ITALY Law and Practice Contributed by: Maurizio Marullo, Giorgio Vagnoni, Claudia Marongiu and Pasquale Ambrosio Cepparulo, LAWP Studio Legale e Tributario
6.7 Minority Protection and Control Rights Minority partners in a JV, especially in an international context, can secure various control rights to monitor and protect their investment. • Veto rights, preventing the majority from mak - ing significant changes without the minority’s consent: these rights are usually enshrined in the JV’s bylaws and/or the JV agreement and apply to a predefined list of “reserved matters,” such as amending the bylaws, issuing new shares or altering share capital, approving the business plan, appointing or removing directors, and winding up the JV. • Information rights: S.r.l. non-managing share - holders have broad information and document examination rights, while S.p.A. shareholders have more limited inspection rights. JV agreements can enhance minority oversight with provisions for comprehensive reports and observer status at board meetings. • Tag-along rights: this right allows the minority member of a corporate JV to “tag along” on the sale and sell their shares at the same price and on the same terms as the majority, preventing them from being left behind with a new, potentially unde - sirable partner. • Exit rights: the JV agreement could also include clear provisions for a minority partner’s exit, such as put options, which allow the minority to sell their shares to the majority at a predetermined price or valuation in specific circumstances. These rights provide an escape mechanism if the JV fails to meet its goals or if a dispute arises. Under Italian law, all of the above rights can be implemented through the issuance of special class of shares or through the attribution of special rights to the minority member (as the case may be, depending on the JV corporate form), fully enforceable against third parties. 6.8 Applicable Law and Dispute Resolution in International JVs Applicable Law In the context of international JVs involving Italian parties, assets, or operations, the selection of gov - erning law and dispute resolution mechanisms is a
key aspect of the negotiation process. These choices can have a significant impact on the enforceability of rights, the predictability of outcomes, and the overall stability of the JV arrangement. It is advisable for JV parties to explicitly choose both a substantive law (which governs the content and interpretation of the agreement) and a procedural law (which applies to the resolution of disputes). While Italian law may be selected where the JV oper - ates primarily in Italy or touches upon regulated sec - tors (such as energy, defence, or strategic infrastruc - ture), international JV partners often opt for neutral third-country law. The decision is usually influenced by the location of assets, the domicile of the parties and the territories where the JV performs its main activity. If the JV agreement provides for the incor - poration of a foreign entity, it is necessary to ensure consistency and co-ordination between the applicable law chosen by the parties in the JV agreement and the statutory laws governing the JV entity. Dispute Resolution When it comes to the choice of forum, Italian courts are rarely selected in cross-border JVs. Most JV agreements involving foreign parties prefer arbitration procedures, typically administered under the rules of institutions such as the ICC, LCIA, or the Milan Cham - ber of Arbitration. The absence of a clear agreement on the applicable procedural law or jurisdiction can lead to significant uncertainty. In such cases, courts will apply conflict- of-law rules – for instance, those under the Rome I Regulation (Regulation (EC) No 593/2008) on the law applicable to contractual obligations, or the Brussels I bis Regulation (Regulation (EU) No 1215/2012) on jurisdiction and the recognition and enforcement of judgments within the EU. This can lead to delays, parallel proceedings, and higher enforcement risks, particularly if the JV operates across multiple jurisdic - tions. Although Italy does not impose mandatory alterna - tive dispute resolution (ADR) procedures for JV agree - ments in general, ADR mechanisms (such as media - tion, negotiation, or expert determination) are often
44 CHAMBERS.COM
Powered by FlippingBook