CORPORATE | Court of Milan on ‘Russian roulette’ clauses

On 28 May 2024, the Court of Milan issued its Order no. 2026, ruling on the legitimacy of certain clauses in companies’  bylaws aimed at overcoming certain situations of decision deadlock in the administrative body and/or shareholders’ meeting. In particular, clauses (including the so-called ‘Russian roulette’ clauses and  ‘Texas shoot out’ clauses) that give one or each of the shareholders the right to activate a procedure at the end of which one of them will be entitled to purchase the shares of the other shareholder(s) (who will be obligated to transfer their participation) are deemed legitimate. Specifically, the Court states that such clauses are justified by the resolution of a deadlock that may arise within the corporate bodies and serve a general interest deserving of protection by the legal system, by safeguarding the company’s business against the risks of inactivity arising from the deadlock itself.

Newsletter n. 100 – October 2024