Transfer of shareholding and right of pre-emption in Italy

Pre-emption clauses, together with the so-called acceptance clauses, are provisions restricting the transfer of shareholding. In particular, pre-emption clauses if set forth within the By-laws, allow the shareholders to reciprocally bind each other to prefer one to another in the event in which one or some of them decide to sell their own shareholding.

Pre-emption clauses under the respective By-laws ensure a strongly private nature to the company, which are aimed at preventing any parties unrelated to the circle of shareholders - as originally composed - from succeeding to the company structure.

By way of the order No. 4852 of 9 March 2015, the Court of Milan ruled that the pre-emption clause foreseen by the By-laws for the transfer of shareholding to third parties has real property effectiveness, and that the above is to be deemed to the extent that it is the case of a clause which may be objected to third parties.

This means that, in the event of any transfer of shareholding in breach of the pre-emption, the transfer deed shall be ineffective ab origine, thus excluding the case in which the shareholder entitled thereto has to 'redeem' the shareholding obtained in breach of the pre-emption clause from the third party purchaser.

As a general rule, the pre-emption agreement falls within the scope of shareholders' agreements, will only be relevant at a legal obligation standpoint and may not be objected to third parties.  Nonetheless, should it be included in the memorandum of association or in the By-laws, it shall become relevant for the company's organisation and shall have real property effectiveness, which may also be objected to the third party purchaser.

The real property effectiveness of the pre-emption clause entails that it may be objected to third parties: any transfer of shareholding made in breach of the pre-emption is therefore ineffective and the purchaser/transferee shall in no way be considered a shareholder of the company.

A different case would be the event in which the pre-emption is foreseen under the shareholders' agreements: should this be the case, the clause will only be effective at a legal obligation standpoint.  It is true that the transfer was made in breach of the pre-emption, however, it will in any event be valid and effective, and the purchaser will acquire shareholder status for all purposes, which shall in no way be objected by the company or by the other shareholders entitled to be preferred.

It is worth clarifying that, even if the real property effectiveness of the pre-emption clause actually entails the impossibility for the transferee to acquire shareholder status, the above does not involve the possibility for the other shareholders to redeem from the third party purchaser the shareholding purchased by the latter in breach of the pre-emption.

Such further right will only be possible if expressly provided by law, whilst it cannot result from a 'mere' agreement by the shareholders (therefore, ultimately, a private transaction) even if included in the By-laws and published in the Companies' Register.

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