1. The case at issue

The case ruled upon by the Supreme Court involved a corporation whose corporate capital was originally held by two shareholders, holding respectively 60% and 40% of the company’s shares; moreover, the company’s by-laws provided for qualified majorities of two thirds of the capital on both first and second call. Such provision of the by-laws prevented amendment to the by-laws without the agreement of both shareholders, thus eventually involving an unanimity regime.

On the death of the minority shareholder, the heirs of the deceased shareholder decided to dissolve their joint ownership of shares, splitting their shareholding into four lots, which could be disposed of autonomously. Following the change in the company’s shareholding structure, by virtue of an agreement between the majority shareholder and one of the shareholders-heirs, the meeting could amend the by-laws and reduce the quorums to pass resolutions, bringing them in line with the provisions of the Civil Code (Articles 2368 and 2369).

The three dissenting shareholders exercised their right of withdrawal, invoking Article 2437, g), of the Civil Code, which allows withdrawal by shareholders dissenting from meeting resolutions involving “amendment to by-laws in respect of voting or profit-participation rights”. The company resisted, challenging the applicability of such provision to the case.

The Court of Bergamo upheld the application of the three dissenting shareholders but, at a later stage, the Court of Appeal of Brescia reversed the decision, denying the right of withdrawal enforced, and the losing parties then submitted the case to the Italian Supreme Court.

2. Article 2437 of the Italian Civil Code and the discipline of withdrawal

As a preliminary remark, it should be noted that the provision under examination must be examined in the context of the general review of the discipline of shareholders’ withdrawal under Legislative Decree No. 6 of 17 January 2003. The reform was aimed at extending the enforceability of the right of withdrawal, making obsolete the interpretation approach followed by courts until then, based on the mandatory nature of statutory requirements and the idea that withdrawal involves the impoverishment of a company and adversely affects the interests of creditors.

Indeed, under Article 2437 quater of the Civil Code, directors are entitled to liquidate a withdrawing shareholder by offering its shares on an option basis to the other shareholders or third parties, or by the Company purchasing the shares.

Capital reduction or the company’s winding-up is only allowed if there are no profits or reserves available for purchasing the shares, which means that corporate capital reduction is only a possible consequence of withdrawal.

Getting back to the wording of Article 2437, g), of the Civil Code, “amendment to by-laws in respect of voting or profit-participation rights” can be construed in different ways. Legal commentators are indeed divided between those advocating stricter interpretations and those holding more extensive views, while agreeing only with the fact that the wording of the provision is rather ambiguous.

The Supreme Court holds that the resolution whereby the quorum for extraordinary meetings is switched back to the statutory quorum falls within the scope of Article 2437, g), of the Civil Code, for not even involving an indirect alteration of voting or profit-participation rights (these latter to be meant as economic rights only).

The Supreme Court gives a few examples, clarifying that a direct alteration of voting rights would result from a resolution turning shares without voting rights into shares with voting rights, or from one changing the scope of the matters on which voting rights can be exercised. By contrast, a change in quorum involves no (direct or indirect) change in the by-laws structure of voting rights, which means the only change can be in voting “weight”, but the voting right attached to the shares does not change. The applicants were indeed basically alleging that the resolution had an adverse impact on the unanimity regime, preventing them from influencing the company’s decisions in the future.

On the other hand, under Article 2437, g), of the Civil Code, the exercise of a shareholder’s right of withdrawal is not linked to the prejudice caused to the shareholder, rather being the consequence of a change being made to the voting right. In confirmation of this, the Supreme Court notes that lawmakers expressly disciplined the cases in which the right of withdrawal is the consequence of a more unfavourable treatment of the shareholder, such as under Article 2497 quater of the Civil Code, which provides for the shareholder’s withdrawal in the event of a significant alteration of the company’s economic-and-asset situation.

3. Conclusions

The Supreme Court therefore goes to the extent of excluding the shareholders’ right of withdrawal under Article 2437, g) of the Civil Code, confirming the outcome of the appeal proceedings, seeing no alteration in voting or profit-participation rights as a result of the resolution whereby the meeting quorum was brought in line with the statutory requirements. However, that conclusion is arrived at following an argumentative path different from that followed by the Court of Brescia, who (i) advocated a strict interpretation of the provision with a view to preventing the company’ depletion and (ii) found an indirect prejudice to the voting right, with consequent inapplicability of the provision.

The Supreme Court instead holds that, in the case at issue, it is not correct to mention any (direct and even indirect) impact on the voting right. It is true that the meeting resolution amending the quorum to pass resolution has a detrimental effect on the minority shareholder’s position, but this has nothing to do with the case provided for by the law, which is one of an objective alteration of the voting right provided for by the by-laws.

Finally, the Supreme Court underlines that the extensive interpretation of the withdrawal right – disregarded by the Court itself – arises from the concern that the majority may abuse their power. However, the Court clarifies that the abusive nature of a resolution whereby the quorum set in the by-laws is switched back to the statutory one should be excluded until proven otherwise.