ADVANT Nctm strengthens its corporate structure with the appointment of Roberto …
In order to deal with the state of emergency related to the spread of the COVID-19 virus (extended, as of today, until 31 March 2022), Italian lawmakers have adopted a series of rules which, if on the one hand are aimed, inter alia, at limiting movements and large gatherings, on the other hand have allowed, notwithstanding social distancing measures, the regular holding of shareholders' (and board of directors') meetings, thus preventing the risk of paralysis of Italian companies' corporate bodies.
This is the framework for Decree Law No. 18 of 17 March 2020, converted into Law No. 27 of 24 April 2020 (the "Cura Italia Decree"), which, in paragraph 2, contains a specific provision allowing any company, as an exception to any other provision (whether of laws, regulations or by-laws), to hold shareholders' meetings exclusively by means of telecommunications.
Given the exceptional nature of the emergency regime, the question has therefore arisen as to the temporary effectiveness of such rules, or rather the advisability of introducing the procedures prescribed in the Cura Italia Decree into the "general" company law.
In this scenario, Maxim No. 200 of 23 November 2021 of the Board of Notaries of Milan is certainly relevant, whereby the Board expressed its opinion on the "legitimacy of clauses in the by-laws of joint stock companies (s.p.a.) and limited liability companies (s.r.l.) which, by allowing participation in the shareholders' meeting by means of telecommunication, pursuant to Article 2370, paragraph 4, of the Italian Civil Code, expressly attribute to the administrative body the power to establish in the notice of call that the meeting be held exclusively by means of telecommunications, omitting the indication of the physical location of the meeting[1]" even after the end of the emergency period.
Article 106, paragraph 2, of the Cura Italia Decree introduced new rules on the methods of participation and exercise of the voting right in both ordinary and extraordinary shareholders' meetings, extending the possibility of resorting to the instruments, already provided for by company law, which allow the performance of such activities without the participants being physically present in the same place.
Indeed, Article 2370, paragraph 4, of the Italian Civil Code expressly provides that "By-laws may allow for participation in the shareholders' meeting by means of telecommunication", thus considering said method of holding shareholders' meetings as a natural and legitimate evolution of the collegial method in the light of modern telecommunication means[2].
Through the Cura Italia Decree, lawmakers have chosen to widen the range of methods of holding shareholders' meetings by allowing: (i) on the one hand, the use of telecommunication means even in the presence of clauses in the by-laws preventing or limiting it, or even in the absence of clauses in the by-laws providing for it, as required by the aforementioned Article 2370, paragraph 4 of the Italian Civil Code; (ii) on the other hand, the possibility for shareholders and other eligible persons to participate in shareholders' meetings exclusively by telecommunication means without the need to convene the meetings in a specific physical location provided that the identification of the participants, their participation and the exercise of their voting rights is guaranteed.
It follows that, within the emergency framework, shareholders' meetings can be held in three different ways[3]:
However, the question has been raised by legal scholars as to whether, if the shareholders' meeting is held exclusively by audio and/or video conference, it is still necessary to indicate a physical location for the meeting, or such indication can be considered superfluous and replaced by the virtual location where the meeting is held[4].
In this respect, some legal scholars[5], highlighting the exceptional and temporary nature of the emergency regulations, had argued the need to interpret such provisions in accordance with the standard approach of the legislator on the holding of shareholders' meetings which, even in the cases referred to in Article 2370, paragraph 4 of the Italian Civil Code, provides for shareholders' meetings to be convened in a physical location.
In this regard, the Board of Notaries of Milan, in the grounds for its Maxim No. 187/2020[6], expressed an opinion to the contrary, pointing out, as a direct consequence of the provisions of Article 106, paragraph 2, of the Cura Italia Decree, the fact that in such cases the meeting shall not be convened in a physical location[7].
In the opinion of the Board of Notaries of Milan[8], a direct consequence of said rule is the fact that whenever the notice of call provides exclusively for participation by means of telecommunications, without indicating a specific physical place where the meeting is to be held (or indicating it for other purposes or in any event without anyone being able to access it), the presence of any person in any specific place is not required[9].
It further follows that the "minimum and necessary" physical presence of the chairman and secretary at the place where the meeting is convened as a consequence of the provision in Article 2370 of the Italian Civil Code is no longer required[10].
The emergency rules mentioned above and the resulting virtual meeting tools have undoubtedly made the exercise of business activities easier during the emergency situation.
With a view to the end of the emergency regime, operators and scholars - as mentioned above - wondered about the possibility that, regardless of the framework of Article 106, paragraph 2 of the Cura Italia Decree and apart from the cases of plenary meetings, shareholders' meetings may be convened without indicating any physical location, but only by means of telecommunications
The issue, already addressed by some legal scholars[11], was recently dealt with by the Board of Notaries of Milan in its Maxim No. 200/2021.
In particular, the Board of Notaries of Milan makes its considerations based on the assumption that the temporary effectiveness of the rules set out in Article 106, paragraph 2, of the Cura Italia Decree does not reduce its relevance but, as a matter of fact, confirms and reinforces the ability of the new means of communication to protect the principles that regulate the formation of the will in the collegiate bodies and the shareholders' rights.
Even if at a first reading several provisions of the Italian Civil Code would appear to run counter to the conclusion accepted in the Maxim, according to the notarial interpretation they should be read in an evolutionary perspective in consideration of the opportunities made available by modern technology, and namely:
In the grounds for Maxim No. 200/2021, the Board of Notaries considered also the systematic and functional aspects of the issue, pointing out that the holding of the shareholders’ meeting exclusively by means of telecommunications does not in itself amount to a potential infringement of the principles of collegiality, good faith and equal treatment of shareholders[13].
On the contrary, if the rationale of the rules in question is precisely that of favouring the exercise of corporate rights, it can certainly be stated that such rights are more effectively safeguarded in a meeting to be held exclusively by videoconference rather than in a meeting convened anywhere (in Italy or in Europe under the specific terms of the by-laws)[14].
In consideration of the above, the Board of Notaries came to the conclusion – on which we agree - that "in the presence of a clause in the by-laws that generically allows participation in the meeting by means of telecommunications, the administrative body (or, in any event, the person calling the meeting) may lawfully state in the notice of call that the meeting will be held exclusively by means of telecommunications, omitting details of the physical location of the meeting while specifying the connection methods” [15].
It should also be pointed out that, according to the interpretation of Notaries, the above-mentioned conclusions concerning the procedures for holding the Shareholders' Meeting must be deemed a fortiori also applicable to the meetings of other corporate bodies, especially the Board of Directors and the Board of Statutory Auditors, even in the absence of a clause in the by-laws expressly providing for the possibility of convening the Board only by telecommunication means (provided that there is a generic provision in the by-laws which, pursuant to Articles 2388, paragraph 1, and 2404, paragraph 1, of the Italian Civil Code, allows participation by such means).
Maxim No. 200/2021 does not deal with the possibility that the Chairman and the Secretary (or the Public Official) may be in different places when participating in the meeting by means of telecommunications, while referring to the considerations previously made in its Maxim No. 187/2020[16].
Although such Maxim is set in the exceptional context of the emergency regime, the underlying rationale seems to be the same as that underlying the grounds for Maxim 200/2021, i.e. the evolutionary interpretation of the place to be stated in the notice of call, no longer only as a "physical" place but also as a "virtual" place [17].
In light of the above, it does not seem unreasonable to believe that, also in a post-Covid context, the Shareholders' Meeting (and the meetings of the Board of Directors and the Board of Statutory Auditors) should be deemed legitimately held even if the Secretary and the Chairman are not in the same place, precisely due to: (i) the fact that there is no longer a need to convene the Shareholders' Meeting in a specific physical location and (ii) the legitimacy of the notices of call providing for Shareholders' Meetings to be held exclusively by means of telecommunications.
Despite the convincing arguments of the authoritative Board of Notaries referred to herein, some scholars[18] have, however, expressed a contrary view, emphasizing the temporary nature of the provisions of Article 106, paragraph 2, of the Cura Italia Decree - involving the cessation of their effect upon termination of the emergency situation - which explains the recourse to emergency lawmaking[19].
Therefore, we can only wait for the hoped-for end of the epidemic emergency to carry out more in-depth assessments based on the evolution of the interpretation of legal scholars and case law and the practical follow-up.
This article is for information purposes only and is not, and cannot be intended as, a professional opinion on the topics dealt with. For further information please contact Paolo Gallarati, Filippo Federici and Martina Da Re.
[1] See Board of Notaries of Milan, " Clausole statutarie che legittimano la convocazione delle assemblee esclusivamente mediante mezzi di telecomunicazione (artt. 2363, comma 1; 2366, comma 1; 2370, comma 4; e 2479-bis c.c.)", Maxim No. 200, 2021.
[2] See F. Magliulo, Article 2370, in Commentario romano al nuovo diritto delle società, edited by F. D'Alessandro, II, 1, Padua, 684, who points out that "The use of telecommunications must be considered in any case as a form of participation in the shareholders' meeting, albeit at a distance, provided that the collegial method and the principles of good faith and equal treatment of shareholders are fully complied with".
[3] See F. Magliulo, Article 2370, in Commentario romano al nuovo diritto delle società, edited by F. D'Alessandro, II, 1, Padua, 684, who points out that "The use of telecommunications must be considered in any case as a form of participation in the shareholders' meeting, albeit at a distance, provided that the collegial method and the principles of good faith and equal treatment of shareholders are fully complied with".
[4] In this regard, it is also interesting to note the change of view of Assonime, which in Faq No. 1, "Place of the meeting and participation - Is it necessary to indicate the place of a meeting held exclusively through telecommunication means?", first stated that " [...] lawmakers do not consider the meeting held by telecommunication means as a real virtual meeting on the network, but rather as a form of remote participation with respect to a specific physical place. Consequently, even if the meeting is held exclusively by telecommunications means, the company should still be required to indicate, in the notice of call, the physical location of the meeting, pursuant to Article 2366 of the Italian Civil Code” and in a version updated on 10 March 2021 of the same Faq: " [...] According to the interpretation of the Board of Notaries of Milan (see the grounds for Maxim No. 187 of 2020), if the company establishes that participation in the shareholders' meeting may take place exclusively through telecommunication means," the meeting, as in the case of a plenary meeting, will not be convened in a physical location. The same applies in cases where the company, although availing itself of the possibility of establishing that those eligible to attend the meeting may do so only by means of telecommunications, nevertheless indicates a specific physical location in the notice of call. Indeed, besides having no significant legal relevance, said indication is not such as to involve the existence of the place of the meeting in the proper sense, since it will not be possible, even in theory, for anybody to physically attend the meeting". According to such interpretation, one may assume that, in the case of meetings held exclusively by means of telecommunications, it is not necessary to indicate in the notice of call the place where the meeting is to be held.".
[5] See Assonime and its Faq No. 1 mentioned above (original version).
[6] See Board of Notaries of Milan, "Intervento in Assemblea mediante mezzi di telecomunicazioni (Articles 2366, paragraph 4, 2370, paragraph 4, 2388, paragraph 1, 2404, paragraph 1, and 2479-bis, c.c.; Article 106, paragraph 2, d.l. 18/2020)", Maximum No. 187, 2020.
[7] See Board of Notaries of Milan, Maxim No. 187, 2020, cit, in whose grounds it is stated that “The same applies in cases where the company, although availing itself of the possibility of establishing that those eligible to attend the meeting may do so only by means of telecommunications, nevertheless indicates a specific physical location in the notice of call. Indeed, besides having no significant legal relevance, said indication is not such as to involve the existence of the place of the meeting in the proper sense, since it will not be possible, even in theory, for anybody to “physically” attend the meeting”.
[8] See Board of Notaries of Milan, Maxim No. 187, 2020, cit, in whose grounds it is stated that “Even in such circumstances, therefore, the secretary taking the minutes attends the meeting only by telecommunications means and records the entire decision-making process on the basis of what is so perceived , it being understood that, in cases where minutes are drawn up as a public deed, the notary certifying the minutes must in any event be in a place within his or her territorial area under the Notary Law”.
[9] See in the same sense also Atlante - Maltoni – C. Marchetti - Notari - Roveda, “Le disposizioni in materia societaria nel Decreto-legge COVID-19 (Decreto legge 17 marzo 2020, n. 18). Profili applicativi”, in Federnotizie, 30 March 2020 and A. Busani, “Assemblee e Cda in audio-video conferenza durante e dopo COVID-19”, in Le Società 04/2020.
[10] In the grounds for Maxim No. 187/2020, the Board of Notaries of Milan on the other hand resolved in the affirmative the question of the necessary physical presence in the place where the meeting is convened of the Chairman and/or the Secretary when intervention in the meeting is permitted also by means of telecommunications and, therefore, in case of a meeting convened in a physical place: “It follows that, while there is nothing to prevent the chairman from not being physically present at the place where the meeting is convened - with him or her being able to assess his or her capacity to conduct the meeting also by means of telecommunications, depending on the specific factual circumstances - it seems that a shareholders' meeting cannot be properly conducted without the physical presence of the secretary or notary at the place where the meeting is convened (except in cases where there is no physical place to convene the meeting)”. Maximum No. 187, 2020, cit. See in the same sense also A. Busani, “Assemblee e Cda in audio-video conferenza durante e dopo COVID-19”, cit.
[11] A. Busani, “Assemblee e Cda in audio-video conferenza durante e dopo COVID-19”, cit..
[12] See Board of Notaries of Milan, Maxim No. 200, 2021, cit, in whose grounds it is stated that “Indeed, if lawmakers had intended to fully exclude the legitimacy of provisions in the by-laws allowing for participation in the meeting only by remote means, the provision should have specified that the clause "may allow participation in the meeting also by means of telecommunication”.
[13] See Board of Notaries of Milan, Maxim No. 200, 2021, cit, in whose grounds it is stated that “This does not seem to be the case with regard to the principle of collegiality, which is in any event guaranteed by current technological solutions, which allow - and indeed to a certain extent encourage - dialogue between participants and the exchange of documents in near real time. Similarly, both the principle of good faith and that of equal treatment of participants can be considered respected whenever the company makes the necessary electronic connections available to all those entitled, without discriminating between shareholders and without compromising their right to participate, discuss and cast their vote”.
[14] See Board of Notaries of Milan, Maxim No. 200, 2021, cit, in whose grounds it is stated that “Between a shareholder (if any) "forced" to go to any of the physical locations falling within the geographical perimeter of said clauses and a shareholder (if any) "forced" to use a telephone or a videoconference platform, which have now become commonplace in all areas of the company, it seems possible to say that it is the former, and not the latter, who risks a greater compression of its administrative rights and of its right to participate in the meeting's decision-making process”.
[15] See Board of Notaries of Milan, Maxim No. 200, 2021, cit.
[16] See footnote in paragraph 2.
[17] See Board of Notaries of Milan, Maxim No. 200, 2021, cit., where it is stated that “In other words, what matters is the circumstance that the shareholders' meeting is not convened at a physical location and that participation by means of telecommunications is allowed. If such conditions are met (...), the location of the various participants is not relevant, it being understood that, in cases where the minutes are drawn up in a form as a public deed, the notary drawing up the minutes must in any event be in a place within his or her territorial jurisdiction under [Italian] Notarial Law”.
[18] See in particular A. Luciano in “La riunione assembleare virtuale tra diritto societario comune e disciplina emergenziale: a proposito di una recente Massima del Consiglio Notarile di Milano” in Il Societario, focus of 13 December 2020.
[19] See in particular A. Luciano in “La riunione assembleare virtuale tra diritto societario comune e disciplina emergenziale: a proposito di una recente Massima del Consiglio Notarile di Milano”, cit., where it is stated: “[…] if a merely virtual shareholders' meeting could always be freely convened (under a provision in the by-laws allowing remote participation pursuant to Article 2370, paragraph 4, of the Italian Civil Code), it would be difficult to understand why emergency lawmakers felt it necessary to specify that, during the pandemic crisis, companies are endowed with such a power and that such power is bound to cease at the end of said crisis.”.
