The Court of Appeal of Naples[1] confirmed the principle whereby transfers of equity in Italian limited liability companies (“Società a responsabilità limitata”) are valid between the buyer and seller regardless of the fulfillment of the transfer formalities provided by law (i.e. execution of a written deed of transfer before a Notary Public and enrollment of such deed with the Companies’ House).
Indeed, such formalities are aimed only at making the transfer enforceable vis-à-vis third parties and should not be interpreted as conditions for the transfer to be valid/enforceable between the parties to the transfer.
Consequently, based on the Italian law principle whereby the parties are free to choose the form of contractual arrangements, equity in limited liability companies can be validly transferred also by means of oral agreements.
Furthermore, the Court stated that there is no provision of law which prevents the parties from agreeing on transferring equity before a limited liability company is formally incorporated (i.e. before the company is enrolled with the Companies’ House).
Indeed, the Italian law principle[2] whereby joint stock companies (“Società per Azioni”) are forbidden from issuing shares before the incorporation process is completed (i) does not prevent the parties from agreeing on transfers of equity and (ii) in any case, is not applicable to limited liability companies.
You can find the Judgment of the Court of Appeal of Naples at this link.
[1] Judgment no. 1999 of April 11, 2019.
[2] Section 2331 of the Italian Civil Code.
