Posted on: 13/05/22



    In a previous newsletter (on 09.04.2021) we had already written about the so called “Russian roulette” clause, which can be provided for in the company by-laws or in a shareholders’ agreement. It is – as already illustrated – a “deadlock-avoiding” clause, which means that it is aimed at providing in advance a mechanism that overcomes situations where the company’s operations could be blocked (the typical situation is when two shareholders, having the 50% of the stock capital each, are in disagreement, which implies the impossibility to approve the balance sheets or to renovate the corporate bodies).


    This mechanism, essentially, provides that a shareholder can invite another shareholder to sell him his own shareholding at a certain fixed price (stated by the proponent), or to purchase the proponent’s shareholding at the same price. Through this mechanism it should be possible to exit the impasse situation, by removing the contrast between the two shareholders (in reality, by completely removing the plurality of shareholders) and thus preserving the company’s activities. For this reason, the clause was deemed as valid by some notarial statements. But it also presents some critical issues


    In the previous newsletter we analysed the decision of the Court of Appeal of Rome 3.02.2020 no. 782 which, with broad and articulated argumentations, acknowledged the validity of such a clause.

    On the contrary, the appealing companies presented many issues which should lead to the invalidity of the clause, such as:


    – lack of an interest worthy of protection according to art. 1322 of the Italian Civil Code;


    – the fact that the price is unilaterally and arbitrarily fixed only by one of the parties is in violation of art. 2437-ter of the Italian Civil Code. (or art. 2473 of the Italian Civil Code for ltd companies) and, more in general, violates the principle of fair valuation of the shareholding in every case when a shareholder is bound, due to by-laws provisions or shareholders’ agreements, to sell his shares;


    – the violation of the prohibition of the so-called “patto leonino” provided by art. 2265 of the Italian Civil Code,


    all issues which, however, were dismissed by the second-degree judges.


    This decision was challenged and has been now examined by the Court of Cassation. The Supreme Court, nonetheless, after retiring in the council chamber on 3.02.2022, with the provisional order 29.04.2022 no. 13545, “also considering the absolute novelty and complexity of the objected issues”, deemed necessary to deepen the question, appointing the Court’s Study Office (“Ufficio del Massimario”) to analyse the “legal, jurisdictional and scholar framework, also in the USA and in Canada as far as possible” concerning the clause at stake.


    Such order, which is an exception in the ordinary decisions of the Court, is not actually so rare (it has been issued about 90 times in the last four years). What is surprising, on the contrary, is that the Court of Cassation examined the claim in the council chamber only two years after the filing of the challenged decision of the Court of Appeal. Even the second-degree proceedings, indeed, were quite quick in respect of the proceedings’ average duration before the Court of Appeal of Rome.


    It is also interesting that the order at hand paid attention to the law and praxis of foreign systems. This attitude, too, is becoming increasingly common among jurisprudence, which is sensitive to a regulatory environment with an international scope that is increasingly permeable to institutions from other countries (and this not only in the areas of corporate, financial or business contract law, but also in civil liability – think of so-called punitive damages – or family law – think of the proposals put forward on prenuptial agreements).


    And yet, in the light of the evident perplexities shown by the Supreme Court and pending the in-depth investigations requested by it, it is worth suggesting a very cautious approach where one intends to introduce such a clause within a company’s by-laws or to agree on it in a shareholders’ agreement.


    It remains to be hoped that the fast-moving pace that has marked the proceedings under consideration so far, will also characterize the in-depth work of the Court’s Study Office (“Ufficio del Massimario”), and that the Supreme Court will soon clarify its position in this regard, providing a stable benchmark in all situations in which such a clause could find application.






    DISCLAIMER: This newsletter merely provides general information and does not constitute legal advice of any kind from Macchi di Cellere Gangemi. The newsletter does not replace individual legal consultation. Macchi di Cellere Gangemi assumes no liability whatsoever for the content and correctness of the newsletter.





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