What is the option right and what is its purpose?
The option right is the right of current shareholders to be preferred to third parties in the subscription of payment share capital increases. It is one of the most significant rights granted to shareholders, as it allows them to maintain their weight in the shareholding structure, in case of a capital increase. In this regard, pursuant to Article 2481-bis of the Italian Civil Code, in the event of an increase in the share capital by means of new contributions, the shareholders are entitled to subscribe in proportion to their shareholdings. The deed of incorporation may then provide – except for the case of reduction of the share capital below the legal minimum (Article 2482 ter of the Italian Civil Code) – that the capital increase may also be implemented by offering newly issued shares to third parties; in such a case, the shareholders who have not consented to the decision have the right of withdrawal.
The “personal” character of the limited liability company
A question therefore arises: if the articles of association or the memorandum of association do not provide that the capital increase may also be implemented by offering newly issued shares to non-shareholders, does this imply that the shareholder may not transfer his/her option right? In the Italian Supreme Court’s view, in order to answer this question, it is first necessary to focus on the tendentially restricted nature of the limited liability company.
In this regard, the judges of the Italian Supreme Court note that the personal nature of the limited liability company is not to be interpreted in a strong sense – as the closure of the company to third parties, but on the contrary in a weak sense, as the interest of the shareholder to maintain unchanged not the subjective composition of the company, but the extent of his participation in the share capital (and therefore not to see his share diluted).
In support of this, the judges point out that the shareholdings of the limited liability company, pursuant to Article 2469, paragraph 1, of the Italian Civil Code, are normally freely transferable, unless otherwise provided for in the memorandum of association; therefore, the limited liability company is generally understood by the legislator as an entity “open” to the entry of new shareholders.
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The recent ruling of the Italian Supreme Court
Following the same line of interpretation, the Italian Supreme Court’s recent ruling specifies that, in principle, there are no reasons that exclude the transferability of the option right of the shareholder; in fact, if the regulation of the option right is intended to preserve the balance of power within the company, what matters is the will of the shareholder to give effect to that interest; if, therefore, such a will is lacking (e.g., because the shareholder does not intend to keep the shareholding held until then, or is not in a position to maintain it, as he does not have the relevant financial means), he may deprive himself/herself of his/her option right, waiving it or transferring it to a third party.
Attention to the provisions of the articles of association
However, this transferability does not apply tout court, since it must take into account any eventual provision of the articles of associations which, in fact, could neutralize it. In particular, the transferability of the option right may be precluded directly, in presence of a clause in the articles of associations expressly prohibiting it, or indirectly, in case of provisions excluding the free circulation of the company’s shareholdings. It would be incongruous to allow the transferability of the option right when a clause in the articles of association prevents the transfer of the shareholding. In the presence of such a prohibition, in fact, the rules of the articles of association are clearly aimed at excluding the entry of new shareholders and the free transferability of the option right would lead to a result which the company contract intended to prohibit.
In conclusion, therefore, it can be considered that the shareholder, before the expiration of the term provided for the exercise of the option right, may freely transfer the option right to third parties who are not shareholders, provided that there are no provisions in the articles of associations that are incompatible with such transfer.