Is the pre-emption clause enforceable against a change of control?
1 Settembre 2017
On May 9, 2017, the Court of Rome (the Court) stated that the change of control over a shareholder of an Italian joint stock company (Società per Azioni) does not trigger the pre-emption right provided by the company’s by-laws in favor of its shareholders.

In the case at hand, shareholder A owned a participation in joint stock company B and the by-laws of B provided a pre-emption right in favor of its shareholders.

The equity-holders of A transferred 100% of A’s quotas to another company C, so that C acquired control over A. At this point, certain other shareholders of B brought before the Court of Rome A, its former owners and C, claiming that the transfer was in breach of the pre-emption right provided by the by-laws in their favor, and that such a transfer could, therefore, not be enforced against them.

In particular, the other shareholders of B claimed that, although A formally remained the owner of B’s shares, since C acquired control over A, C became indirectly the new shareholder of B.

According to the Court of Rome a change of control over a shareholder does not trigger the pre-emption clause for two reasons:

(i)                because the pre-emption right requires a transfer of the quotas owned by a shareholder, while it cannot be recognized in the event of a change of control over a shareholder of the same company; and

(ii)              because the by-laws of a company are binding only for the shareholders of the company, not for other parties (such as the former and new owners of A in the case at hand).

The order of the Court of Rome is available at the following link: http://www.giurisprudenzadelleimprese.it/wordpress/wp-content/uploads/2017/07/20170509_RG11688-2017-2.pdf

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