Last Updated June 21, 2019

Law and Practice

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CMS Adonnino Ascoli & Cavasola Scamoni is unique in its composition, which combines extensive local and international expertise in order to assist clients with all types of cross-border issues. The Italian corporate team (with offices in Milan and Rome) comprises over 30 professionals and is best known for its knowledge leadership, especially in the energy, life sciences, automotive and media sectors. It has strength in mid-market deals, with a number of long-term clients in this area. Recent highlight deals include international transactions concerning Total, including assisting Total Marketing Services SA and ERG Spa with the sale of TotalERG Spa to API Spa (Anonima Petroli Italiana S.p.A) and providing assistance to Moneygram with respect to restructuring after Brexit. The firm also concluded several high-value deals in 2018, with clients including NMS Group, Telit, and Cuki. It covers all corporate-related practice areas.

The relationship between the shareholders and the company has two main sources: the law and the bylaws.

In fact, within the boundaries laid down in the ICC and other applicable regulations, the shareholders, when setting up a company by entering a deed of incorporation, are allowed to regulate several crucial aspects of their relationship with the company in the bylaws.

Indeed, the bylaws, which can be amended only by way of resolution of the extraordinary quotaholders’/shareholders’ meeting before a public notary, establish among other things the rules applicable to the relationship of the shareholders to each other and covers issues such as the transfer of participations, granting of specific rights to certain shareholders/quotaholders, withdrawal and exclusion from the company, etc.

SPAs

According to Article 2380-bis ICC, the ordinary and extraordinary management of the company is an exclusive and autonomous prerogative of the board of directors (or the sole director), as appointed by the shareholders’ meeting, with the exception of those matters that must be entrusted to the shareholders (see 3.2 Decisions Made by Particular Bodies, above).

Therefore, as a general principle, the shareholders cannot intervene directly into the management strategies. Nonetheless, a number of tools are granted to the shareholders with the purpose of monitoring and, in certain cases, intervening in the management of the company, such as the right to remove the directors at a shareholders’ meeting or to choose not to re-elect them when their mandate expires.

Moreover, Article 2367 ICC provides that shareholders representing a tenth of the share capital (or less, if provided by the bylaws), have the right to ask the directors to call a shareholders’ meeting with a specific agenda. In the event of the directors’ inertia, the controlling body shall call the meeting. Should the controlling body fail to call the meeting, the shareholders may ask a court to do it.

SRLs

Pursuant to Article 2475 ICC, the management of SRL companies is usually entrusted to the quotaholders, unless otherwise provided in the company’s bylaws.

The stronger involvement of the quotaholders in the management of the company is embodied by other provisions, such as the possibility to entrust quotaholders, with specific provision of the bylaws, with special rights relating to the administration of the company in accordance with Article 2468(3) ICC.

Furthermore, Article 2476 ICC provides that even the quotaholders who do not take part in the management of the company have the right to be informed by the directors of the trends of the business and to consult, including through trusted professionals, the company’s books and the documents relating to the management (such as of journals, minutes of the meetings of the corporate bodies, accounting reports, bank account statements, contracts and tax returns).

The Italian courts (both local and Supreme Court) have also held that, in relation the matters falling within their competence pursuant to Article 2479 ICC, quotaholders have the direct power to call the quotaholders’ meeting, notwithstanding different provisions of the bylaws and, in any case, without the need to resort to a court’s decision as it is for SPAs (see, ex multis, Italian Supreme Court, case no 10821 of 25 May 2016).

SPAs

In SPAs, shareholders adopt their decisions by means of shareholders’ meetings only.

As a general rule and unless the bylaws provide otherwise:

  • the shareholders’ meeting is convened by the board of directors, with a notice of call that must include:
    1. the location of the meeting;
    2. the date of the meeting, which shall be at least 15 days later; and
    3. the items on the agenda to be discussed and resolved by the shareholders;
  • usually the notice of call will also include the detail of a shareholders’ meeting on second call, which can be assembled and pass resolutions with a lower quorum, if provided by the bylaws, in the event that the first one cannot be properly held;
  • even without a notice of call, a plenary shareholders’ meeting can be validly assembled if the entire corporate capital of the company is represented and the majority of the directors and the statutory auditors are in attendance;
  • shareholders can be represented within the shareholders’ meeting by means of proxies granted to other shareholders as well as to third parties, with the exception of members of management and control bodies of the company;
  • as far as quorum is concerned, shareholders’ meetings are duly assembled with the attendance of at least half of the shareholders, excluding shares without voting rights. The ordinary meeting passes resolutions with the favourable vote of the absolute majority of the attendees, unless a higher majority is required by the bylaws. The extraordinary meeting passes resolutions with the favourable vote of shareholders representing more than half of the share capital, unless a higher majority is required by the bylaws; and
  • the shareholders’ meeting is chaired by a chairman, identified by the bylaws or appointed by the attendees. The chairman verifies the regularity of the meeting and ascertains the results of the vote. The chairman must be assisted by a secretary (likewise identified by the bylaws or appointed by the participants), who is entrusted, inter alia, with the task of preparing the minutes of the meeting.

SRLs

The quotaholders can pass resolutions during a quotaholders’ meeting but also by means of written resolutions, except for some items that must be necessary addressed by the quotaholders’ meeting (eg, modifications of the bylaws or the corporate scope of the company, compulsory reduction of the corporate capital and winding up of the company).

There are other differences from the SPA, such as:

  • the shorter term for the notice of call, which is set to eight days prior to the meeting but can be further reduced by the bylaws;
  • the possibility, unless differently provided by the bylaws, of not appointing a secretary to the meeting; and
  • the fact that, even without notice of call, the quotaholders’ meeting is properly convened if the quotaholders are present and management and supervisory bodies are not in attendance and declare that they have been informed as to the agenda, even if they are not physically in attendance.

Each director is jointly and severally liable towards the shareholders/quotaholders for damages resulting from directors’ breach of their statutory duties and obligations, unless such duties have been validly delegated to either a managing director, an executive committee or an attorney-in-fact.

Thus, each shareholder is entitled to bring forward an ordinary action for damages, which is subject to a five-year time bar, starting from the day on which the act was committed.

Specific disclosure obligations concerning the shareholders are provided in relation to companies with publicly traded shares in order to ensure that all stakeholders (eg, investors, regulators and financial operators) are informed of the allocation of shareholdings granting control powers.

In particular, Article 120 TUF provides that all persons holding significant shareholdings, ie, above the threshold of 3% of the share capital (5% if the issuer is an SME), must notify the company and the public authority responsible for regulating the Italian financial markets (Commissione Nazionale per le Società e la Borsa) (CONSOB).

Failure to notify significant shareholdings may result in:

  • an administrative sanction against the issuer and the shareholder;
  • suspension of certain voting rights; and
  • the possibility (including for CONSOB) to challenge the resolution passed with the decisive vote of the shares for which the right to vote was not allowed.
CMS Adonnino Ascoli & Cavasola Scamoni

Galleria Passarella 1
20122 Milan
Italy

+39 02 89 28 38 00

+39 02 48 01 29 14

daniela.murer@cms-aacs.com www.cms.law
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Authors



CMS Adonnino Ascoli & Cavasola Scamoni is unique in its composition, which combines extensive local and international expertise in order to assist clients with all types of cross-border issues. The Italian corporate team (with offices in Milan and Rome) comprises over 30 professionals and is best known for its knowledge leadership, especially in the energy, life sciences, automotive and media sectors. It has strength in mid-market deals, with a number of long-term clients in this area. Recent highlight deals include international transactions concerning Total, including assisting Total Marketing Services SA and ERG Spa with the sale of TotalERG Spa to API Spa (Anonima Petroli Italiana S.p.A) and providing assistance to Moneygram with respect to restructuring after Brexit. The firm also concluded several high-value deals in 2018, with clients including NMS Group, Telit, and Cuki. It covers all corporate-related practice areas.

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