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The shareholder's conflict of interest in shareholders' meeting resolutions.

[:it]Conflict of interest could be defined as the limitation that the shareholder encounters in his right to vote.

It is important to remember that two prerequisites are necessary for this to be effectively configured:

  1. that the partner pursues its own end
  2. that said end contrasts concretely with the general interest of society[1]

The question therefore arises as to what happens if a shareholder with a conflict of interest votes on a resolution of the shareholders' meeting of a public limited liability company to bring a corporate liability action against the director.

While theArticle 2373 of the Civil Code prior to reform expressly sanctioned a ban on voting by the shareholder in conflict of interest, the current layoutInstead, it gives the shareholder the choice between voting by renouncing his potentially conflicting personal interest or abstaining from voting.

Should the latter opt for abstention, Art. 2368 para. 3 provides that the shares are counted towards the attainment of the quorum constitutivebut not for the purpose of calculating that deliberative. It is important to note that the contestability of the resolution is rightly subject to the fact that the vote of the shareholder in conflict of interest was decisive in reaching a quorum.

Therefore, the shareholder's voting right is remitted ex Article 2373 (1) to its appreciation of the consequences that may ensue. The resolution of the shareholders' meeting therefore retains its validity intact unless it was passed with the casting vote of the conflicting shareholder. The latter will then be free to choose whether or not to abstain from voting.[2]

Another question is whether the shareholder-directors may vote on resolutions concerning their respective liabilities. In fact, although Art. 2373 para. 2 expressly states a prohibition for such a hypothesis, the question arises as to whether the shareholders' meeting is called upon to resolve on a liability action of director Caius, Tizio (also a shareholder-director), may exercise his voting right.

An important arbitration award recently expressed itself on this point, stating that: "at in accordance with the principle of vicarious liability, the shareholder's vote on the liability of the other directors is admissible and must therefore be counted towards the quorum for passing a resolution, the prohibition under Article 2373(2) of the Civil Code applying only when the resolution concerns the liability of the voting shareholder himself and not when the resolution concerns the liability of another director"[3].

ABSTRACT

  • for the conflict of interest to exist, it is necessary that the shareholder pursues its own end and that this end is in concrete conflict with the general interest of the company
  • the current provision of Article 2373 gives the shareholder the choice between voting by renouncing his potentially conflicting personal interest or abstaining from voting
  • in the event of abstention, Art. 2368 para. 3 provides that the shares are counted for the purposes of reaching the constitutive quorum, but not for the purposes of calculating the deliberative quorum
  • the appealability of the resolution is subject to the fact that the vote of the shareholder in conflict of interest was decisive for the attainment of the quorum
  • Although Art. 2373 para. 2 prohibits member-directors from voting on resolutions concerning their respective liabilities, in accordance with the principle of vicarious liability, the vote of the member-director on the liability of the other directors is permissible

[1] It must be borne in mind that the interest must be objectively in conflict with the corporate interest. If this is not demonstrated, the resolution cannot be annulled, even if it turns out that the vote was cast e.g. out of personal spite against the directors or to gain an advantage over the other shareholders (Commented Code of S.p.A., Fauceglia - Schiano di Pepe, 2007, UTET)

[2] Corporate Law, Gastone Cottino, pg. 346 ff., 2006 CEDAM

[3] Arbitration Board, 2 July 2009, Jur. comm. 2010, 5, 911, note De Pra

 

 

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