Which amendments to the articles of association entitle a shareholder to withdraw?

When does the shareholder have the right to withdraw?

Articles 2437 and 2473 of the Italian Civil Code, respectively  relating to joint-stock companies and limited liability companies, provide for some legal causes – mandatory or not – for the withdrawal of the shareholder; in addition to the aforesaid, as known, the parties may introduce in the articles of association further withdrawal hypotheses. In this regard, pursuant to art. 2437, paragraph 1, of the Italian Civil Code, shareholders who have not taken part in a resolution amending the articles of association with respect to voting or participation rights are entitled to withdraw. This provision has given rise to different reconstructions with regard to the notion and extension of the concepts of “voting rights” and “participation rights” and the relationship between them.


The case

The case at issue in the recent judgment of the Court of Venice concerns the verification of the legitimacy of the withdrawal exercised by a shareholder who did not participate in a resolution amending the articles of association which had restricted the right of shareholders to delegate third parties to attend and vote at the shareholders’ meeting (by limiting it, for individuals, only to family members, and for companies, only to the shareholders of that company).

The dissenting shareholder therefore contested a restriction of the possibility to delegate which, insofar as it modified the right to vote or participate, would have allowed, pursuant to the company’s articles of association and the regulatory provisions of article 2437 of the Italian Civil Code, the withdrawal of shareholders who did not agree with the same resolution.


The Court’s decision

The Court of Venice, in rejecting the recourse filed by the dissenting shareholder, firstly specified that “participation rights” are to be understood as only those of an economic nature and not, as the shareholder asserted, those of participation in the management of the company and, in conclusion, ruled that “the amendment to the articles of association of the faculty acknowledged to the shareholder to grant proxy to third parties in order to attend the shareholders’ meeting and exercise the voting right does not concern in itself the recognition of the voting right connected to the status of shareholder, but it is exclusively related to a modification of the faculties and the right to be represented at the shareholders’ meeting, which is different from the recognition of the voting right“.

Therefore, where a shareholders’ meeting resolution leads to a modification of the concrete procedures for exercising the voting right, without changing the voting right itself, there is no right of withdrawal of the dissenting shareholder. In fact, the shareholder, notwithstanding the said amendment to the articles of association, continues to enjoy the same voting right held previously, which is not affected either directly or indirectly by the said amendment.


Restrictive interpretation of shareholder’s withdrawal preferred

The Court of Venice, referring to previous rulings of the Supreme Court, expresses its preference for a restrictive interpretation of withdrawal rules, in order to balance the protection of the rights of the shareholder with the conservative interest of the company and its assets.

According to the Court’s interpretation this is due, on the one hand, to the need for certainty in order to ensure the good performance of the company, which must be able to know in advance which amendments to the articles of association will give rise to the right of withdrawal of the shareholder and, on the other hand,  to the risk that a broad interpretation would extend indefinitely the grounds for withdrawal.

The Court concludes that the above, moreover, may also be inferred from an examination of Articles 2437 and 2473 of the Italian Civil Code which, expressly recognizing the possibility for the articles of association to provide for further causes of withdrawal, certainly cannot be read in a broad sense with reference to the withdrawal hypotheses explicitly regulated.

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