No. 57 - A legal and economic analysis of special-purpose capital

The research paper examines one of the most important innovations introduced by the recent reform of company law: the possibility for public limited companies to build-up capital to allocate to a specific purpose. The paper is divided into two parts. The first part looks at the economic reasoning behind the various techniques used to separate capital and tries to pinpoint the options available, evaluating them according to their effectiveness. The interest of this approach lies in the unusual decision to envisage two different types of special-purpose capital: ‘special-purpose capital’ in the narrow sense and ‘special-purpose finance’. The second part of the paper examines the strictly regulatory aspects in order to clarify the origins and scope of the two models, identify the main problems, and make a brief assessment of the ‘value’ of the reform. The unusual nature of the new institution and some uncertainties regarding specific aspects of the related regulations make it difficult to forecast how and how often it will be used as its ‘attractiveness’ will also depend on the introduction of ad hoc bankruptcy regulations designed to ensure the system ‘withstands’ the unsuccessful outcome of projects.