Revocation of a director: who is entitled to challenge the resolution?
The Court of Rome issued a judgment on 4 April 2018 whereby it ruled that resolutions adopted by the shareholders’ meeting in breach of the provisions of the by-laws or laws may be challenged by the entire board of directors and not by a single director.
Indeed, under Section 2377 of the Italian Civil Code, resolutions that have not been adopted in compliance with the by-laws or the applicable law may be challenged by (i) the absent, dissenting or abstaining shareholders; (ii) directors; (iv) the controlling body.
In light of the Court’s decision, reference to “directors” shall be intended as “the board of directors”. Therefore, the entire body may challenge the resolution while the single director is not entitled.
The case involved a director revoked from his office by the resolution of the shareholders’ meeting, which the same director challenged on the following grounds: the revocation from his office was not included as an item on the agenda and therefore the resolution did not comply with the relevant agenda. Accordingly, the director applied to the Court to rule against the resolution and to order his re-appointment.
Based on the abovementioned principle, the Court of Rome stated that (i) the director was not entitled to challenge the decision of the shareholders’ meeting in order to be re-appointed as director, and (ii) he could only request compensation for damages.
The judgment of the Court of Rome is available at the following link: http://www.ilcaso.it/giurisprudenza/archivio/19748.pdf