The revocation of the company director as a precautionary measure.
Following the recent period of pandemic and the consequent market crisis, the issue of shareholders’ control over the management of the company has become even more topical, as well as the protection of shareholders in the event of serious irregularities in the management of the company by the administrative body. In this respect, the regulation of the interlocutory revocation of the director of a company is of particular interest, in respect of which two contrasting trends have recently been consolidated, especially with regard to the nature of the action itself.
The first issue to be considered with regard to the rules is whether or not the remedy of revocation of a director is connected, and to what extent, to the lawsuit for liability. On this point the answer is not uniform, although there is an opinion which may be considered as dominant.
In particular, a distinction must be made between two opinions. The first, which places the interlocutory measure in a strict relationship of instrumentality with the action under Article 2476, paragraph 3, of the Italian Civil Code based on the literal meaning of the provision in the part where it provides that the shareholder bringing the action “may also request, in the event of serious irregularities in the management of the company, that a interlocutory measure be adopted to revoke the directors themselves”
Therefore, the “ante causam” action can only be brought in connection with the subsequent case on the merits. This approach is supported mainly by the Court of Rome, see judgments of 20 February 2019 and 31 May 2018, but also by other courts, see Court of Catanzaro , Sez. spec. Impresa , 30/05/2017
The second approach, on the other hand, which can be considered predominant, rejects the relationship of instrumentality mentioned above , allows instead the use of said means with an advance on the ruling on the merits. Consequently, it is excluded that the anticipatory means must necessarily be used in connection with the subsequent action on the merits. The case law which considers the relationship of so-called “attenuated instrumentality” is mainly attributable to the Milano courts, but not only, ex multis Tribunale di Milano, see judgment Tribunale Milano Sez. spec. Impresa, 13/06/2017, no. 2476, but see also Tribunale di Firenze, 01/07/2019 and Tribunale di Bologna, 18 April 2017).
Obviously, the adoption of one or other approach and the legal solution offered with regard to the potential prosecution of the ante causam proceedings or necessarily in connection with the proceedings on the merits, leads to a different assessment of the nature of the interlocutory measure concerned, anticipatory in the first case and merely conservative in the second case.
Without prejudice to what has been said above in terms of the assessment of the nature of the measure of interlocutory revocation, it should however be noted that both the aforementioned opinions, although opposing in their appreciation of the nature of the measure, are similar in recognising ( although for different reasons, given that the possibility must be coordinated with the underlying legal reasoning, which we have seen is different) the eligibility of the ante causam revocation of the director.
Similarly, there is a consensus in the case law (albeit still on the basis of different arguments resulting from the nature of the proceedings in question) with regard to the parties to be sued and the issue of the company’s necessary participation. The joinder action is in fact necessary, as provided for the action on the merits (Civil cassation, section I , 04/07/2018 , no. 17493), both according to the orientation that ascribes to the interlocutory measure an instrumental function to the pursuit of the action under article 2476 of the Italian Civil Code, and this because the shareholder acts as a procedural substitute of the company the summoning of the latter is required under article 102 of the Italian Code of Civil Procedure, as well as for the case law that supports the “attenuated instrumentality” because ( even though it loosens the relationship between the interlocutory proceedings and the proceedings on the merits) it is a consequence of the application of the general principle that the limited liability company is a necessary joinder in the liability proceedings of the directors.
On the other hand, the conditions for granting the measure in the case of an instrumental action or an “attenuated instrumental” action will be different, given that in the first case, the granting of the measure will be subject to the positive outcome of a assessment of plausibility concerning the grounds of the future action for damages, whereas it will not be possible to grant the measure where such a requirement is lacking, where the damage is not actual, or where there is no danger of worsening the damage as a result of the administrator remaining in office. On the other hand, in the second case, the only condition to be assessed, in addition to the presumption of serious misconduct, is the “concrete and imminent risk of harm to the company’s interests arising from the continuation of such conduct”.
At the end of this brief overview, it is worth mentioning the issue related to the differences between the interlocutory proceedings “ante causam” pursued under Article 2476 of the Italian Civil Code, and the different action, but apparently common in purpose, under Article 2409 of the Italian Civil Code. In this regard, it should be noted that, as also made clear by case law, there is no risk of overlapping of these actions, since the procedure regulated by Art. 2409 of the Italian Civil Code. cannot be used to achieve purposes other than those provided for by the law, or to obtain results that can be achieved with other actions, and must concern irregularities characterised by the condition of actuality, while those facts, even if serious, whose effects have already ceased to exist are irrelevant, given that the judicial control regulated by this institution is temporarily located in a phase in which the management irregularities are still in place, and as only being potentially harmful. Otherwise, where the suspected management misconduct is no longer in place (but the damaging effects of such misconduct may still be in place), it will be necessary to bring a different action under Article 2476 of the Civil Code and the interlocutory proceedings ante causam (see recently Court of Catanzaro, 28/02/2020). Likewise, the procedure of voluntary jurisdiction, pursuant to Article 2409 of the Italian Civil Code, cannot be considered as a judgment on the merits of the interlocutory revocation of the directors pursuant to Article 2476 of the Italian Civil Code, which instead is necessarily litigious and is carried out in the action provided for therein.
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