Simul stabunt simul cadent clauses are clauses generally included in the by-laws of Italian companies whereby the termination of the office of one or more directors triggers termination of all the other directors’ offices.
Such clauses are usually aimed at maintaining the same management structure, as originally determined by the shareholders, by encouraging directors (who are aware that the resignation of one of them will trigger termination of the entire management body) to act in concert.
It is easy to understand that simul stabunt simul cadent clauses can be used unlawfully to keep unwanted directors off of the board without cause. This happens when such clauses are activated for the sole purpose of excluding certain directors from the board and avoiding paying them the indemnities they would be entitled to receive if they were revoked from their office without cause.
In a case recently examined by the Court of Milan, as part of a broader transaction and corporate reorganization process:
1. some directors resigned from their office, triggering the simul stabunt simul cadent clause set forth in the by-laws;
2. as a consequence, the claimant ceased to hold office as a director, as did all the other directors;
3. a new board of directors was appointed;
4. the claimant was not re-appointed as a member of the new board.
The claimant asked the Court to order the company to pay damages he had suffered due to the circumstance that he was not re-elected and that the company did not explain the reasons behind that decision and did not give him adequate notice.
The Court of Milan rejected the claimant’s requests since (a) he did not provide evidence that the simul stabunt simul cadent clause was activated with the sole aim of excluding him from the board and (b) in any case, resignations of the other board members (which triggered the simul stabunt simul cadent mechanism) were part of a broader corporate transaction.
 Decision of January 14, 2020.