Withdrawal and Exercise of Corporate Rights – New Possibilities for Share Liquidation in Case of Withdrawal


Withdrawal of a quotaholder and loss of corporate rights

The withdrawal of a quotaholder becomes effective upon the moment when such expression of will is brought to the attention of the company. Consequently, a quotaholder who has withdrawn from a limited liability company in Italy (“Srl”) becomes solely a creditor of the company for the reimbursement of their quotaholding (according to its value at the time of withdrawal). The withdrawing shareholder thereby loses their corporate rights, notably including the right to exercise control, which enables the same quotaholder to obtain information on corporate affairs at any time, inspect corporate books, and review all documents concerning ongoing administration. However, the withdrawing quotaholder does not forfeit the right provided by Article 2473, paragraph 3 of the Italian Civil Code to request the Court to appoint an expert who, through their sworn report, determines the liquidation value of the share attributable to the withdrawing quotaholder. This right aims to ensure that the correct value to be attributed is indicated and cannot be excluded (unless waived by the withdrawing quotaholder).

Co-ownership of participations and standing to challenge Shareholders’ resolutions

Shares in companies (whether they are stakes in limited liability companies or company limited by shares) may be subject to co-ownership among multiple parties. Concerning companies limited by shares, it is provided that co-owners cannot individually exercise the corporate rights deriving from the participation, but a common representative must be appointed for this purpose. The appointment of the common representative is made by majority based on the value of the co-owned participation (and therefore, according to the expression deriving from the ancient roman law, not “per capita”). Thus, only the common representative is entitled to intervene in legal actions. A recent ruling of jurisprudence has reiterated that even in cases of challenging shareholders’ resolutions, if the action is brought by co-owners of the shareholding, the only party entitled to bring the action in question is the common representative. This ruling reaffirms a well-established trend.

Liquidation of the outgoing shareholder’s share: the opportunities of Bond Financing

A shareholder who withdraws (or is expelled) from capital companies is entitled to be liquidated with the value of their holdings at the time of withdrawal. In most cases, these are minority shareholders: in such cases, liquidation typically occurs with the company’s resources unless the majority partner provides for it with their own financial means (instead of the company). However, there is also another option, applicable in the case of joint-stock companies and if the “outgoing” shareholder agrees to a deferred payment: resorting to bond financing, whereby the company turns to the banking system to acquire the necessary resources for the liquidation in question. This allows the company to finance itself at a lower rate than that of the banking system, while, on the other hand, the outgoing partner may obtain a higher return than what is available in the capital market. Furthermore, this solution allows for flexibility in agreements tailored to each specific case (for example, by linking the interest rate to the company’s performance through earn-out clauses).


Violation of occupational safety regulations and entity liability

A recent judgment of legitimacy addressed a case of an accident at work resulting in severe injuries to an employee; the worker, specifically, was engaged at the top of a silo, and the accident occurred due to the activation of a component of the crane that impacted the victim. This incident prompts a jurisprudential review of the administrative liability profiles of the entity for violating occupational safety regulations. In such events, it must be assessed whether the perpetrator of the offense violated the above-mentioned regulations to save costs for the entity – regardless of whether they actually achieved such savings – and to maximize production; these two criteria (cost savings and production maximization) are objective attribution criteria, distinct from each other. It was also concluded that liability cannot be excluded due to the insignificance of the cost savings achieved or the limited contribution to maximizing the company’s productivity; likewise, liability cannot be excluded for “occasional” or “sporadic” violations, i.e., violations that lack systematic character. For “cost savings,” it is worth noting that expenses related to workers’ professional training, which have not been carried out, as well as those related to the documentation of maintenance procedures and the preparation of danger signage, fall squarely within this context. It is also emphasized that the failure to adopt and the ineffective implementation of organizational models constitute the so-called “organizational fault” that must be specifically proven by the prosecution, while the entity can demonstrate not to be at fault for having nonetheless implemented measures to prevent harmful events.

LDP remains at your disposal for any further information or discussion of the topics addressed above.


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