The family business and its inheritance division

In the event of an inheritance division or the transfer of the business, the participants in the family business have a right of pre-emption over the business.

Regarding the time limit for exercising the right of pre-emption and redemption, it is necessary to consider the moment of liquidation of the share, which coincides with the consolidation, upon termination of the relationship with the family business, of the credit right of the participant to receive the share of profits and the increase in assets related to their position. The date of the final judgment ruling on this right is irrelevant, since its effects arise upon the dissolution of the relationship.

The entrepreneur is therefore free to sell the business they own. However, the legislator has sought to protect the interest of family members to continue the productive work by recognizing their right of pre-emption on the business itself. This right concerns the business as a whole or a branch of it. It does not apply in the case of the sale of individual assets, unless the importance of the individual asset is essential for carrying out the business activity to the extent that the asset’s identity is inherently tied to the business.

In the case of division, this ** potestative right** serves to protect the interest in the unity of the business, especially if the business assets are assigned to a family member who is unrelated to the business and has no motivation to exercise the right.

The pre-emption right belongs to each entitled party. If the right is exercised jointly by all entitled parties, the business will be acquired by all in equal parts. However, in such cases, the portion relating to increases in value is acquired by the family member based on their participation title.

The family member who is excluded has the right to redemption. It is true that a just objection to this imagined solution is that the final deadline for exercising this potestative right is the state of the inheritance community. The reply, however, is intuitive and stems from the need to adapt the law under consideration to the specific case analyzed here. The conclusion is that the due date (dies ad quem) coincides with the liquidation of the participant’s share.

Another objection concerning the potential harm that the accepted thesis might cause to the certainty and security of legal transactions can be refuted by relying on axiological arguments. The legislator, in balancing conflicting interests—on one hand, the protection of work within the family against historical abuses and oppression, and on the other hand, the inviolability of acquired rights—favored the former without violating constitutional public order.

In fact, there is no emergence of a true pre-emption right over the business assets, since there is no third party for whom family-worker participants are preferred on equal terms. Rather, it is a right of forced purchase of the participant against the co-heir who is unrelated to the business of the deceased.

According to some interpreters, the forced purchase would also be admissible in all situations of business transfer belonging to the disposer, including transfers due to liberal cause and death title.

If this latter view is accepted, then coherently it must be admitted that the donee or successor must be paid by the preferred party under the law the commercial value of the business, since the preference cannot take the form of unjust enrichment or disguised expropriation.

It has also been argued that the preference now examined cannot be invoked when the business has been contributed to a company, because in this situation there is no real separation between the subject and the asset.

To delve deeper into the topic of family businesses and inheritance divisions, you can contact Agenzia delle Successioni, whose professionals will best manage your case.