Obligation to justify shareholders’ resolutions

We can observe, as also stated on several occasions by the Court of Cassation[1], that, according to the rules of the Italian Civil Code, there isn’t a general principle of obligation to justify shareholders’ resolutions passed by limited liability companies or joint-stock companies. On the contrary, the provisions of the Italian Civil Code show the rule that the majority of shareholders’ meetings legitimately take decisions without the need for a specific justification.

In confirmation of this assumption, it should be noted that the legislator has only provided for certain specific cases in which an obligation to justify the resolutions is expressly required, i.e. in the cases described in articles 2441, paragraph 5, of the Italian Civil Code and 2497-ter of the Italian Civil Code.

Pursuant to the article 2441, paragraph 5 of the Italian Civil Code, regarding joint-stock companies, the decisions to increase capital with the exclusion or limitation of shareholders’ first refusal rights may be legitimately made only if the reasons for the exclusion of the aforementioned right are precisely justified. It should be noted that, even if the exclusion of first refusal rights should result from the decision to approve a capital increase by means of certain contributions in kind and not in money, it is also in this case  necessary to indicate the reasons underlying the identification of this type of contribution.

On the contrary, the rules governing limited liability companies do not provide for a rule similar to Article 2441, paragraph 5, of the Italian Civil Code. Therefore, limited liability companies can always legitimately approve capital increase resolutions without having to justify them. On the other hand, joint-stock companies are not obliged to justify a resolution to increase their capital only if it does not in any way limit the exercise of first refusal rights.

Article 2497 ter of the Italian Civil Code, regarding subsidiary companies, and therefore companies subjected to the management and coordination of other companies, expressly provides that the decisions of the shareholders’ meeting or of the Board of directors must be clearly justified, indicating the reasons underlain the resolutions. Precisely, the reasons must include not only the interests involved of the company that has made the decision, but also the interests of the group, the holding company and the other subsidiaries. To this end, it is considered that such interests are legitimate on condition that the company adopting the decision does not suffer any damage, unless such damage is offset by benefits deriving from the resolved transaction.

In addition to the cases indicated in the Civil Code, doctrine and jurisprudence agree that there are other cases[2] in which it is mandatory to justify the shareholders’ resolution, such as, for example, resolutions to terminate the company relationship in the event of exclusion of the shareholder or revocation of the director. In such cases, in fact, resolutions are considered legitimate only if taken after the occurrence of certain conditions set out in the By-laws or in the law itself. Therefore, the resolution of exclusion or revocation shall clearly indicate the occurrence of such conditions.

In conclusion, it should be noted that the obligation to justify shareholders’ resolutions is limited to the cases identified by the common doctrinal and jurisprudential interpretation and by the cases indicated by the legislator, examined above. Therefore, we can observe that the Italian law, regarding companies, prefer to guarantee shareholders freedom of determination without necessarily binding them to state the reasons for their decisions.

[1]   Court of Cassation, Sentence no. 15647 of 22 July 2020;

[2]   Court of Cassation, Sentence no. 2037 of 26 January 2018.