When are transfers of quotas of limited liability companies effective?

According to the Italian Supreme Court (Order No. 31051 of November 27, 2019), the transfer of quotas of an Italian limited liability company (società a responsabilità limitata, in brief “S.r.l.”) shall be effective vis-à-vis the company as from the time the relevant deed of transfer is entered in the Register of Enterprises. This is a general principle that also applies to the pledging of S.r.l. quotas, which therefore—according to the Supreme Court—shall be effective once the deed of pledge is entered in the Register of Enterprises.

The decision at hand is noteworthy, as it supersedes the statutory rules and current business practices for transfer of S.r.l. quotas.

Pursuant to Article 2470, Paragraph 1, of the Italian Civil Code, the transfer of S.r.l. quotas is effective vis-à-vis the company starting from the time the deed of transfer is filed with the competent Register of Enterprises. From that moment, the purchaser of the quotas is entitled to exercise its corporate rights vis-à-vis the company, e.g. the right to vote at equity-holders’ meetings, the right to receive dividends and the right to subscribe company’s newly-issued quotas.

In its decision, the Supreme Court argued that using the date of filing with the Register of Enterprises Companies — rather than the date of entry into the register — as the effective date of transfer of S.r.l. quotas may impair the security and stability of the trading of quotas. In addition, the Court underlines that in the Italian Civil Code certain effects (e.g. preference of one purchaser in case of sale of the same quotas to multiple purchasers) are tied to entry in the Register of Enterprises rather than to filing. The order of the Supreme Court is available at the following link: https://www.gazzettanotarile.com/wp-content/uploads/2019/12/Cass_n_31051_2019.pdf

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