Already an IBA member? Sign in for a better website experience

The approval clause as a limit to company share transfers: a comparison between SRL and SPA regulation

Wednesday 13 October 2021

Marco Di Toro

MDT Studio Legale, Torino

Giorgia Valenza

MDT Studio Legale, Torino

The Italian Supreme Court, in decision No 9461 of 9 April 2021, recently ruled on the so-called ‘approval clause.’ The Court stated that, if it has been included in the statute of a società a responsabilità limitata (limited liability company or SRL), a transfer of shares by inter vivos deed carried out without the prior consent of the shareholders must necessarily be considered absolutely ineffective towards the company and the parties of the transfer contract.[1]

While the Court’s pronouncement only applied to SRLs, it’s interesting to consider and compare the Italian legislator’s provisions for the società per azioni (joint stock company or SPA) on the same issue.

Italian law provides for the free circulation of both SPA and SRL company shares. This may be limited only by particular and specific statutory clauses like the approval clause. These clauses were provided for by Legislative Decree No 6 of 17 January 2003, entitled ‘Organic reform of the regulations governing joint stock companies and cooperatives, in implementation of Law No 366 of October 3, 2001’. They are usually used by the founding partners in order to prevent unwelcome entries into the company, thus protecting the stability and harmony of the corporate structure. It is useful to implement such clauses to avoid shares from being purchased by insolvent parties, by those who are just interested in acquiring advantageous information for competing companies or to safeguard the national capital of the entity.[2]

Two types of approval are commonly used:

  • the ‘mere approval’, which reserves the right to grant acceptance to the discretion of the individual without laying down specific objective conditions to which the approval is subject; and
  • the ‘approval with reasons’, which provides that the person appointed to express the consent must comply with criteria, conditions and limits predetermined by the statute or has to verify the possession of subjective requirements.[3]

If not disputed, the validity of these clauses has been in doubt because it may risk keeping partners ‘locked in’, hindering the possibility of liquidating their investment.[4] Their effectiveness was questioned as a result, and they have often been viewed with suspicion and caution.

However, subjecting the entry of new shareholders to the approval of certain corporate entities represents a restriction on the free transfer of company shares that must be balanced.

So, the Italian Civil Code adopts different measures depending on the type of company involved.


With regards to SRLs, Italian corporate law (eg cassation No 3345 of 12 February 2010) has never disputed the legitimacy of the ‘mere approval’ clause. Indeed, paragraph 2469 of the Civil Code provides that the clause is always effective and the shareholder interested in the transfer of their shares can perform the right of withdrawal.

Nevertheless, doctrine and jurisprudence have struggled to understand if the right of withdrawal should be provided only in the event of a denied approval[5] or whether it can always be exercised.[6] In the latter case, the downside could be the possibility of exposing the company to the danger of an ad nutum[7] withdrawal, especially because ‘operators are hardly willing to take on the danger of an unjustified or pretextual withdrawal in the face of organisational rules whose purpose is not to close on principle but rather to select entries’.[8]

In 2019, the Court of Milan dealt with an issue related to the right of withdrawal, declaring that the withdrawal right must be granted to shareholders on the sole occurrence of the clause in the statute.[9] On the contrary, the Court of Appeal of Venice, in a decision on 30 July 2021, took a different view, stating that ‘in the presence of an approval clause, the withdrawal of the shareholder remains subject to the prior and unsuccessful request for approval, made in accordance with the statutory procedures’. The conflicting conceptions demonstrate that this is still a hotly debated and open matter.


On the other hand, SPA regulation has been defined more clearly. Paragraph 2355 bis of the Civil Code incontrovertibly states that the ‘mere approval’ clause will be invalid if it does not provide for an obligation to purchase or a right of withdrawal of the seller.

In addition to the above-mentioned remedies, it is also worth mentioning the ‘French-style’ approval clauses, which oblige the company to identify an alternative party acceptable to the corporate structure as a candidate for the purchase of the shares package to be transferred.[10] In such cases, some authors have proposed that it should not grant any right of withdrawal, as the shareholder is guaranteed the possibility of leaving the company[11].

Either way, the provisions of the Civil Code envisage that the statute may establish a time limit before which withdrawal cannot be exercised; for limited liability companies the term is two years from the constitution of the company or the subscription of the shareholding, while for joint-stock companies it is about five years from the formation of the company or from the moment the prohibition is introduced.

It should be also noted that the approval clause is often used in relation to the pre-emption clause and these mixed clauses have become widespread in practice[12]. In 2005, even the Supreme Court expressed a view on the possibility of configuring complex clauses of this kind. In this respect, it has been sustained that: ‘the combination and the close relationship between approval and pre-emption makes the joint application referable exclusively to the case in which, by transferring the shares to third parties, it becomes necessary to evaluate the interested parties and the possible exercise of pre-emption’.[13]

Now that we have completed an overview of the legal landscape, we will look at what may occur in the event of a breach of this clause in light of the Supreme Court judgment mentioned in the introduction.

The Court, as announced, affirmed the absolute ineffectiveness of a transfer of a stake in an SRL in violation of the approval clause. It invoked cassation No 19203 of 2005 and stated: ‘since a stake of a SRL is not naturally intended for circulation, it is necessary to ascertain in concrete terms that the parties intended the transfer independently of the opposability of the contract to the company and of the possibility for the transferee to exercise the rights inherent to the quality of shareholder’.

Instead, for an SPA, there are some authors who argue that the wording of Article 2355 of the Civil Code could lead to a company shares transfer carried out without requesting prior approval being declared null and void, considering that ‘the consent of the designated corporate bodies or of the other shareholders, even though it is in the nature of an agreement, is assumed by the law to be a condicio iuris for the legal effectiveness of the contract, not only against the company but also towards the contracting parties[14]‘.

Therefore, for both SPA and SRL companies, it is possible to argue that a transfer of shares without complying with a statutory approval clause shall render a transfer ineffective.

[1] GB Fauceglia, ‘Sull’inefficacia assoluta del trasferimento di quote in violazione della clausola statutaria di gradimento’, in Rivista, Le società, 6/2021, 662.

[2] A Salomoni, ‘Funzione e disciplina della clausola di gradimento’, in Prelazione e gradimento nella circolazione delle partecipazioni sociali, edited ny C Granelli , V Vettori (Padova, 1997), 88.

[3] A Stagno D’Alcontres, N Deluca, Le società, (Giappichelli, 2017), 276.

[4] E Adducci, I patti parasociali, disciplina, giurisprudenza e clausole, Halley Editrice, (Matelica, 2007), 35.

[5] P Ghionni Crivelli Visconti, Società a responsabilità limitata a struttura chiusa e intrasferibilità delle quote, (Torino, 2011) 163.

[6] P Rainelli, ‘Il trasferimento della partecipazione’, in Le nuove SRL, (Milan, 2008) 303.

[7]Ad nutum’ is a Latin term which means ‘the act by which a party concludes a contractual relationship by his sole decision, without the other being able to oppose’.

[8] M Maltoni, ‘La partecipazione sociale’, in La riforma della società a responsabilità limitata, (Milan, 2003), 178.

[9] E Fregonara, ‘La clausola di mero gradimento e il diritto di recesso nelle SRL: una questione dibattuta’, www.nuovodirittodelle

[10] M Confortini, ‘Clausole negoziali’, Utet Giuridica, (Milan, 2019), 578.

[11] ‘In pratica’, Le società, (IPSOA 2020), 1091.

[12] M Gabelli, S, Morri, Le società, (IPSOA, 2015), 400.

[13] D Minussi, ‘Clausole miste di gradimento e prelazione’,

[14] C M De Iuliis, comment on ‘Art 2355 bis’, in Codice Civile Commentato delle s.p.a., (Torino, 2006), 255.