The Rome Court of Appeal recently ruled on a Russian roulette clause included in a shareholders' agreement which had been entered into on a 50:50 basis. The validity of Russian roulette clauses has been disputed as several scholars consider them to be against the mandatory provisions of company law relating to a shareholder's withdrawal from a company and their assessment.
The Supreme Court of Cassation recently ruled on the revocation of the board chair of a listed company controlled by a public entity shareholder. The court clarified the concept of just cause with regard to directors' revocation under Article 2383 of the Civil Code. The court also stated that directors' revocation must be specifically provided for in the shareholders' meeting resolution. If the company cannot prove the revocation's just cause, the director must be compensated for damages borne.
The reimbursement of shareholder loans to a company and the reimbursement of loans made by companies belonging to the same group are postponed until other company creditors have been reimbursed if there is an excessive imbalance between the financed company's debt and its net equity or if its financial situation would be better improved through a capital increase. However, in light of the COVID-19 emergency, these norms have been suspended for loans made between 9 April 2020 and 31 December 2020.
Law Decree 76/2020 was recently enacted as part of Italy's strategy to simplify some of its bureaucratic procedures and, among other things, ease the requirements which apply to companies that wish to increase their share capital. The law decree has introduced significant facilitative measures regarding share capital increases, including a significantly lower quorum for enacting shareholder resolutions which affect share capital increases.
The Court of Milan recently examined the simul stabunt simul cadent clause in a joint stock company's articles of association. Pursuant to such clause, if a director resigns from the board of directors, the entire board is no longer in charge of the company and a shareholders' meeting must be called to appoint a new board. If the ousted director proves that this clause has been used illicitly and that such use amounts to an abuse of power by the company, they can be compensated for damages suffered.
The Court of Cassation recently outlined the main features of de facto administrators. The court highlighted that a de facto director is burdened with the entire range of duties to which a de jure administrator is subject. Thus, should the necessary objective and subjective requirements apply, a de facto administrator is criminally responsible for their conduct which breaches criminal standards as if they were a de jure administrator.
The Supreme Court of Cassation recently clarified the distinction between shareholder financing and shareholder capital contributions, with the former being a loan and the latter being a capital contribution in order to finance a company. This decision confirms previous decisions which stated that the courts must assess shareholders' actual financial commitment to a company and not only the item recorded in the company's balance sheet.
The Court of Rome Companies Tribunal has set out an important principle concerning shareholders' rights regarding certain company decisions. The court granted an interim measure and consequently declared ineffective the resolution of a company's shareholders' meeting upon the request of a shareholder who claimed that the company's board of directors had failed to provide the shareholders with documents concerning a merger operation which would lead to a change of control over the company.
The Supreme Court of Cassation has set out important principles regarding the duties of chairs and deputy chairs of company boards of directors. In particularly, chairs' duties are of an organisational nature and must be fulfilled in a neutral way with the aim of coordinating the board as an impartial body. The court also ruled on directors' right to be indemnified in the event of their revocation without cause before the expiration of their appointment.
A recent Court of Cassation decision concerned the amendment of a company's articles of association to considerably increase the percentage of legal reserve and extraordinary statutory reserve before dividends were distributed in favour of shareholders. The question before the court was whether the amendment was grounds for a shareholders' withdrawal on the basis that it was an amendment of articles of association with regard to shareholders' voting rights or their participation.
Article 2497 of the Civil Code sets out that companies which provide direction to coordinate their subsidiaries are directly liable to the subsidiaries' minority shareholders for any damages caused to profitability and shareholding value by a violation of fair management principles. In this context, a recent Supreme Court of Cassation decision examined how to assess whether a corporate group exists and the scope of controlling entities' direction and coordination activities.
The Supreme Court of Cassation recently held that the postponement of loan reimbursements to company partners or shareholders applies not only in cases of court-assessed insolvency, but also if a company experiences temporary financial difficulties. The court also found that company management must refuse to reimburse loans to partners or shareholders if the company was experiencing financial difficulties when the loan was granted or the reimbursement was requested.
In a recent decision, the Supreme Court of Cassation stated that the revocation of members of a controlled company's board of directors due to the transfer of the majority shareholdings to a third party does not constitute just cause for a director's revocation. Consequently, a change in control of a holding company does not breach the duty of trust between the company and its board members.
Italian corporate law establishes the liability of members of the board of directors of joint stock companies depending on whether they are chief executive officers or executive directors or independent and non-executive directors. Recent Supreme Court of Cassation and Milan Court of Appeal decisions focused on the liability of non-executive directors by affirming that they must be proactive and fulfil their duty to be as informed as possible to ensure a suitable standard of corporate governance.
The Civil Code sets out specific rules which apply in the event that a chief executive officer (CEO) or director has extra-company interests. In the event that such a conflict of interests affects the position of a managing director, they cannot vote in the relevant board of director's resolution on the subject of the conflict. A recent Supreme Court of Cassation Decision has emphasised the duties of transparency and fairness to which company directors and CEOs in Italy must adhere.
The Supreme Court of Cassation recently examined the admissibility of a put option clause in a shareholders' agreement of a joint stock company by which one shareholder was committed to indemnify the other shareholders from any losses arising from payments to the company for stock capital contributions or other payments having a similar effect. The court's decision confirms that Italian company law admits shareholder agreement clauses in line with the international principles of lex mercatoria.
The rules concerning the corporate governance of limited liability companies were recently amended. The changes are twofold: some directly affect the bylaws of limited liability companies, while others affect the requirements for appointing professionals who perform auditing and supervisory duties for such companies. The new provisions must be adopted immediately by newly formed companies, whereas pre-existing companies must update their bylaws by 16 December 2019.
Italian company law contains specific provisions for shareholders' agreements relating to listed or non-listed companies. Two recent court decisions provide clarity in this regard and confirm that the existing legal framework broadly recognises the admissibility of shareholders' agreements in order to govern the rights and obligations of company shareholders, particularly for joint ventures in the financial, trade and industrial fields.