Shareholder withdrawal from a joint-stock company following the removal of restrictions on the transferability of the shares
With judgment no. 20546 of June 27, 2022, the Italian Supreme Court ruled that the mere removal of a restriction on the transfer of shares – regardless of whether or not such amendment has substantial relevance compared to the previous by-law provisions – grants the shareholder of a joint-stock company, who didn’t vote in favor of such amendment, the right to exercise the withdrawal right pursuant to Article 2437, par. 2, lett. b), of the Italian Civil Code.
The case
The case originates from an amendment to the by-laws of Beta S.p.A., consisting in the removal of the obligation, for the shareholder wishing to transfer its shares, to offer them first to the other shareholders in the event of a transfer to companies controlled by the same transferring shareholder. Following such amendment to the by-laws, the majority shareholder Gamma S.p.A. transferred its 52.13% shareholding to Delta S.r.l., a special purpose vehicle incorporated ad hoc and owned by Gamma S.p.A. for the 51% of the corporate capital.
Alfa S.r.l., who didn’t vote in favor of the removal of the restriction to the transfer, exercised its withdrawal right pursuant to Article 2437, par. 2, lett. b), of the Italian Civil Code. Beta S.p.A. contested the existence of such withdrawal right and Alfa S.r.l. sued the company seeking an order for the latter to liquidate the value of its share. In particular, Alfa S.r.l. requested the Court of Florence to ascertain and declare that the amendment to the by-laws removed a restriction on the transferability of the shares, thus giving rise to a cause of withdrawal pursuant to Article 2437, par. 2, lett. b), of the Italian Civil Code.
The Court of Florence, considering that the amendment of the by-law provision did not constitute a substantial removal of the restriction on transferability, rejected the claim brought by Alfa S.r.l.
Following the confirmation by the Court of Appeal of Florence, of the Court of Florence’s judgement as to the non-existence of the withdrawal right, Alfa S.r.l. appealed the ruling against the Supreme Court.
The decision
The Supreme Court, in contrast with the precedent decisions of the Courts, ruled that it is sufficient for the amendment to the by-laws to have removed a restriction on the transferability of the shares, without it being necessary for such amendment to have “substantial relevance”. In support of this conclusion, the Supreme Court pointed out that, in Article 2437, par. 1, let. a), of the Italian Civil Code – concerning the possibility of the dissenting shareholder to withdraw in case of resolution of the shareholders’ meeting which change the corporate purpose of the company - the legislator has expressly provided that such change in the corporate purpose shall be significant. The same requirement is not provided for amendment to the clauses on the transferability of shares referred to in par. 2, lett. b), because the same article 2437, par. 2, of the Italian Civil Code allows the by-laws to regulate such case differently.
The Supreme Court further observed that the introduction of the element of “substantiality” of the amendment would entail discretionary and subjective assessments incompatible with the need for certainty in corporate structures.
Therefore, in the case at hand, the Italian Supreme Court stated the existence of the withdrawal right for the dissenting shareholder pursuant to Article 2437, par. 2, lett. b), of the Italian Civil Code.