Posted on: 17/12/2020

    Prohibition of the catching bargain (so-called “patto leonino”).



    By decision No. 4628/2020 the Court of Milan Section Specialized in Business Matters ruled again on the application of art. 2265 of the Italian Civil Code to the put options on shareholdings at a predetermined price (so-called “put” options).


    Summarizing the main case-law regarding the prohibition of the catching bargain (so-called “patto leonino”) (see Article 2265 of the Italian Civil Code according to which – “The agreement by which one or more shareholders are excluded from any participation in profits or losses is void”), the Court of Milan:


    (i) restated the relevance of the prohibition pursuant to art. 2265 of the Italian Civil Code (governing simple partnerships) also with respect to joint-stock companies (as already ruled by Cass. Civ. No. 8927/1994);


    (ii) referred to the previous rulings of the Courts of Milan which had affirmed the nullity of “put” options at a predetermined price – including both the purchase price of the shareholding and the disbursements borne by the shareholder for the company’s recapitalization (Court of Milan on 30.12.2011, as well as Court of Appeal Milan on 17.09.2014 and on 19.02.2016) and denied it where the exclusion from losses was not “total and constant”, for instance when it does not concern the disbursements connected to the company’s recapitalization (Court of Milan on 3.10.2013, on 22.7.2015, on 18.10.2017 and on 30.01.2018);


    (iii) mentioned its own previous ruling of 27.03.2020 which specified the scope of application of the prohibition pursuant to art. 2265 of the Italian Civil Code, deeming that “the loss for the shareholder can only be understood in the meaning of Articles 2446, 2447, 2482 bis, 2482 ter, or operating losses capable of affecting the share capital by more than 1/3 or even making it fall below the legal minimum. Therefore, the exclusion from the losses of the shareholder of a joint-stock company means that, by statute or by virtue of a shareholder’s agreement, the shareholder is able, by maintaining the same shareholding, to shift operating losses (that affect the share capital by at least one-third) to the other shareholders”; and


    (iv) partially departed from the preceding decision of the Court of Cassation No. 17498/2018 which – with a ruling that at the time seemed innovative – considered worth to obtain protection the agreement whereby, in a participation loan, a shareholder was obliged to indemnify the other from any negative consequences deriving from the contribution made to the company by attributing to such shareholder the right to sell the shareholdings (the so-called “put”) at a predetermined price (equal to the purchase price originally paid plus interest and any disbursements made in favor of the company.


    In this last regard, the Court of Milan – dissenting with the argument of the Supreme Court according to which the put option at a predetermined price would have implemented a mere “transfer of purely internal risk from a shareholder to another shareholder or a third party” and made it worth of protection. It was indeed recognized by the Court of Milan that the cause of an option agreement consists in a combination of associative and financing purposes; on this assumption, the Court declared the nullity of a put option agreement which provided for a predefined price, equal to a fixed consideration to be increased by any disbursements borne by the shareholder and this despite the presence of a corresponding “call” option in favor of the other shareholder.


    According to the Court of Milan, in compliance with the principles already stated by Cass. Civ. No. 8927/1994 and partially diverging from Cass. Civ. No. 17498/2018:


    a) 2265 of the Italian Civil Code considers null and void an agreement providing for the exclusion of a e shareholder from any share in the profits and / or losses realized by the company;


    b) the reason for the prohibition pursuant to art. 2265 of the Italian Civil Code is connected to the structure of the corporate agreement (intended as several assets joined together in order to achieve the common purpose of dividing the results of the economic enterprise) and does not allow for the total exclusion of one or more shareholders from those results;


    c) the sanction of nullity is applicable where the option agreement gives a catching bargain result both directly (pursuant to Article 1418 of the Italian Civil Code) and indirectly (pursuant to Article 1344 of the Civil Code); this is to be ascertained with reference to the time of the deal (and therefore regardless of subsequent checks as to whether the shareholder has actually made disbursements in favor of the company or has requested their reimbursement from the other shareholder when exercising the put option).


    In light of this further ruling, which summarizes the preceding case-law already available on the subject matter, further and greater caution must therefore be used in the negotiation and drafting of put option agreements, to avoid the risk that they will subsequently be declared null and void, with the consequent nullification of the shareholder’s desired result or effects particularly at the time of entry into the shareholding structure of entities that are in situations of financial difficulty.




    The implementation in Italy of Regulation (EU) no. 655/2014 establishing a European Account Preservation Order.



    On December 1, 2020, entered into force Legislative Decree no. 152 of October 26, 2020 (hereinafter “The Decree”), with the object to adapt the Italian legislation to the provisions of Regulation (EU) no. 655/2014 of the European Parliament and of the Council of 15 May 2014 (hereinafter “The Regulation”).


    The Regulation aims to facilitate debt recovery between EU countries in civil and commercial matters, establishing a new procedure which allows a court in one EU country to issue, upon request of a creditor, a European Account Preservation Order (EAPO) that blocks funds held by the debtor in a bank account or accounts in another EU country.


    The EAPO is available to citizens and businesses:

    – in cross-border cases between EU countries, i.e. when the account, at the date of application for an EAPO, is held in an EU country other than where the creditor is domiciled or the court seized is based;

    – as an alternative to national procedures, but does not replace them.


    The court competent to issue an EAPO is normally that competent to rule on the substance of the matter. In all cases, the creditor must provide evidence to convince the court that there is a real risk that justifies the need to freeze the debtor’s account. If the creditor requests an EAPO before obtaining a judgment on the substance of the matter, sufficient evidence should also be given to the likely success of the substance of the claim.


    In order to ensure the surprise effect and the usefulness of the EAPO, the debtor is not informed prior to its implementation (ex parte procedure).


    The creditor who does not know the debtor’s account information can, under certain conditions, request the court to obtain account information from designated authorities in the EU country of enforcement.


    An EAPO issued in an EU country in accordance with the regulation shall be recognized and enforceable in another EU country without any special procedure or declaration of enforceability.


    In order to counterbalance the absence of a prior hearing, there are the following safeguards for the debtor against the abusive use of the EAPO:


    – remedies — including a right of appeal — to be able to challenge the EAPO as soon as the debtor is informed of the blocking of their accounts;


    – rules on the provision of a security by the creditor — to ensure that the debtor can be compensated for any damage caused by the EAPO;


    – rules on the creditor’s liability for any damage caused to the debtor by the EAPO due to an error on the creditor’s behalf.


    The Decree covers specific aspects of the procedure that the Regulation delegates to the legislation of the single Member States.


    In particular, the Decree:


    – indicates which court is competent to issue the EAPO where the claim is based on an authentic instrument;


    – in case of enforcement of the order in Italy, identifies the information authority that is competent to acquire information on bank accounts of the debtor upon request of the court with which the application for the EAPO is lodged;


    – establishes that the search for information on bank accounts are conducted by electronic means set forth in art. 492-bis of the Italian Civil Procedure Code;


    – identifies the applicable procedures and the competent court for the execution of the EAPO in Italy and for challenges against the decision granting or rejecting it or its enforcement.


    Thus, the Decree represents an important measure both for creditors of a Member State seeking to seize the bank accounts of a debtor located in Italy and for Italian creditors applying to the court in Italy in order to obtain a EAPO on the bank accounts of a debtor located in another Member State.




    The European Parliament dictates guidelines for responsibility in the field of artificial intelligence: what changes for companies in the sector?



    On October 20, the European Parliament issued a Resolution with recommendations to the Commission on a civil liability regime for artificial intelligence (AI), containing a proposal for a Regulation on liability for the operation of artificial intelligence-systems.


    The resolution is part of the proposals sent by Parliament to the Commission with a view to the latter’s legislative proposal on artificial intelligence.


    The choice of a Regulation, according to the European institution, would be necessary for the creation of a real digital single market; in fact, it would guarantee legal certainty “throughout the liability chain, including for the producer, the operator, the affected person and any other third party”.


    The key aspect of the European Parliament’s proposal is the provision of a strict liability system for operators of high-risk AI- systems (which will be listed in a future annex to the Regulation, periodically revised by the Commission).


    Operators of high-risk IA systems (both front-end and back-end) could not, therefore, evade their liability by claiming that they acted diligently, or that the damage or injury was caused by an autonomous activity, device or process driven by their AI system.


    The Regulation should then provide for the maximum amount of compensation in case of death, or damage to health and physical integrity, as well as in case of financial or non-financial damage resulting in verifiable economic loss.


    In this context, becomes central the definition of high-risk AI-systems, which the Parliament identifies – on the basis of what the European Commission also indicated in its White Paper on Artificial Intelligence – in general where there is a pronounced autonomy of the system used and an important potential for damage for one or more persons, also in relation to the sector of activity (e.g. health, transport, energy, police).


    If the line proposed by the Regulation is confirmed by the subsequent European legislative process, there will certainly be a framework of greater regulatory clarity, which will have to be assessed extremely carefully by companies, from the earliest stages of their activities, especially where their sector is qualified as high-risk.



    Solidarity network contracts: creative solutions at the time of the redundancy freeze.



    With the conversion into law of the “decreto Rilancio” (Law Decree no. 34/2020), in art. 43bis the legislator introduced the network contract with solidarity cause, encouraging its use as a tool to counter the economic crisis caused (aggravated rectius) by the Covid emergency.


    It is worth remembering that the aim of the network contract was to help companies to “increase, individually and collectively, their innovative capacity and their competitiveness on the market” (art. 3, paragraph 4ter, Law Decree no. 5/2009). With the stipulation of a “common network program”, entrepreneurs or professionals, undertake to collaborate, exchange information or services or carry out in common activities falling within the object of their own enterprise.


    Now, for the year 2020 (the extension of the measure up to 2021 is currently under discussion) the legislator provides that the network contract between companies may also be stipulated in order to safeguard the employment levels of the companies of sectors affected by the economic crisis due to crisis situations or states of emergency declared by means of provisions by the competent authorities.


    Therefore, the following are included among the aims of the solidarity network contract:


    (i) the employment of workers of companies participating in the network at risk of losing their jobs;


    (ii) the inclusion of people who have lost their jobs due to the closure of activities or business crisis;


    (iii) the employment of professional figures necessary to relaunch productive activities during the exit phase from the crisis,


    to be pursued by resorting to staff secondment and (for now, theoretically, while waiting for a new implementing decree to be issued by the Ministry of Labour) to co-employment at companies participating in the network.


    In the light of the fact that the strategic objective of the solidarity network contract is to ensure the employment levels of companies, both the Ministry of Economic Development and Retimpresa suggest considering, in a broad sense, the concept of a “company belonging to a supply chain affected by crisis”, so as to enable the setting up of networks with a solidarity cause, in the event that even only one or more network companies – and not, necessarily, all of them – belong to the supply chains declared to be in a crisis.


    Moreover, in order to encourage its use, even though the obligation to register the network contract with the Register of Companies remains unchanged, the legislator has provided that the solidarity network contract be signed with simplified modalities, derogating from the need to draw up the contract through a public deed or notarized private deed.


    From the labor point of view, as for any formal network contract, undoubtedly the greater flexibility of the network companies to conclude agreements for the secondment of personnel certainly seems beneficial. In fact, within the framework of a network contract, the requirement of the “interest in the secondment” of one or more employees of companies participating in the same network is considered as existent per se. Moreover, the network contract introduced the concept of “co-employment”, that is the coexistence of several employers with respect to the same personnel. Consequently, in this context, there is less of a risk that secondment agreements are considered illegitimate insofar as they circumvent the regulations governing the supply of personnel.


    This new network contract with solidarity cause is undoubtedly an interesting measure and one to be taken into due consideration among the tools (few, when considering the extension of the term for the freeze on redundancies) available, at national level, for the management of redundancies.




    Draft Budget Law 2021: the proposed new provisions for enterprises.



    The Council of Ministers has recently approved the draft law “A.C. 2790-bis” containing the Italian Budget for the financial year 2021 and the multi-year budget for the three-year period 2021-2023 (hereinafter, “Draft Budget Law 2021”).


    The Draft Budget Law 2021, coherently with the programmatic recommendations set forth by the governmental note on the economic and financial policies (so-called “NADEF”), is composed by 229 articles and is subdivided, as required by the accounting laws, in two sections.


    The following are the main tax provisions included in the Draft Budget Law 2021 having an impact on enterprises:


    a) Tax credit on consultancy fees for listing of SMEs (art. 36): the tax credit granted in case of consultancy fees paid for the listing of SMEs is prorogated to 31 December 2021;


    b) Tax incentives for mergers & acquisitions (art. 39): a tax credit is granted in case of mergers, demergers and contributions resolved in 2021 equal to the amount of Deferred Tax Assets (“DTA”) registered for tax losses and excess of ACE deduction (i.e. the notional interest deduction on equity increases). The tax credit is capped to the 2% of the DTA of the entities involved in the relevant M&A transaction;


    c) Capital strengthening of medium-sized enterprises (art. 42): the tax credit for equity injections in medium-sized enterprises in Italy set forth by art. 26 of Law Decree no. 34/2020 is prorogated to injections (to be) materially completed within 30 June 2021, provided that the relevant investment is made within 31 December 2020;


    d) Foreign investment funds (art. 110): an exemption regime is granted to dividends received and capital gains/losses made by foreign UCITs established in a EU Member State or a EEA country that allows an adequate exchange of information, in line with the current legislation applicable to Italian UCITs;


    e) Tax credit for R&D activities (art. 185): the tax credit for research and development activities, technology innovations and other innovative activities governed by art. 1, paragraphs from 198 to 209 of Law no. 160/2019, is prorogated to eligible activities completed within 31 December 2022;


    f) Amendments to the legislation on advance pricing agreements (art. 196): the effective date of the unilateral and bilateral/multilateral advance pricing agreements governed by Art. 31-ter of Presidential Decree no. 600/1973, concluded between the Italian tax authorities and enterprises with international activities, can be backdated up to the fiscal years for which the relevant statute of limitations for the tax audit/assessment activity of the Italian tax authorities is not yet elapsed.






    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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