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Shareholders’ Agreement: Definition, Typology, Duration

Patti Parasociali

This article deals with the shareholders’ agreements in Italy, a rather widespread and useful legal instrument to manage better the company and to prevent disputes that could arise between the shareholders.

What are Shareholders’ Agreements in Italy

Shareholders’ agreements are contractual agreements between two or more shareholders (natural or legal persons) of a company (for example, an S.r.l., limited liability company or a SpA, joint-stock company) for a better and more stable management of the company. These contracts can regulate both the relationships between the partners and with the directors or with third parties.

The scope of these agreements may vary: for example, they are signed to determine the structure and operating conditions of a joint venture, or to protect the members or investors of a start-up,  or the initial financing and contributions by the members of an LLC.  Moreover, shareholders may agree in advance how to vote on certain matters or how to decide on certain issues. Other shareholders’ agreements are aimed at stabilizing the governance of the company, at limiting the choice of directors, or the exit of a shareholder from the company, at determining the conditions for the transfer of the shareholding….

Unlike the provisions of bylaws and statutes of the companies which are binding for all present and future members, shareholders’ agreements are binding only on those who sign them.

Furthermore, unlike bylaws and statutes, which in Italy are drawn up by notarial deed, the shareholders’ agreements – except for listed companies and spas that use risk capital – are not public: the shareholders can keep their agreements confidential and use them to regulate matters that generally are not covered by statutes, such as, for example, the financing obligations of the shareholders in favor of the company after its incorporation, or other specific commitments of a shareholder.

Compensation for damages is the typical remedy for the violation of a shareholder agreement: the non-compliant shareholder may be required to pay the other shareholders a sum as a penalty fixed in the agreement itself.

Under Italian law, the shareholders of most of the companies may determine freely the content of their agreement, within the limits of the general provisions of the civil code.

Some provisions of the civil code (2341bis and 2341ter) contain the definition, duration and conditions of publicity which apply only to shareholders’ agreements in joint stock companies.

Finally, articles 122 and 123 of the Consolidated Finance Act (Legislative Decree 28/1998) and the related  CONSOB Communications contain special regulations for shareholders’ agreements in listed companies.

Duration of the Shareholders’ Agreements

Shareholders’ agreements in SPAs, (joint stock companies) have a maximum duration of five years. However, they can be renewed upon expiration. If there is no deadline, each party to the agreement has the right to withdraw with a 180 days’ notice.

This 5years limit does not apply to shareholders’ agreements of other companies such as joint ventures and LLCs, but if the parties did not fix any term, each member has the right to withdraw with a 180 days’ notice.

Shareholders’ agreements in Italy: typology

In Italy, these agreements are classified in relation to their main scope.

Voting syndicate. The shareholders are bound to vote in the same way at the general shareholders’meeting, for example, by proxy of a common representative. However, these agreements can not impose how to vote to shareholders who have to decide on the liability of the directors of the company. Such a clause and the relevant shareholder’s vote would be invalid;

Block voting agreement. This agreement serves to maintain the same ownership structure of the company and/or to prevent one or more third parties from acquiring it (for example, a competitor of one of the partners). This agreement therefore limits the transfer of shares or quotas within the same company, preventing shareholders from leaving the company;

Agreements relating to the financing of the company (in the broad sense). The shareholders undertake to finance the company and fix the conditions for their loans or other contributions of tangible or intangible assets to the company; they may also undertake to do something for the company (typically, if they are shareholders in a start-up);

Profit guarantee agreement. A minimum dividend is guaranteed to one or more shareholders. However, an agreement which provides for the assignment of a share of profits to a shareholder, excluding him from the losses, is void under art. 2265 of the Italian civil code;

Agreements concerning the management of the company. This category includes shareholders’ agreements aimed at determining in more detail how the directors must be designated among the shareholders or establishing the way to manage stalemate situations, including the sale of shareholdings, if the stalemate cannot be overcome;

Share transfer agreements. This category includes agreements containing option rights to sell or purchase the shares among shareholders or which facilitates the transfer to a third party: as an example,  by entitling the majority shareholder to purchase the minority shareholder’s shares (drag along right ), or by entitling the minority shareholder to sell also its shares to a third party who intends to purchase the majority shareholder’s shares (tag along right).


Shareholders’ agreements are commonly used in Italy and are valid legal tools to pursue many purposes. Generally, in Italy the drafting of a shareholders’ agreement requires the assistance of a lawyer expert in corporate law. For further information or assistance,  you can contact us.