According to art. 2247 of the Italian civil code, with a deed of partnership, ‘two or more people provide goods or services to carry out a shared business with the purpose of dividing the profits’. According to Italian law before the introduction of the benefit corporation category, it was not possible for a company or partnership to have a purpose other than profit and the distribution of said profit among its shareholders.
The creation of the benefit corporation category introduced a new type of company that, through its corporate mission, integrates at least one social or publicly beneficial aim, in addition to profit. In that sense, B Corps are an evolution of the very concept of what a company is.
The Benefit Company category was established in Italy on 17 April 2015 with Law Decree n. 1882. Italy is the first nation in Europe to codify a law on benefit companies. Globally speaking, only the United States came before Italy in this regard.
According to the aforementioned law, benefit corporations ‘pursue one or more objectives for the common good and operate in a responsible, sustainable and transparent manner in relation to people, society, nature and the environment, cultural and social assets, entities and associations, and other stakeholders’.
To become a benefit corporation, we've updated our articles of association. The most important changes are:
‘The ultimate goal of Tirelli & Partners is the wellness and happiness of all the people that are part of it, through work in a fair, supportive and inspiring environment, and participation in a business where prosperity is shared.’
The addition of the following objectives for the common good:
‘The business that constitutes the corporate mission include the following, aimed to promote the common good:
‘the lowest salary and the highest salary (including bonuses) among collaborators, employees and managers/directors of the company cannot exceed a ratio of 1:7. When calculating that ratio, part-time contracts will be considered according to the number of hours contracted. If, at the end of the year, one or more people are found to have a pay rate exceeding the stated ratio, a bonus in the amount required to re-align the 1:7 ratio will be assigned to the person or people on the lower end of the pay scale’.
Distribution of company profits
‘The net profit shown on the balance sheet, minus at least 5% (five percent) to be destined as a legal reserve until reaching a fifth of the capital, shall be divided as follows:
A) the lesser of either 20% (twenty percent) of the profits or 2% (two percent) of the turnover to associations that pursue beneficial, cultural and environmental aims;
b) to the shareholders/partners in proportion to the ownership percentage, an amount that does not exceed the number obtained by multiplying the sum of the paid-up share capital and the capital contribution payments according to the following formula: (1+(8.5%+ECB rate)^n) where the ECB rate is the rate for refinancing operations set by the European Central Bank. To calculate the dividends, we will also consider the years in which dividends are not distributed or they are distributed in amounts lower than the yield indicated above;
c) a remaining statutory reserve which cannot be distributed as long as the company exists, usable only for the development of projects relating to the business and not usable for the purpose of free share capital increases.
Thus, for us, profit is not just an end in and of itself, but a tool to obtain the real goal of the company: the happiness of its employees and giving back to the community. To do so, we have also established rules regarding the salaries of employees and shareholders that prevent excessive discrepancies and recognize the fact that good financial results should be attributed to the entire team.
Being a benefit corporation means that managers must balance the interests of shareholders and the interests of the whole community. In that sense, benefit corporations must appoint a director of corporate impact. They must also be committed to transparent, complete business reporting through an annual report attached to the financial statement, describing both past actions implemented and the company's plans and commitments for the future.
Benefit companies do not receive tax breaks or other financial exemptions so that, in addition to being beneficial for society, they don’t become a burden to taxpayers.