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The amendment of the clause in the Bylaws relating to the distribution of profits justifies the right of withdrawal of minority shareholders

Civil Supreme Court, section I, Ruling no. 13845 of 22 May 2019. Est. Terrusi

data: 07.05.2020
Area: Corporate, M&A

In its Ruling no. 13845 of 22 May 2019, the Italian Supreme Court clarified that, with regards to a withdrawal from a joint-stock company, the term “participation rights” of Article 2437, letter g) of the Italian Civil Code also includes patrimonial rights implied by the right to participate, which includes the right relating to the percentage of the profit distributable under the articles of association. Consequently, if a clause in the bylaws directly related to the distribution of profit is modified, to the point of negatively affecting the shareholders’ property rights, the Court recognizes the legitimate exercise of withdrawal by the minority shareholders. The same conclusion must also be reached if the amendment reduces the permissible percentage of distribution of the profit for the year in view of the increase in the percentage to be allocated to reserves.

The amendment of the clause in the Bylaws relating to the distribution of profits justifies the right of withdrawal of minority shareholders

Civil Supreme Court, section I, Ruling no. 13845 of 22 May 2019. Est. Terrusi

data: 07.05.2020
Area: Corporate, M&A

In its Ruling no. 13845 of 22 May 2019, the Italian Supreme Court clarified that, with regards to a withdrawal from a joint-stock company, the term “participation rights” of Article 2437, letter g) of the Italian Civil Code also includes patrimonial rights implied by the right to participate, which includes the right relating to the percentage of the profit distributable under the articles of association. Consequently, if a clause in the bylaws directly related to the distribution of profit is modified, to the point of negatively affecting the shareholders’ property rights, the Court recognizes the legitimate exercise of withdrawal by the minority shareholders. The same conclusion must also be reached if the amendment reduces the permissible percentage of distribution of the profit for the year in view of the increase in the percentage to be allocated to reserves.