Business Network Contract. An introduction.
Law 2009, n. 99 introduced a series of changes relative to the effectiveness of business networks.
In particular they specified some characteristics related to the “business network contracts” (Contratti di rete di impresa) which have to point out the strategic goals and mutual activities. This creates space for improvement of competitive capacity and innovation on the market.
The goal of the contract is to increase specifically the mutual innovative capacity and competitiveness on the market. Between the lawful goals of the contract (Contratto di rete) there is with no doubt the capacity to approach relationships otherwise precluded to the single business: funding, facilitation, public contracts (public call for bids) and in general all kind of businesses and strategic activities where a “organisation trigger” is necessary to reach more ambitious and dimensional targets.
Therefore, since 2009, the “business network contracts” are recognized organizations and business partners in Italy and abroad, with full legal effect, registered in the local Chamber of Commerce as well as a firm or a consortium.
A business network is formed because a tangible need exists. Members are seeking solutions to specific problems and looking for new opportunities for growth. These groups can be highly structured, holding regular meetings and with a set membership, or more loosely defined.
There are as many types of business network groups as there are businesses. Groups can consist of companies in the same industry (horizontal Network Contracts) or of different industires (vertical Network Contracts).
There are many advantages to joining a business network. Members can share a customer base and develop new business opportunities. Companies in a business network can share suppliers, leveraging strength in numbers for better pricing and stronger vendor commitment, in certain cases they can also shere workers. A business network also offers members shared resources and pools of information.
THE FRAMEWORK SCHEME
The regulation provides a framework scheme identifying the essential content of the contract and leaving to the freedom of the parties the definition of specific clauses. The essential elements of the network contract include the following items:
The contract must be in writing and possibly certified by a public notary. It must be also filed with the Register of Enterprises where the participants have their headquarters. There is no limitation on an increased number of participants.
Through the network contract, enterprises pursue the common goal of improving their potential for innovation and competitiveness. These strategic goals should be expressly indicated in the contract together with the economic activities to be jointly performed.
The firms perform a “network program,” as defined in the contract, which specifies rights and duties of each participant and ways and means to achieve the common goal. The participants to the network contract commit themselves to jointly perform one or more economic activities within their business scope. The Law requires some sort of functional link between the economic activities performed via the network contract and the business scope of each firm.
The internal governance of the network contract hinges on a Common/ Management Body entrusted with the performance of the network contract and with powers to act on behalf of the participants when entering into contractual relationships with third parties and/or government bodies. The firms are also free to establish entry and exit rules and the contract duration.
Liability and Financial Aspects
The firms should create a common fund aimed at pursuing their common goal and make contributions to it, according to what is defined in the contract.
Under some circumstances, such a fund constitutes a separate asset of the network: the personal creditors of the participants cannot have recourse to it. In this case the participants therefore have limited liability towards creditors and other third parties for the obligations undertaken within the network contract’s scope and in the network’s name. Alternatively, if the firms are public stock corporations, they may also create set-apart funds in their own assets. Finally, enterprises which use the network contract for the strategic goal of improving their potentials for innovation and competitiveness are given access to specific financial aid measures, simplified procedures for access to finance, and simplified administrative procedures.