cases in English partnership law, see: Milman and Flanagan, Modern Partnership Law, Routledge, London, 2021.

[34] Cagnasso, cited in the previous note, p. 10. On this point, see also P. Vella, L’allerta del codice della crisi e dell’insolvenza alla luce della direttiva (UE) 2019/1023 in www.ilcaso.it, July 24, 2019, 24. A definition of accounting systems can also be found in Norma di comportamento n. 3.7. concernente la “Vigilanza sull’adeguatezza e sul funzionamento del sistema amministrativo-contabile” according to which, accounting structures comprise “the set of guidelines, procedures, and operating practices aimed at ensuring the completeness, accuracy, and timeliness of reliable corporate reporting, in accordance with the accounting principles adopted by the company.” These structures enable “the production of valid and useful information for management decisions and for the safeguarding of company assets, as well as reliable data for the preparation of the financial statements”.

[35] Accounting and financial statements are fundamental elements that regulate the life of a company; in fact, they are not only an information tool but also the basis for the company’s financial decisions. See Strampelli, Diritto contabile, 2022, 8; Nigro, Le scritture contabili, in Trattato di diritto commerciale,directed by Galgano, 1978, 279 et seq. In any case, with reference to the explanatory notes, it should be noted that these are not mandatory for sole proprietorships, as can be inferred from Article 2435 of the Italian Civil Code, nor for micro-enterprises referred to in Article 2435-ter of the Italian Civil Code. See Spiotta, Scritture e assetti contabili. Un’asimmetria normativa tra codice civile e codice della crisi, in Riv. dir. comm., 2020, 198 et seq.

[36] However, this rule seems not superseded by the second paragraph of Article 2086 of the Italian Civil Code: the provision of adequate structures, including accounting structures, for all companies leads me to reflect on the applicability of the obligation referred to in Article 2214 of the Italian Civil Code also to non-commercial entrepreneurs.

[37] On this subject, see Cincotti, L’inventario dell’imprenditore commerciale, in Giur. comm., 2015, 5, I, 886 et seq.

[38] However, this topic will be discussed in more detail below.

[39] In this regard, business doctrine has also affirmed the necessary coincidence of the inventory structure with that provided for by the legislator for the balance sheet; if anything, the only differences between the two documents could be found in the greater detail of the former compared to the latter, considering that the inventory is primarily descriptive in nature. On this point, see De Dominicis and Viganò, Brevi note terminologiche in materia di bilancio, inventario e rendiconto, in Riv. soc., 1967, 589 et seq., 604 et seq.

^[40] Another important issue concerns identifying the preparer of accounting documents. The first factor to consider is the type of governance structure adopted by the company—either single or joint administration. In the former, the preparation may be delegated to one partner, whereas in the latter all managing partners have a duty to be involved, without prejudice to subsequent duties of the partners.

[41] Accounting standards, though technical, are considered binding “legal rules” for the person drafting financial statements. In the Italian legal system, national accounting standards are not customs or mere practice but—just as in other European civil law systems—are rules that must be adhered to, and not merely “technical elements” made customary through repeated use In this regard, please refer to the observations of Fortunato, I principi contabili nell’ordinamento giuridico italiano, in Contabilità, finanza e controllo 2001, 555 et seq.; Id., I principi contabili internazionali e le fonti del diritto (pluralismo giuridico, diritto riflessivo e “governance” nel modello europeo), in Giur. comm., 2010, I, 5 et seq. It should also be noted that, pursuant to OIC Accounting Principle No. 29, the same accounting principles are identified as “the rules, including procedures, governing the criteria for identifying transactions, the methods of their recognition, the criteria and methods of measurement and those of classification and presentation of values in the financial statements”. On the regulation of financial statements for small partnerships from an international comparative perspective, see Janus, Regulation of Financial Statements of Small Partnerships: Comparative Analysis, in Social Research, 2023, vol. 63, 97 et seq.

[42] See Cagnasso, Il bilancio di esercizio dell’imprenditore individuale e delle società di persone, in Cagnasso-Locatelli-Irrera-Quattrocchio, Il bilancio di esercizio. Profili della nuova disciplina, 1993, 184 et seq.

[43] On the partial inadequacy of the criteria for preparing financial statements to accurately reflect the financial position of companies in Italy,see Ferrara and Corsi, Gli imprenditori e le società, 2009, 733; Guglielmucci, Diritto fallimentare, 4, 2011, 41; Strampelli, Capitale sociale e struttura finanziaria nelle società in crisi,in Riv. soc., 2012, 659 et seq.; Terranova, Stato di crisi e stato di insolvenza, 2007, 61; Stanghellini, Le crisi di impresa fra diritto ed economia, 2007, 145.

[44] Article 111-duodecies of the Italian Civil Code provides that “if all the partners with unlimited liability, as referred to in Article 2361(2), are joint-stock companies, limited partnerships or limited liability companies, general partnerships or limited partnerships must prepare their financial statements in accordance with the rules established for joint-stock companies; they must also prepare and publish consolidated financial statements as governed by Article 26 of Legislative Decree No. 127 of April 9, 1991, provided the relevant conditions are met.” However, there appears to be little doubt that the valuation principles applicable to the financial statements of partnerships are primarily those set forth in Article 2426 of the Civil Code – which, in turn, must be interpreted in light of the general clause of true and fair view in Article 2423, as well as the additional principles for the preparation of financial statements laid down in Article 2423 bis. On Article 2426 of the Italian Civil Code, see, among others, De Angelis, Commento all’art. 2426 c.c., in Il bilancio d’esercizio, a cura di Cagnasso, De Angelis, Racugno, in Commentario Schlesinger, 2018, 425 et seq.; Strampelli, Commento all’art. 2426 c.c., in Le società per azioni. Codice civile e norme complementari, diretto da Abbadessa and Portale, 2016, I, 2299 et seq.; Cagnasso, La nuova disciplina del bilancio d’esercizio: i principi generali e i principi di redazione, in Giur. it., 2017, 5, 1247 et seq.; Beghetto, La nuova disciplina giuridica del bilancio di esercizio dopo l’approvazione del d.lgs. 18 agosto 2015, n. 139 (prima parte), in Studium iuris, 2016, 154 et seq.; Id., La nuova disciplina giuridica del bilancio di esercizio dopo l’approvazione del d.lgs. 18 agosto 2015, n. 139 (seconda parte), in Studium iuris, 2016, 295 et seq.; Garesio, La nuova disciplina del bilancio d’esercizio: le regole di struttura e i criteri di valutazione, in Giur. it., 2017, 5, 1250 et seq.; Sottoriva, La redazione del bilancio di esercizio secondo il D.lgs. 139/2015 e secondo i principi contabili nazionali, 2° ed., 2018, passim; and, if you can, see also Policaro, Commento all’art. 2426 c.c., in Commentario del Codice Civile Scialoja Branca, a cura diIrrera, Libro V, Bilancio, art. 2423-2435 ter, 2022, 293 et seq.    

[45] As pointed out by authoritative doctrine Montalenti, Assetti organizzativi e organizzazione dell’impresa tra principi di corretta amministrazione e business judgment rule: una questione di sistema, in N. dir. soc., 2021, 1, 17, “adequacy in relation to the nature and size of the business is therefore configured as a general clause, best described as proportionality and, more specifically, as a variable criterion for organizational complexity. This criterion precludes the imposition of rigid, predetermined models that are incapable of adapting to the concrete and multifaceted nature of the enterprise—considering its specific business activities, the type of product, and the scale of operations”. On the need for adequate structures capable of producing the information flows necessary for detecting a crisis (and conducting the practical test referred to in Article 13 of the Italian Civil Code), see Irrera and Riva, La convergenza tra le indicazioni del codice della crisi e D.L. 118/2021: is cash king? DSCR e TdR a confronto, in Ristrutturazioni aziendali, 20 October 2021.

[46] As has been observed, accounting is part of business organization and, as such, is an essential condition for rational management. It should therefore be a tool for ex ante planning and a guarantee of continuity and economic and financial balance. For a recent review of the predictive capability of financial ratios for financial distress, see Abdullah et al., Analysis of financial ratios to predict financial distress in companies, in Journal of Public Administration and Policy Research, 2023, vol. 15, no. 1, 33 et seq.

[47] On this point, see also Irrera, Gli obblighi degli amministratori delle società per azioni tra vecchie e nuove clausole generali, in Riv. dir. soc., 2011, 368 et seq.

[48] See Spiotta, Scritture e assetti contabili. Un’asimmetria normativa tra codice civile e codice della crisi, in Riv. dir. comm., 2020, 204. In this regard, see also Quaderno n. 71 Odcec Milano – “Sistemi di allerta interna”, Milan, 2017, 90. In international academic literature, EBITDA is widely regarded as a benchmark metric for assessing operational performance and economic sustainability in enterprises. Its conceptual neutrality with respect to accounting and financial choices enables meaningful comparisons across organizations differing in capital structure and industry context. As noted by Okeke, EBITDA’s widespread adoption in financial analysis supports its relevance both in practical evaluation and scholarly debate. On this point see Okeke, Evaluating Company Performance: The Role of EBITDA as a Key Financial Metric, in International Journal of Computer Applications Technology and Research, 2020, 9(12), 337 et seq. However, recent legal scholarship has highlighted the contractual complexity in defining EBITDA in debt agreements and the impact on covenant enforceability: on this point see DeFontenay et al., Contractual Complexity in Debt Agreements: The Case of EBITDA, in Columbia Law School Economic Studies, Working Paper No. 659, May 2021, 5 et seq.

[49] They can certainly be considered as such when they allow the calculation of the above-mentioned indicators. On this point see also Ranjbar and Hussainey, Accounting comparability and financial distress, in Journal of International Accounting, Auditing and Taxation, 2023. vol. 51.

[50] Legal analyses have connected financial indicators such as EBITDA with governance practices, showing how these metrics are used for compliance and asset impairment testing across legal systems. See Vichitsarawong et al., Corporate governance, financial indicators and asset impairments, in Journal of Corporate Finance, 2023, Vol. 81, Article 154461, 2 et seq.

[51] Although not identified in the Civil Code or the Business Crisis and Insolvency Code, the meaning of “adequacy” can be traced back to “commensurate, make suitable or convenient”; on this point, see Buonocore, Adeguatezza, precauzione, gestione, responsabilità: chiose sull’art. 2381, commi terzo e quinto, del codice civile, in Giur. comm., 2006, 1, 5 et seq. In any case, the modulation of structures based on the nature and size of the company has led part of the doctrine to believe that it can even be considered a specific exemption for micro-enterprises; see Abriani and Rossi, Nuova disciplina della crisi d’impresa e modificazioni del codice civile: prime letture, in Società, 2019, 393 et seq. 

[52] It should be noted that if the directors of partnerships fail to fulfill their duty to create adequate structures, the partners have the right to dismiss them for just cause. Thus Cagnasso, La predisposizione degli assetti adeguati nelle società di persone, in N. dir. soc., 2022, 1, 13. It should also be emphasized that in partnerships, the establishment of structures appropriate to the nature and size of the business necessarily implies a minimum form of coordination between the directors, even in those with separate administration. On this subject, see Capelli, Commento all’art. 2257 c.c., in Patriarca and Capelli, Società semplice, in Commentario del Codice Civile e codici collegati Scialoja-Branca-Galgano, a cura di De Nova, 2021, 142.

[53] On this point, see Irrera, La collocazione degli assetti organizzativi e l’intestazione del relativo obbligo (tra Codice della Crisi e bozza di decreto correttivo), in N. dir. soc., 2020, 2, 130; Cagnasso, Le misure idonee, gli assetti adeguati e l’organizzazione dell’attività di impresa, in N. dir. soc., 2021, 10, 1597; Amatucci, Lessico e semantica nelle procedure concorsuali, in Giur. comm., 2021, I, 365 e segg.; Fortunato, Assetti organizzativi e crisi d’impresa: una sintesi, in Giur. comm., 2023, I, 901 et seq. It should also be noted that failure to put in place adequate structures (including for crisis prevention) constitutes a breach of a specific obligation on the part of directors, an obligation that cannot be protected by the business judgment rule. The choice of how to structure the arrangements may be considered unquestionable, but not the possible choice of directors to do without them. This unquestionability is all the more valid when they relate to the company’s organizational choices, primarily related to the type of activity carried out and the market to which it is directed. On this point, see Montalenti, Assetti organizzativi e organizzazione dell’impresa tra principi di corretta amministrazione e business judgment rule: una questione di sistema, in N. dir. soc., 2021, 1, 24; Jorio, Note minime su assetti organizzativi, responsabilità e quantificazione del danno risarcibile, in Giur. comm., 2021, 5, I, 812 et seq.; Di Cataldo and Arcidiacono, Decisioni organizzative, dimensioni dell’impresa e business judgment rule, in Giur. comm., 2021, I, 69 et seq.

[54] In addition, the duties relating to corporate governance also involve duties of disclosure and continuous monitoring of the same and, where necessary, review, with the resulting costs. See Patriarca and Capelli, La governance nelle società di persone, in Governance e mercati. Studi in Onore di Paolo Montalenti, a cura di Callegari, Cerrato, Desana, 2022, II, 1333.

[55] Thus Arato, Corretta amministrazione e adeguatezza degli assetti organizzativi: ruoli e prerogative di amministratori, sindaci e revisori, in La nuova disciplina delle procedure concorsuali. In ricordo di Michele Sandulli, 2019, 80.

[56] On this point, see v. Garesio, Il contenuto degli assetti organizzativi, amministrativi e contabili nelle società di persone, in N. dir. soc., 2022, 1, 45, according to which “by way of example and with specific reference to the financial profile, they could usefully include the analysis of cash flows and the verification of available liquidity, examining in particular, both final balances and prospective time frames, collections (with consequent verification of customer solvency) and disbursements (weighing expenses related to the ordinary passive cycle and those related to medium- to long-term investments), as well as the balanced composition of financing sources and their adequacy in comparison with the company’s uses”.

[57] On this point, see Racugno, Dal bilancio ai fatti di gestione, in Giur. comm., 2002, I, 612; Spiotta, Scritture e assetti contabili. Un’asimmetria normativa tra codice civile e codice della crisi, in Riv. dir. comm., 2020, 223.

[58] Although certain accounting and reporting requirements are imposed on agricultural enterprises that wish to benefit from measures established by European legislation—for example, as set out in Law No. 153 of May 9, 1975, which implemented the relevant directives of the Council of the European Communities on agricultural reform, as published in Official Gazette No. 137 of May 26, 1975.

[59] Instead, it is only possible to discuss the type of structure, which, as we have seen, is related to the nature and size of the enterprise. See Spiotta, cited in the penultimate note above, p. 200. On this point, we emphasize the views expressed by Cagnasso, Le misure idonee, gli assetti adeguati e l’organizzazione dell’attività di impresa, in N. dir. soc., 2021, 10, 1597 et seq., according to whom the Crisis Code offers “a significant example of the expansive vision of traditional sectors of the commercial entrepreneur’s statute”.

[60] For “interpretations” of what is meant by financial statements (and the documents that comprise them), see Garesio, Il contenuto degli assetti organizzativi, amministrativi e contabili nelle società di persone, in N. dir. soc., 2022, 1, 47 et seq. In any case, please also refer to the considerations set out below in paragraphs 3.1 and 3.2.

[61] Among the authors who have analyzed in Italy the topic most extensively, see Cagnasso, La società semplice, in Trattato di diritto civile,edited by Sacco, 1998, 184 et seq.

[62] At this point, it is legitimate to ask whether this obligation also extends to partnerships formed in a commercial legal form (namely, s.n.c. and s.a.s.) that actually engage in non-commercial activities; the answer appears to be affirmative, based on the plain wording of Article 2302 of the Italian Civil Code. In any case, Article 2214, paragraph 1, of the Italian Civil Code – as previously mentioned – it clear that entrepreneurs carrying out commercial activities are required to maintain both a journal and an inventory book; significantly, the latter, as expressly referenced in Article 2217, must culminate in a balance sheet and a profit and loss account, thus providing a true and fair account of profits and losses incurred. Moreover, it is generally considered mandatory – not only to maintain the journal – but also the so-called general ledger, which serves as the basis for the preparation of the financial statements. See Bocchini, Manuale di diritto della contabilità delle imprese. Vol. 1. Le scritture contabili, 1989, 153.

[63] On this point, Simonetto, I bilanci, 1967, 41 et seq. For a critique of this approach, see mainly Portale, I beni iscrivibili in bilancio e la tutela dei creditori nella società per azioni, in Riv. soc., 1969, 242 et seq.; Id., Capitale sociale e conferimento nella società per azioni, in Riv. soc., 1970, 33 et seq.

[64] According to which the inventory closes with the financial statements.

[65] With reference to simple partnerships, see Cagnasso, La società semplice, in I singoli contratti, Trattato di diritto civile, edited by Sacco, 6, Turin, 1998, 196, according to which “even the financial statements of a simple partnership must provide, albeit with a wide margin of discretion for those who draw them up, both in terms of structure and in terms of the applicable valuation criteria, a clear, truthful, and correct representation of the financial position and results of operations”.

[66] Quattrocchio, Le scritture contabili e il bilancio, in Le nuove società di persone, edited by Cottino and Cagnasso, 2014, 218; Contra Benatti, Il rendiconto delle società di persone, 2006, 133 et seq.

[67] With regard to general partnerships, Article 2311 of the Italian Civil Code provides that “the financial statements, signed by the liquidators, and the distribution plan must be communicated to the partners by registered letter and are deemed to be approved if they have not been challenged within two months of communication”.

[68] Milan Court, March 8, 2016, with note by Garesio. Il (protratto) ritardo nella comunicazione del bilancio all’accomandante, in Giur. It., 2016, 6, 1417 et seq. Furthermore, the Supreme Court (Cass. June 24, 2016, no. 10715) ruled that the limited partner’s refusal to attend the shareholders’ meeting for the approval of the financial statements, as required by the articles of association, without being given the opportunity to examine the relevant documents, including the financial statements, was legitimate. Again on this point, the Court of Rome, January 7, 2015, No. 219, reiterated that the right in question cannot be exhausted by the presentation of a mere statement of income and expenditure or a generic description of the operations carried out, since, in fact, in order to exercise the aforementioned right, a general overview of the company’s actual financial position, economic situation, and financial performance must be provided, from which the profits made and losses incurred during each individual financial year can be deduced.

[69] For example, the inventory, as it is not intended for publication, may contain certain confidential information from the entrepreneur, information that is intended to be withheld from third parties and which, therefore, is not intended to be disclosed in the financial statements. On this subject, see De Dominicis and Viganò, Brevi note terminologiche in materia di bilancio, inventario e rendiconto, in Riv. soc., 1967, 589 et seq., 604 et seq.; Cincotti, L’inventario dell’imprenditore commerciale, in Giur. comm., 5, 2015, 886 et seq.

[70] In light of the above considerations, the question arises as to whether s.n.c. and s.a.s. companies can structure their financial statements in abbreviated form, pursuant to Article 2435-bis of the Italian Civil Code. I believe that this choice is possible and that it should be considered optional, since it is possible to use the ordinary formats, although this is difficult to imagine in practice given the size of the companies involved. The latter would only become mandatory if the size of the company exceeded the thresholds set out in Article 2435-bis of the Italian Civil Code. On this subject, see, among others, Cottino, Sarale, Weigmann, Società di persone e consorzi, in Trattato di dir. comm., edited by Cottino, III, 2004, 116 et seq. European partnership law provides that financial statements must be prepared by the managing partners and approved by the partners, typically following the rules applicable to companies limited by shares. This ensures both profit allocation and creditor protection, with variations depending on the type of partnership and jurisdiction. See: Serafin, “Italian Company Law Partnerships”, IECL Handbook, Università di Trieste, 2024, 24 et seq.; For a recent analysis of international financial reporting standards applied to partnerships, see Sipayung, Manulang, Muda, Presentation of Partnership International Financial Reporting Standards, in International Journal of Management and Economics, 2024, vol. 7, 716 et seq.

[71] In particular, the second part of the second paragraph of the provision clearly specifies that “in financial statement valuations, the entrepreneur must comply with the criteria established for the financial statements of joint-stock companies, as applicable”.

[72] Article 2426 of the Italian Civil Code, enacted pursuant to Articles 32, 34 through 42, and 59 of the Fourth Directive, sets out the criteria for asset valuation, thereby indicating the methods for recording such assets in the financial statements. These criteria must also be applied in compliance with the general clauses of true and fair representation established by Article 2423 of the Italian Civil Code, as well as the principles for the preparation of financial statements as laid out in Article 2423-bis.

[73] Please refer to the considerations expressed above, in note 20.

[74] The aforementioned provision was introduced by Article 9 of Legislative Decree No. 6 of January 17, 2003, which entered into force on January 1, 2004. It is worth noting that, under Article 2361 of the Italian Civil Code, the acquisition of shareholdings in other companies that entail the assumption of unlimited liability for corporate obligations is subject to two requirements: (1) a resolution of the shareholders’ meeting authorizing the acquisition; and (2) disclosure of the participation in the notes to the financial statements. This represents a significant innovation stemming from the 2003 corporate law reform, whereby joint-stock companies, subject to the aforementioned conditions, may lawfully participate in partnerships a reversal of a previous, longstanding case-law approach that deemed such participations null and void due to contravention of mandatory rules. In any event, the two requirements laid down in Article 2361 are designed to ensure that, through the acquisition of equity interests in another company, joint-stock companies do not materially alter their corporate purpose.

[75] In a newly established company, the “first financial year” may have a “multi-year duration” due to the “insignificant nature” of the first three months of activity. In this regard, the ruling of the Milan Notarial Council No. 116 of June 8, 2010, established the legitimacy of the articles of association setting the duration of the first financial year for a period not exceeding 15 months from the date of the deed itself. The reasons for the ruling state that: “it is legitimate to set the first closing date of the financial year at a date later than the expiry of the twelfth month from the date of the deed (or its registration), whenever this allows the preparation of an insignificant interim financial statement to be avoided. The assessment of the “significance” or “insignificance” of the interim financial statements must, of course, be carried out on a case-by-case basis, taking into account the specific circumstances of the case, which may also be specified in the articles of association. By way of example, it can be assumed that the period of “insignificance” may be particularly long, inter alia, whenever the actual start of the company’s operations is subject to obtaining administrative authorizations that are not immediately issued. In general, and regardless of the specific circumstances of the case, it should be considered that a period of less than three months can in any case be considered “insignificant”, and that therefore the clause in the articles of association establishing the date of the first financial year within 15 months of the date of the articles themselves is to be considered legitimate. That said, it should also be noted that the above reasoning is not applicable to companies in operation, as “insignificance” is not sustainable, even for a short period. Moreover, any changes to the duration of the financial year that may affect a financial year that has already ended or a financial year that is still in progress, the closing of which is brought forward to a date prior to the date of the “amendment resolution”, do not apply as they are “retroactive”. Finally, it should be noted that, as always, the Milan Notarial Council, in its ruling no. 7 of May 8, 2001, stated that “the principle that financial years must be annual must be balanced with the right of the company to choose the start date of the financial year and, if necessary, to change it for justified reasons during its lifetime: this balance will normally be achieved by providing for a financial year and a related interim financial statement, but may also be achieved by providing for a financial year longer than one year when the limited time period does not allow for the preparation of a meaningful interim financial statement”.

[76] Cottino, Sarale, Weigmann, Società di persone e consorzi, in Trattato di dir. comm., edited by Cottino, III, Padua, 2004, 115.

[77] Quattrocchio, Le scritture contabili e il bilancio, in Le nuove società di persone, edited by Cottino and Cagnasso, Bologna, 2014, 195 et seq.

[78] See Benatti, Il rendiconto delle società di persone, Milan, 2006, 89 et seq.

[79] However, even this statement appears less “stentorian” in view of the new provisions on crisis monitoring provided for in the corporate crisis and insolvency code.

[80] As well as on the possibility that the company may fall into a state of crisis; on this point, please refer to the considerations expressed in particular above, in paragraph 2. In any case, according to Article 2261 of the Italian Civil Code, the report is intended for non-executive shareholders, to provide them with as much information as possible on the management of the company (and, specifically, on the overall management, when the business for which the company was established has been carried out, and on the annual management, if this is not the case). See Cagnasso, Il bilancio di esercizio dell’imprenditore individuale e delle società di persone, in Cagnasso, Locatelli, Irrera, Quattrocchio, Il bilancio di esercizio. Profili della nuova disciplina, Turin, 1993, 224.

[81] In this regard, in Italy the Court of Cassation has specified that the “statement of accounts” of partnerships referred to in Article 2262 of the Italian Civil Code is the expression of an accounting situation, which is a summary of the company’s financial position at the end of a year of activity, the valuation criteria for which are those applied to financial statements (see Court of Cassation 3.2.2017, no. 2962, Court of Cassation 25.1.2016, no. 1261, Court of Cassation 9.12.2014, no. 25864).

[82] As is well known, in a simple partnership, the creditor can directly attack the partner of the company to obtain what is owed to him by the latter, even if he has not taken action on the company’s assets. However, the individual partner may request that the creditor first seize the company’s assets (indicating the assets that can be seized) and only then, if the enforcement is unsuccessful, take action against the partner.

[83] See Nigro, Le scritture contabili, in Trattato di dir. comm., edited by Galgano, 2nd edition, 1978, 213 et seq.; Shlesinger, L’approvazione del rendiconto annuale nelle società di persone, in Riv. soc., 1965, 815 et seq. According to the latter author, the term “report” can be understood as a simple list of income and expenditure, or as a full balance sheet (therefore also including asset valuations).

[84] See Cagnasso, Le misure idonee, gli assetti adeguati e l’organizzazione dell’attività di impresa, in N. dir. soc., 2021, 10, 1597 et seq.

[85] Financial statements for partnerships are required in most jurisdictions, both for regulatory compliance and to safeguard the interests of partners and creditors. For a comparative overview –

including UK, Canada, and international practice see: Shajani, The Ultimate Guide to Partnership Financial Statements, Shajani CPA, July 2024.

[86] Directive (EU) 2025/25 of the European Parliament and of the Council, published in the Official Journal of the European Union, December 19, 2024.

[87] See Speranzin, Le società di persone nella direttiva, in Orizz. dir. comm., 2025, 1, 436 et seq.; On the importance of transparency as a pillar of corporate governance in European and international law, see also Parella, Corporate Governance & International Law, in Washington and Lee University School of Law Scholarly Commons, 2024, 418 et seq.

[88] Specifically, these are Directive (EU) 2017/1132 of the European Parliament and of the Council on certain aspects of company law and Directive (EU) 2019/1151, introducing changes regarding the use of digital tools and also known as the “CorpTech” Directive. With particular reference to the latter, see Maltese, La costituzione online di società a responsabilità limitata (anche semplificata, in Riv. soc., 2022, 671 et seq.; de Luca, La costituzione online. Riflessioni sulla Direttiva 2019/1159/EU (Direttiva Corptech), in Riv. not., 2020, 413 et seq. On the other hand, with regard to the characteristics of Directive (EU) 2017/1132 and the amendments made to it, see Nuzzo, Impresa società nell’era digitale (note), in Banca borsa tit. cred., 2022, I, 417 et seq.

[89] See European Commission, Report on the harmonization of corporate disclosure, COM(2023) 812 final.

[90] See Unioncamere, 2024 Report on Partnerships in Italy, Rome, 2024. For an overview and monitoring of partnership performance in Europe, see: Publications Office of the EU, Performance of European partnerships. Biennial Monitoring Report (BMR), Brussels, 2024. In addition, comparative standards on disclosure and transparency in partnership accounts are discussed in Shaoul, Stafford, Stapleton, Disclosure of Information and Transparency in Public-private Partnerships, in Public Money & Management, 2023, 53 et seq.

[91]  However, these costs would be required – at least in terms of preparing the financial statements, as we have seen – by the c.c.i.i.

[92] For the sake of completeness, the directive establishes a detailed list of information that S.n.c. and S.a.s. companies must disclose, namely:

1) company identification data: name, legal form, registered office and Member State of registration, any changes to the registered office, registration number; 2) financial information: total amount of shareholders’ contributions, accounting documents for each financial year (annual financial statements); 3) corporate documents: articles of association and bylaws, changes to the articles of association, including any extensions, full text updated after each change; 4) information on shareholders and governance: details of shareholders authorized to represent the company, information on powers of representation (individual or joint), details of shareholders with unlimited liability, for limited partnerships, details of limited partners; 5) information on special procedures: any dissolution of the company, judgments declaring the company null and void, details and powers of liquidators, information on the closure of liquidation and removal from the Register; 6) additional information: central administration headquarters (if different from the registered office), main place of business (if different from the registered office).This information, which must be filed within 15 days of any change, ensures that the actual situation and the official data are constantly aligned. On this subject, see Bianca, La direttiva (UE) 2025/25 e l’efficacia delle iscrizioni dei registri delle imprese interconnessi (Orizz. dir. comm., 2025, 1, 417 et seq.

[93] See Article 12 of Directive (EU) 2025/25.

[94] In terms of European harmonization, generally identified above all in Article 54 TFEU, see Malberti, La Commissione europea presenta una proposta di direttiva sulla c.d. European cross border association, in Riv. soc., 2023, 1319 et seq. See also Weber, Expanding the Toolbox of Sustainable Business Law: The Transnational Impacts of the EU Corporate Sustainability Due Diligence Directive, in Pace Environmental Law Review, Fall 2024.

[95] In addition to facilitating their dialogue with foreign banks, institutions, and operators and, ultimately, increasing their competitiveness. On the extensive regulatory framework on corporate sustainability and non-financial reporting introduced at EU level, see: Pascal Durand, Abrial Gilbert-d’Halluin, Directive (EU) 2022/2464 as regards Corporate Sustainability Reporting (CSRD), Larcier, Brussels, 2024.

[96] With reference to comparative models adopted in other European countries, see the project promoted by the Max Planck Institute for Comparative and International Private Law in Hamburg, Max Planck Institute, A comparative study of partnership law, C.H. Beck, München, 2021. For a broader comparative legal perspective on partnership law and its impact on company structures, see Rider, Partnership Law and its Impact on ‘Domestic Companies, in Cambridge Law Journal, 2025 (online September 20), passim.

[97] For a comparative analysis of ESG reporting standards and their role in harmonizing sustainability disclosure across jurisdictions, see Elidrisy, Comparative Review of ESG Reporting Standards: ESRS European Sustainability Reporting Standards versus ISSB International Sustainability Standards Board, in International Multidisciplinary Journal of Science and Technology, 2024, vol. 9, 3, 7191 et seq.

[98] On this argument see Schaltegger, Christ, Wenzig, Burritt, Corporate sustainability management accounting and multi‐level links for sustainability – A systematic review, in International Journal of Management Reviews, 2022, 480 et seq.

[99] See Purwanti, Pamungkas, Kartikaningrum, Nurcahaya, The Role of Sustainability Accounting in Enhancing Stakeholder Trust and Transparency, in Dinasti International Journal of Economics, Finance & Accounting, 2025, 2523 et seq.

[100] Weber, Corporate governance transparency: Do firm‐level ethics matter?, in International Journal of Disclosure and Governance, 2024.

On this topic see Hummel, An Overview of Corporate Sustainability Reporting Legislation in the European Union, in Journal of Sustainable Finance & Investment, 2024, 14, 3, 321 et seq.;
Bianchini and Tiberio, Il Bilancio di Sostenibilità e la rendicontazione ESG nelle imprese italiane, Milano, 2023, 33 et seq. Additionally, see European Parliament and Council, Directive (EU) 2022/2464 of 14 December 2022 on corporate sustainability reporting (Corporate Sustainability Reporting Directive, CSRD), in Official Journal of the European Union, L322, 16.12.2022, 15-64.

[102] See Loi n° 2017-399 du 27 mars 2017 relative au devoir de vigilance des sociétés mères et des entreprises donneuses d’ordre, in Journal Officiel de la République Française, 28 mars 2017, n. 0074, 1-5. Regarding certain remarks see Ruggie, The Social Construction of the UN Guiding Principles on Business and Human Rights, in Corporate Responsibility Initiative Working Paper n. 67, Harvard Kennedy School, 2017, 1-30; Kircheim, France’s Duty of Vigilance Law: Evidence and Compliance, in Business and Human Rights Journal, 2021, 6, 2, 255 et seq.

[103] On the topic of non-financial reporting and climate-related disclosures in the United Kingdom, see: Barker and Eccles, The Financial Reporting of Climate-Related Information in the UK and European Markets, in European Accounting Review, 2023, 32, 3, 567 et seq.; Sjåfjell and Richardson, Company Law and Sustainability, Cambridge, 2015, 200 et seq.

[104] Beaver, Financial Ratios as Predictors of Failure, in J. Accounting Research, 1966, 4, 71 et seq.; Altman, Financial Ratios, Discriminant Analysis and the Prediction of Corporate Bankruptcy, in J. of Finance, 1968, 23, 4, 589; Nada Mselmi et al., Financial distress prediction: the case of French small and medium-sized firms, in International Review of Financial Analysis, 2017, 54, 112 et seq.; Jones, Distress Risk and Corporate Failure Modelling, New York, 2023.

[105] Recent scholarly work has highlighted how Italian law on directors’ duties in the vicinity of insolvency remains fragmented and inconsistent with comparative European standards, creating uncertainty for partnerships operating in cross-border contexts. See Mangano, Does Corporate Governance Matter? Italian Law Regarding the Duties of Directors in the Vicinity of Insolvency, in LSE Law, Society and Economy Working Paper, 2025, 16, 2 et seq. The Autor critically examines the dual obligations imposed on directors by recent Italian reforms – namely, the duty to establish adequate organizational frameworks and the duty to prevent insolvency – demonstrating how these obligations risk being weaponised in closely held companies where shareholder conflicts exist. His comparative analysis, drawing on UK, US, and German models, proposes a regulatory reform inspired by soft law guidance to mitigate unintended consequences while maintaining effective enforcement mechanisms. 

[106] Trib. Milano 29 febbraio 2024, in Società, 2024, 6, 707; Trib. Cagliari 19 gennaio 2022, in Società, 2022, 12, 1430; Trib. Catanzaro 6 febbraio 2024, in Quotidiano Giuridico, 2024.

[107] On this point see Latella, The Insolvency of Multinational Groups of Companies: From the European Regulation to the New Italian Bankruptcy Code, in European Company Case Law, 2024, 341 et seq.; Della, The Insolvency of Multinational Groups of Companies: From the European Regulation to the New Italian ‘Business Code’, in European Company Case Law, 2024, 1341 et seq.; Boon-Vriesendorp, Harmonisation of European Insolvency Law, Hague, 2023; McCormack et al., Comparative legal analysis of Member States, European Parliament Publications, Brussels, 2016.

[108] As recently noted in the literature, the proposed Insolvency Directive creates a “hazy passage” between the need for harmonization and the risk of over-regulation, leaving directors in a state of legal uncertainty regarding their duties and potential liability: Bartolacelli and Laudonio, A Hazy Passage Between Scylla and Charibdis: Directors’ Liability under the Proposal for an Insolvency Directive, in European Company Case Law, 2024, 429 et seq.

[109] Vicari, European Company Law, Berlin, 2021; Pulgar Ezquerra, The proposed second insolvency directive, in European Company Case Law, 2024, 391 et seq.

[110] Latella, The Insolvency of Multinational Groups of Companies: From the European Regulation to the New Italian Bankruptcy Code, in European Company Case Law, 2024, 341 et seq.

[111] Ferro, L’insolvenza societaria nella Direttiva Insolvency III, in Giustizia Insieme, pubblicato il 20 giugno 2023, on https://www.giustiziainsieme.it; Panzani, Osservazioni ragionate sulla proposta di una nuova Direttiva di armonizzazione delle leggi sull’insolvenza, in Dirittodellacrisi.it, 2023, 1, et seq.; Boon and Vriesendorp, Harmonisation of European Insolvency Law, 2023; McCormack et al., Comparative legal analysis of Member States, European Parliament Publications, Brussels, 2016.

[112] Paulus and Dammann, European Preventive Restructuring, 2021; Bork and Mangano, The Anatomy of Corporate Insolvency Law, 2024; Psaroudakis, in European Company Case Law, 2024, 408 et seq.

[113] Ibid.

[114] De Stasio, Dove ci porta l’armonizzazione del diritto dell’insolvenza?, in Aisberg Papers, Università di Bergamo, 2025, 2 et seq.; Boon and Vriesendorp, Harmonisation of European Insolvency Law: Operation patchwork has commenced, but where will It take us?, in  Tijdschrift voor Insolventierecht, 2023, 3, 70 et seq. See also UNCITRAL, Legislative Guide on Insolvency Law, UN, New York, 2004.