ITALY Law and Practice Contributed by: Maurizio Marullo, Giorgio Vagnoni, Claudia Marongiu and Pasquale Ambrosio Cepparulo, LAWP Studio Legale e Tributario
Italian laws allow issuance of special classes of shares or the attribution of specific rights to members (as the case may be) with rights which are not proportionate to the contributions made by the members (eg, shares with limited voting rights), so that it is possible for the funding member to provide capital without altering the ownership and voting structure of the company. 6.4 Deadlocks As referred to in 6.1 Drafting and Structure of the Agreement , the JV agreement usually sets out spe - cific mechanisms to resolve deadlock situations, which can be generally classified into three different categories. Deadlock resolution can involve: • negotiation clauses, such as granting a casting vote or appointing an independent arbitrator; • buy-sell provisions, facilitating share transfer and leading to a co-venturer’s exit. Common buy-sell options include: (a) Russian roulette clauses: one co-venturer pro - poses a price, the other can accept or counter with the same offer; (b) Texas shootout clauses: co-venturers submit offers to an independent expert, the highest offer buys shares; and (c) put/call options: one co-venturer is obliged to sell or buy shares at a set price. 6.5 Other Documentation To manage the commercial and operational aspects of the JV, in addition to the JV agreement, one or more of the following ancillary agreements may be executed, depending on the company’s activity: • shareholders’ agreements; • directorship agreements or employment agree - ments; • intellectual property assignments or licence agree - ments; • asset transfer agreements; • manufacturing agreements; • supply and distribution agreements or agency agreements; • management service agreements or service level agreements;
• real estate lease agreements; and • loan agreements with shareholders or third parties. Usually, a draft of these agreements, agreed upon by the co-venturers, is attached as an annex to the executed version of the JV agreement. 6.6 Rights and Obligations of JV Partners The rights and duties of co-venturers are primarily defined in the JV agreement and typically include the following. • Profit and loss allocation rules: by default, profits and losses are shared in proportion to each party’s contribution. Any agreement that entirely excludes a party from both profits and losses ( pactum leoni- num ) is null and void. Co-venturers are free to devi - ate from the default rule, provided each has some share in both profits and losses. • Governance and decision-making: this covers each co-venturer’s rights on the governance of the com - pany and on decision-making processes. • Information rights: this refers to the rights attribut - ed to each co-venturer to access information about the JV’s activities, financials, and management. For the information rights attributed by Italian law to the parties of a corporate JV, see 6.7 Minority Protection and Control Rights . • Non-competition clauses: restrictions on co-ven - turers from competing with the JV’s business and/ or with each other’s business for a specified period or within a defined geographical area. Liability for Debts and Obligations The liability of the JV participants depends on whether they have formed a corporate JV or a contractual JV. For corporate JVs, the company itself is liable for its debts and obligations. The co-venturers have limited liability, meaning their liability is capped at the value of their subscribed capital. For contractual JVs, the co-venturers are liable for the obligations pertaining to the activities they perform, with joint and several liability. This can be contractu - ally structured to facilitate relations with third parties demanding, allowing them to secure fulfilment of the obligations by all JV partners jointly.
43 CHAMBERS.COM
Powered by FlippingBook