Withdrawal right - Italian corporate law

Careful: once upon a time, this page must have seemed like a good idea, but I don't maintain it any more. I’ve moved on. You may find it useful, but it may be badly out of date, and (as always) it might have been flat out wrong in the first place. Use with even more caution than normal.

Under Italian Law a shareholder on the Record Date who does not vote in favour of a proposed merger acquires a “withdrawal right” if the merger is approved. The withdrawal right allows a shareholder who abstained or voted against the merger to be cashed out of the equity at a pre-defined price equal to the average closing price published by Borsa Italiana for the six months prior to the notification date for the merger. It is therefore possible that the withdrawal right as a call option over the stock. It is only exercisable if the shareholder does not vote.

Thanks to Article 2437 of the Italian Civil Code, under Italian Law, shareholders of Italian joint stock companies are entitled to exercise cash exit rights whenever a resolution is adopted at a shareholders’ meeting of shareholders with respect to, inter alia:

• a change in the business purpose of the company;
• a change in the legal form of the company;
• the transfer of the registered office of the company outside of Italy;
• revocation of the winding-up of the Company;
• change of the corporate and economic rights attached to the shares as provided for in the by-laws; or
• a merger in which the shareholders of a listed company receive shares which are not listed on a regulated stock market in Italy.

Cash exit rights can only be exercised by shareholders who did not concur in the approval of the resolution. After the merger, the former shareholders of the Italian joint stock company will no longer have appraisal rights or cash exit rights.

Cash exit rights can be exercised for all or part of the shares held by the relevant shareholder. In order to validly exercise their cash exit rights, shareholders entitled to do so must send notice thereof to the company by registered mail within 15 days after the publication in the Companies’ Register of the resolution approved at the special meeting of shareholders. The shares with respect to which cash exit rights are being exercised cannot be sold by the relevant shareholder and must be deposited with the company (or the relevant intermediary).

The right of withdrawal will be subject to completion of the cross-border merger. The merger itself is subject to certain conditions precedent, including the total amount payable to shareholders exercising the right of withdrawal and to Fiat Industrial creditors opposing the merger not exceeding

Stock Loans

Interesting in the context of Stock Loans, particularly as regards corporate sctions and voting rights with respect thereto - see the commentary at Paragraph 6 of the 2010 GMSLA.

Examples

Cross-border merger of Fiat Industrial S.p.A. with and into FI CBM Holdings N.V.,