Business Networks: What They Are, How They Work

What are enterprise networks, and how do contract and subject networks work, the two legal forms you can choose from? In a period of a constant and growing economic crisis in specific sectors, business networks can represent a financial, legal instrument of cooperation between companies with the aim of:

What Are Business Networks, And What Advantages Do They Offer?

A business network is a contract that allows participants to pool activities and resources to improve business functioning and consequently strengthen the competitiveness of the companies that are part of it; it is a tool through which companies have the opportunity to achieve through collaboration with other subjects, ambitious objectives, for example, the inclusion in market areas at an international level that alone they could not reach due to the small size of the company, thus increasing its competitiveness without however renouncing its legal autonomy.

Furthermore, the business network is a solution that helps to face the economic crisis, as emerges from the 3rd report of the National Observatory on Business Networks, detailed in the article ” Business networks: effective against the financial crisis. ” A fundamental element that characterizes the different types of networks is the “common network program,” based on which the contractors undertake the following:

1. to collaborate in predetermined forms and areas relating to the operation of their businesses, such as the creation of a purchasing group or the result of a familiar brand;
2. to exchange information or services of an industrial, commercial, technical, or technological nature, such as the exchange of commercial information or the sale of products;
3. To jointly carry out one or more activities within the scope of their business, such as research and development or the sharing of logistic platforms.

How Are Business Networks Set Up?

From a regulatory point of view, the network was established by art. 3, co. 4-ter, of Legislative Decree no. 5/2009; over the years, there have been critical regulatory changes by the Legislative Decree no. 83/2012 and of Legislative Decree no. 179/2012. The business network contract must be drawn up by public deed or authenticated private agreement; it may provide for the establishment of a common patrimonial fund and the appointment of a typical body in charge of managing the execution of the contract or individual parts of it in the name and on behalf of the participants. For the network contract to be valid, it must contain some essential elements such as:

1. the name, company, company name or company name of each participant by the original signing of the contract or by subsequent membership;
2. the strategic objectives of innovation and increasing the competitive capacity of the participants and the methods agreed between them to measure progress towards these objectives;
3. The definition of a network program that contains the pronunciation of the rights and obligations assumed by each participant, the methods of achieving the common purpose, if the establishment of a common fund is envisaged, the measure and evaluation criteria of the initial contributions and any subsequent contributions that each participant is obliged to pay into the fund as well as the fund management rules;
4. the duration of the contract;
5. the methods of joining the other entrepreneurs;
6. If the network contract provides for the establishment of the standard body, the name, company, company name or denomination of the person chosen to perform the office;
7. the rules for making decisions by participants on any matter or aspect of common interest;
8. If agreed, the optional causes of early withdrawal and the conditions for exercising the related right.

From a procedural point of view, once the business network contract has been signed, it is necessary to register it in the section of the business register where each participant is registered, bearing in mind that the effectiveness of the contract starts from when the last one was executed. The obligations are to be paid by all those who were original subscribers. To date, in the current regulatory context, due to the legislative changes that have been introduced, entrepreneurs who intend to set up a network can choose between two different legal forms:

1. the contract network;
2. the subject network.The two types of contract have very different characteristics, and the choice between one or the other involves significant consequences from an organizational and fiscal point of view.

The Subject Network

If the business network is equipped with an equity fund, the subject network may decide to acquire legal subjectivity; to this end, the network contract must be registered in the ordinary section of the register of companies in whose district the registered office is established. By acquiring legal subjectivity, the network becomes a new legal entity, distinct from the participating companies, therefore capable of autonomously establishing legal relationships that also gain relevance from a fiscal point of view (the network – subject will therefore be obliged to keep accounting records must have a VAT number if he carries out commercial activity and will be subject to taxation for direct taxes).

The Contracted Network

The contracted network, unlike the “subject network,” which is the owner of the personal legal situations deriving from the implementation of the network program, in the “contract network” the acts put in place in the execution of the network program produce their effects directly in the legal spheres of the participants; therefore the stipulation of a network – contract does not involve the extinction, nor the modification of the tax subjectivity of the companies that adhere to the agreement, nor the attribution of tax subjectivity to the network resulting from the contract itself.

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