Capital Markets - Mergers and Acquisitions, Private Equity

On the waiver agreements of the liability action against directors

In the sale and purchase agreements clauses by which the purchaser, who will assume the company’s control, undertakes not to vote in favour of the exercise of the liability action pursuant to Article 2393 of the Italian Civil Code, as well as not to bring any liability action against the resigning directors pursuant to Articles 2393-bis and 2395 of the Italian Civil Code, are widely used. However, the possible translation of such provision into the shareholders’ resolution held by the new majority shareholder immediately after the transfer of the controlling shareholding is still an open issue.

The agreements by which the purchaser undertakes to indemnify and keep harmless the resigning directors from any loss, damage or liability connected to the performance of their duties are also very common and used. Unlike the agreements above, these latter do not exclude that a liability action could be brought, neither discharge the resigning director, but they transfer the risk related to the consequences of a positive assessment of the director’s liability – both contractual and extra-contractual – to the person granting full discharge.

These agreements, however, even though they are strictly connected with the agreements firstly mentioned, do not constitute part of the present article and they will be dealt with separately.

Going back to the agreements by which the directors are fully discharged from their liabilities, the scope is that to preserve the economic balance reached by the parties by means of the so-called representations and warranties; the aim is, in fact, to avoid that the purchaser could get the dual advantage of the indemnity and of the reintegration of the corporate capital by bringing a liability action against the directors.

We deem appropriate to deal with the matter of the present article, not only because it is in the practice’s interest, but also because it is subject to recent evaluations in the jurisprudential and doctrinal debate.

This matter, however, shall be dealt with care considering that jurisprudence and doctrine have held very different positions over the years.

The starting point of the recognition it is represented by Article 2393, paragraph 6 of the Italian Civil Code, which provides that, through a shareholders’ meeting’s resolution, the company might give up to bring a liability action unless a minority of shareholders representing at least 1/5 of the corporate capital, or the different percentage provided by the company’s by-laws for the exercise of the liability action itself, would make opposition to the such waiver.

Contrary to the recognition of the legitimacy of the waiver agreements the jurisprudence which, starting from the nineties [see Supreme Cassation Court, on 27 July 1994, no. 7030], has ascertained the invalidity of such agreements due to the breach of the company’s interest (in other words the interest of the company to get the indemnity for the benefit of its corporate capital) and the contrariety to the purposes according to the mandatory provisions of law.

In subsequent time this interpretation consolidated so much that the Supreme Cassation Court [Supreme Cassation Court, on 28 April 2010, no. 10215] expressly stated the invalidity of such agreements due to an object (the performance relating to the waiver of the liability action) or common reasons unlawful since the agreement was concluded in the only interest of the shareholders and to the detriment of the company’s interest.

The Milan Court too has declared itself in favour of the legitimacy of the above mentioned jurisprudence [Milan Court, on 16 June 2014, no. 7946]. It has declared in fact the invalidity of the waiver agreements observing that, in the debated matter, the obligation not to exercise the action was substantially equal to the waiver of the liability action, insofar the company exercising that action would have lost, through the merger of the buying Company, any interest to proceed while contemporarily obliged not to bring the liability action itself.

The doctrine too, even though in a different way than the jurisprudence, has many times affirmed the invalidity of the above mentioned agreements. According to a first view, the commitment taken by the shareholder towards the concerned director is invalid because the conflicting issue should be in charge of the promising part making this commitment breaching the mandatory substance of the rule [C. Cottino, Le convenzioni di voto nelle società commerciali, Milan, 1958, p. 247].

Another doctrine [G. Oppo, Le convenzioni parasociali tra diritti delle obbligazioni e diritto delle società, in Riv. dir. civ., 1987, p. 517] moves from the need to respect the collaborating reason that justifies the existence of the company itself, thus considering invalid any pact aiming at operating against the company’s interest.

A third doctrine deems invalid all the clauses releasing directors from their responsibilities even in case of a slight negligence, providing the mandatory nature of Article 2392 of the Italian Civil Code, making reference to the provisions of Article 1229 of the Italian Civil Code and to the nature of public order of the provisions regarding the directors’ responsibilities as they are established to guarantee third parties [G.A. Rescio, Convenzioni di voto: note a margine di recenti provvedimenti, in Riv. dir. priv., 1996, p. 122 ss.].

All these theories, nevertheless, do not exhaust the issue of the agreements for the waiver of the liability actions, as jurisprudence and doctrine have also created theories that are in favour of such agreements.

The jurisprudence itself [Milan Court, on 10 February 2000] has stated that the resolution on the waiver of the liability action might release the directors from their responsibility provided that it includes a specific and clear determination of the administrative acts which could lead to an indemnity claim.

Rome Court [Rome Court, on 28 September 2015, no. 19193] was coherent with the above mentioned statement as, opposite to what affirmed the previous year by Milan Court [Milan Court, on 16 June 2014, no. 7946], it admitted the validity of the agreements through which shareholders undertake not to bring any liability action against the outgoing directors after the termination of their office. In this case the Court has only admitted the invalidity of the agreements which provide for the pre-emptive waiver of the liability action against any kind of conduct taken by the outgoing directors during their office.

These views have also been shared by the doctrine that has affirmed the validity of the above mentioned agreements based on the legitimacy of the commitment to take actions or keep conducts that, by themselves, can result from free determinations concerning patrimonial assets and it being absent any mandatory rule which they might be inconsistent with [B. Visentini, I sindacati di voto: realtà e prospettive, in Riv. soc., 1988, p. 15 ss.; A. Tina, L’esonero da responsabilità degli amministratori di s.p.a., Milano, 2008, p. 325 ss.].

The doctrine has also affirmed that the waiver, besides being expressed, must have a well identified content. According also to the view of the “possibilist” jurisprudence, the resolution for the waiver shall indicate specific actions or violations from which indemnity claims could raise; in fact only in this way the object of the waiver would be determinate or determinable (Article 1346 of the Italian Civil Code) and the shareholders’ meeting would be in the position to take an aware evaluation of the waiver [F. Bonelli, Gli amministratori di s.p.a., Milano, p. 197].

A broader view on this matter has been taken by the most recent doctrine; in particular, the doctrine has deemed appropriate to distinguish between rules that regulate relations between directors and the company and rules that regulate the responsibility vis-à-vis company’s creditors, as the first ones aim at protecting the corporate capital, thus granting the shareholders community’s interests, while the second ones protect creditors’ and third parties’ interests [A. Picciau, Sulla validità dei patti parasociali di rinunzia all’azione di responsabilità e di manleva nelle s.p.a., in Riv. soc., 2016, p. 301 ss.].

According to this latter position, it seems consistent with the complex of rules established by the legislator to admit that Article 2393 of the Italian Civil Code, which regulates the relations between the managing body and the company, can be derogated, while the issue of the responsibility towards third parties and creditors is regulated in a specific and different way by Article 2394 of the Italian Civil Code [A. Picciau, loc. cit., p. 307].

As far as the legitimacy of the waiver is concerned, according to the rules of procedure provided by Article 2393 of the Italian Civil Code regarding the matter of the liability, the doctrine itself [widely on this point, A. Picciau, loc. cit., p. 304 ss.] disagree with the strict views of the jurisprudence. These latter acknowledged mandatory nature to those rules and looked at the above mentioned waiver agreement as a their violation. In fact the law, when providing the shareholders with the right to dispose of the indemnity, through the waiver or an agreement on the liability action, would clearly indicate that those rules are not established to guarantee general interests but to protect the interest of the shareholders community.

In light of all the above, it seems clear that doctrine and jurisprudence have not developed yet a consistent orientation with respect to the subject matter of the present article; however, as it is demonstrated by the “possibilist” jurisprudence and by the most recent doctrine, a broader view affirming the validity of the waiver agreements of the liability action against directors has been increasingly developing.



The contents of this article is meant for informative purposes only and cannot be considered as professional advice. For further information please contact articoliM&


Get our latest news