ITALY Law and Practice Contributed by: Roberto Bonsignore, Paolo Rainelli, Gerolamo da Passano and Nicole B. Puppieni, Cleary Gottlieb Steen & Hamilton LLP
because transaction documents in smaller deals are often less sophisticated. 10.2 Stage of Deal Pre-closing litigation often revolves around liabil - ity arising from interim arrangements like letters of intent, memoranda of understanding or term sheets. Determining the binding nature of such documents typically involves a detailed analysis of the facts. Express statements declaring their non-binding nature may not definitively influence the case’s outcome, particularly if the parties have progressed significantly in negotiations, justifying pre-contractual or even contractual liability, provided that the transaction’s essential elements had been agreed upon. Post-closing disputes commonly stem from breaches of representations and warranties or special indemnities provided by the seller to safeguard the buyer against specific events. Breaches of representations and warranties constitute the most frequent source of M&A liti - gation. In public M&A deals, shareholders may bring claims against the bidder after the transaction’s completion (such as regarding the determination of the minimum price of the mandatory tender offer) or, less commonly, against directors for breaching their duties. 10.3 “Broken-Deal” Disputes Under Italian law, several grounds could be invoked to avoid or delay the performance of pending transactions or to excuse non-perfor - mance due to the pandemic outbreak in early 2020. These include: • statutory force majeure; • termination for supervening impossibility;
• the right to obtain a revision of obligations or to withdraw from the agreement for partial impossibility; • termination of the agreement for supervening hardship; and • the application of contractual clauses con - ditioning the buyer’s obligation to complete the transaction on the absence of “material adverse change” (MAC) occurring between signing and satisfaction of all the other condi - tions precedent to closing. While Italian courts have not shown a clear and consistent trend in these matters, the buy - er’s ability to invoke a MAC condition largely depends on the specific language of these pro - visions. For instance, some clauses may exclude changes affecting “general market conditions” unless disproportionately impacting the target. This suggests the importance of careful nego - tiation and precise drafting of such clauses in future agreements. Shareholder activism plays a significant role in Italy, as several corporate governance rules grant substantial powers of intervention to activ - ists. For instance, the appointment of one or more directors is relatively simple through the statutory slate voting system applicable to Italian companies listed on the Italian main regulated market, which may also allow the appointment of the chair of the internal control body ( collegio sindacale ). Another instrument is the request to convene an ad hoc shareholders’ meeting or to supplement the agenda of an already con - vened meeting with a relatively small percent - age of shares. Activists may also take minority positions with the aim of blocking transactions 11. Activism 11.1 Shareholder Activism
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