Conflicts concerning the content of the so-called “Russian roulette” clause in the articles of association.
A so-called “Russian roulette” clause in the by-laws, aimed at resolving a decision-making deadlock, is legitimate even if it does not contain a mechanism for establishing in advance the price of the shareholding to be transferred.
Among the clauses aimed at overcoming the corporate deadlock (i.e., a definitive and insuperable decision-making impasse) are “Russian roulette” clauses, whereby each shareholder may confront the other with the alternative between (a) selling its shareholding at the price set by the shareholder triggering the clause or (b) purchasing the shareholding of the other shareholder at the very same price. The mechanism creates a peculiar balance between the positions of the shareholders, since the unilateral determination of the price is matched by the risk of losing the shareholding.
In case law, an important consideration on the limits of admissibility of such a clause has been offered by the Court of Appeal of Rome, Corporate Section, in decision no. 782 on February 3rd, 2020.
The Court held that the clause is aimed at pursuing interests that are worthy of protection under the law (pursuant to Article 1322 of the Italian Civil Code), as at a functional level (i) it has the purpose of safeguarding the existence of the company (by removing a shareholder instead of and avoiding the dissolution of the company, pursuant to Article 2384, paragraph 3, of the Italian Civil Code) and (ii) it avoids the expense and time required for the liquidation of the exiting shareholder.
The Court also examined the lack, in the given case, of a mechanism for pre-determining the value of the shareholdings to be sold (an issue which arises only regarding clauses included in the by-laws, whereas, with regard to shareholders’ agreements, it is common ground that the determination of the sale price may be left to the free negotiation of the shareholders). In this respect, the Court did not consider it necessary to predetermine a pricing method in the provision, since the very inherent balance of the mechanism (described above) excludes the possibility of setting an arbitrary price. Moreover, it ruled that the principle of respect for the fair valuation of the shareholding of the exiting shareholder, as provided for in Articles 2437-ter and 2473 of the Civil Code, is not applicable by analogy.
The decision contrasts, at least in part, with the position of some interpreters who, referring to and reviving the debate on drag along clauses, on which Trib. Milano, ord., March 31st, 2008, in Le Società, 2008, 1373 et seq. with a note by C. Di Bitonto; G. Sbisà, Dialogo con la giurisprudenza sulle clausole statutarie di trascinamento (drag-along), in Contratto e impresa, 2015, 635 et seq. and I.I.25 of the Triveneto Committee of Notaries), state that any provision in the by-laws which has the ultimate aim of putting the shareholder in the condition of being forced to withdraw his shareholding, should in any case provide for a way of ensuring compliance with the principle of fair valuation (on this point, rule no. 181 of the Notary Council of Milan https://www.consiglionotarilemilano.it/massime-commissione-societa/181/).
On the same position as the aforementioned decision, the Florence Notary Council’s rule no. 73 (https://www.consiglionotarilefirenze.it/images/orientamenti_osservatorio/73-2020-Roulette-russa.pdf) considers the clause in the by-laws on Russian roulette to be legitimate regardless of the pre-determination of the price of the shareholding to be transferred. The Florentine notaries confirmed the different ratio of the redemption hypothesis and that of the Russian roulette clause: the redemption provides for a condition of mere subjection of the exiting shareholder and therefore there is a deprivation effect; in Russian roulette, on the other hand, due to the unpredictability of mechanism, in which whoever activates the clause may in turn find himself in a condition of subjection, the same effect cannot be found. It follows that the limits imposed by law on statutory autonomy are not applicable by analogy and that no valuation criteria are necessary.
Both interpreters and professionals must also consider a significant practical effect, highlighted by notaries. The obligation to provide for minimum price thresholds under Articles 2437-ter and 2473 of the Civil Code would have a dissuasive effect with respect to the activation of the mechanism and the deadlock could continue indefinitely, leading the company to the inevitable liquidation with a probable depreciation caused by the prolonged immobility.
f.bogoni@macchi-gangemi.com
m.rigo@macchi-gangemi.com
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