ITALY Law and Practice Contributed by: Roberto Bonsignore, Paolo Rainelli, Gerolamo da Passano and Nicole B. Puppieni, Cleary Gottlieb Steen & Hamilton LLP
Special or Ad Hoc Committees ), the committee of independent and unrelated directors typically also seeks support from independent experts and legal counsel when issuing opinions on the transaction’s terms. 8.5 Conflicts of Interest Any director with a vested interest in a trans - action (including an M&A transaction) must promptly disclose this interest to the other directors and the board of statutory auditors. An interested director holding the position of chief executive officer ( amministratore delega- to ) must abstain from executing the transaction and refer it to the entire board. In such cases, upon disclosing the interest, the board resolution must clearly state the reasons why the trans - action is still beneficial to the company. Other directors (and the statutory auditors) have the right to challenge the resolution if the interested director(s) failed to disclose their interest or if the resolution, approved with the decisive vote of the interested director, was detrimental to the company. Breaches of these duties may render the director personally liable for any resulting losses suffered by the company. Shareholders’ resolutions passed with the deci - sive vote of conflicted shareholders can also be legally challenged if they are detrimental to the company. If advisers participate despite a conflict of inter - est or lack of independence, they may be dis - qualified, and their opinions rendered irrelevant. Depending on the circumstances, such advisers could also be exposed to liability.
actions require, among other things, a favour - able opinion from a committee comprising independent and unrelated directors regard - ing the company’s interest in pursuing the transaction and the adequacy and fairness of its terms; and • tender offers initiated by insiders – the board’s opinion of the offer must be preceded by a separate opinion from a committee of independent directors. 8.3 Business Judgement Rule Over the years, Italian courts have grown more hesitant to question directors’ decisions or to intervene to assess their merits. Consequently, Italian courts typically refrain from analysing the substance of decisions made by directors in takeover situations. Instead, they focus on reviewing the directors’ conduct and scrutinis - ing the decision-making process to determine if the directors acted diligently in the interest of the company and its shareholders (as discussed in 8.1 Principal Directors’ Duties ) and based on sufficient information. 8.4 Independent Outside Advice In the case of a tender offer, the board of direc - tors of the target company is required to provide a comprehensive and well-reasoned opinion regarding the offer and the fairness of the offer consideration. If the offer is made by an insider (such as the controlling shareholder, a director or an executive officer of the target company) or individuals acting in concert with an insider, the board’s opinion must be preceded by a similarly well-reasoned opinion from the target company’s independent directors who have no affiliations with the bidder. Both the full board and the independent directors typically seek legal counsel and engage independent financial advisers to obtain one or more fairness opinions. In related-party transactions (as discussed in 8.2
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