Withdrawal of the Shareholder and Criteria for the Determination of the Value of Shareholdings

By Alma Agnese Rinaldi* and Carmela Robustella**

ABSTRACT: The importance of the criteria of liquidation settlement due to the withdrawing shareholder in S.p.A. is one of the main issues pertaining to the institution of withdrawal.

In order for the remedy to effectively fulfill its function of protecting the dissenting shareholder of controlling the fairness and efficiency of the transactions for which it is recognized, it is necessary that the sum of money paid to the withdrawing shareholder neither penalizes him nor, specularly, benefits him in comparison with the situation in which he would be in the absence of the resolution for which withdrawal is recognized.

The institution of withdrawal, in company law, has been the subject of a revitalization project implemented with the 2003 reform, which, while strengthening it, has highlighted numerous problems, thus provoking fervent debate in doctrine and jurisprudence.

Despite the conspicuous studies and in-depth studies, even today there are still issues that are difficult to resolve, making the understanding of the institution arduous; difficulties arising, without a shadow of a doubt, from the use of unambiguous and unclear textual data, the complexity of the right of withdrawal and the multiplicity of interests involved by it.

One of the main problems relates to the definition of the criteria for determining the share of liquidation due to the withdrawing shareholder; it is more pronounced in S.p.a. by virtue of the plurality of interests involved and the conflict that arises among them.

In fact, the interest of the withdrawing shareholder in obtaining a valuation that reflects the value of the shares is opposed to that of the other shareholders in preventing an overvaluation of the share due to the withdrawing shareholder as well as that of the creditors in avoiding the depletion of the company’s assets.

An incorrect determination of the liquidation share could disrupt the relationships within the corporate structure in that, for example, a value that is too high would favor the exiting shareholder, while one that is too low would unjustifiably enrich the other shareholders.Hence the need to identify criteria for fully determining the true value of shares.

SUMMARY: 1. Relationship between withdrawal and transfer of the shareholding: criteria for the        estimation of the outgoing shareholder’s interest. – 2. Liquidation and Valuation of the Shareholding in the Case of Withdrawal. – 3. Shareholder Exit and Different Rules on the Liquidation of Shares in Listed and Unlisted Joint-Stock Companies. – 4. Regulatory Gaps and Liability Profiles of Directors.

1. As is well known, the matter concerning the criteria for the liquidation of the withdrawing shareholder’s interest underwent radical changes with the 2003 reform.

The institution of the right of withdrawal from the joint-stock company was profoundly revised, both in terms of the circumstances legitimising it—now significantly broadened—and the valuation system of the (unlisted) shares subject to withdrawal. The previous regulation had represented a major obstacle to exercising such a right¹: under the “former” Article 2437, first paragraph, of the Civil Code, the value of the shares was determined based on the net assets shown in the financial statements of the last financial year, applying a system notoriously governed by prudential valuation criteria, which compressed asset values compared to their market realizable value[1].

This financial statement-based approach has been abandoned as it was clearly prejudicial to the shareholder and incapable of offering adequate protection against potentially detrimental decisions[2].

In its place, a new set of criteria was introduced to ensure that the withdrawing shareholder receives the fair value of their shareholding[3]—i.e., a monetary sum reflecting the “real” or “effective” value of the shares or quotas at the time the right of withdrawal arises[4].

The reform aimed to make the withdrawal mechanism a more effective tool for protecting minority shareholders against potentially harmful decisions by the majority.

Clearly, offering a shareholder a sum lower than the actual value of their shares defeats this protective purpose by failing to shield them from negative consequences.

From a broader perspective, it is fair to say that the 2003 reform marked a decisive step forward toward this objective.

However— and here attention is focused— the system still has certain imperfections: its application results in occasional under- or over-compensation of the shareholder, which undermines the effectiveness of withdrawal as a protective measure.

Upon receipt of the shareholder’s notice of withdrawal, the company is obligated to proceed with “the liquidation of the shares for which withdrawal is exercised” (Article 2437-ter, paragraph 1, Civil Code).

The situation is further complicated by Article 2437-ter, paragraph 2, which references common business valuation methods identified in business economics literature[5]—namely, the asset-based, income-based[6], and market-based methods[7]—drawing focus toward their technicalities and, at times, away from the broader purpose of withdrawal[8].

In this context, paragraph 2 of Article 2437-ter provides that the liquidation value of the outgoing shareholder’s interest is determined by the directors, having consulted the board of statutory auditors and, where appointed, the legal auditor, taking into account the company’s net assets, income prospects, and the market value of the shares[9].

Thus, the actual value of the withdrawing shareholder’s interest is determined using three parameters:

1. Asset consistency
2. Income prospects
3. Market value of the shares.

It is worth noting that this provision seems to reflect the legislator’s intent to determine the actual value of the shares rather than their cost.

Cost and value are very different concepts: cost represents the minimum sale price below which a loss would occur; value represents the maximum price a buyer is willing to pay, reflecting what justifies a premium above cost.

The first parameter refers to asset-based methods, which determine economic capital by subtracting liabilities from assets, with adjustments made to reflect hidden capital gains[10].

In the absence of explicit legislative direction, it is held that the company’s asset base should be valued using an ad hoc extraordinary balance sheet.

Asset valuation methods are thus linked to accounting data but use a range of techniques to arrive at the “correct” value of assets and liabilities, depending on the assumptions adopted[11].

For example, tangible assets may be revalued using:

• Current market price, if reliable data exists (e.g., in real estate)
• Reproduction cost, which estimates the internal cost of rebuilding the asset
• Replacement cost, used when obsolete assets must be substituted with modern equivalents having comparable function and performance.

The “income prospects” parameter, which supplements asset value, refers to income-based valuation methods that discount normalized future earnings, incorporating goodwill[12].

Income-based valuation includes future goodwill, previously excluded, and highlights prospective performance, positive or negative.

It is noted, however, that analytical asset valuations already account for off-balance-sheet items. Adding goodwill through income-based methods could result in a redundant and distorting double count[13].

This raises the question of whether withdrawal valuation should align with market value, similar to what appears in a liquidation balance sheet[14].

The emphasis on income prospects supplements asset value and calls for discounting future income streams based on economic assumptions[15].

“Income” is an economic term distinct from “profit,” the latter being more familiar in legal contexts[16].

According to a classic business economics definition, “income” is “the increase which, in a given period, the capital of a business undergoes due to operations” [17].

There are various types of income, selected based on context, which highlights the discretion directors enjoy in such valuations.

The third parameter—market value—allows directors to consider values derived from single share purchase agreements, which might reveal prices not otherwise reflected through asset or income assessments[18].

Legal scholars have noted that the legislator ultimately favors the so-called mixed asset-income method, with market-derived values acting as checks or adjustments.

The law does not establish a hierarchy among the criteria; it allows flexibility based on the characteristics of the business and the specific case[19].

Indeed, Article 2437-ter, paragraph 2, uses ambiguous language regarding how these criteria are to be applied or prioritized, as reflected in diverse academic interpretations.

The withdrawing shareholder is entitled to a liquidation value reflecting the actual value of their shares, considering the company’s assets, income prospects, business sector, size, structure, and potential market value[20].

While asset valuation is a starting point, income-based and market-based criteria must also be considered[21].

If there’s no active market, values from recent transactions or comparable companies may serve as references Within the scope of private autonomy, articles of association may introduce alternative valuation criteria, provided they still aim for a realistic determination of share value.

Courts have confirmed there is no hierarchy among the three criteria, and valuation discretion rests with the appraiser[22].

Emphasis on income is appropriate because the valuation concerns an ongoing business, not one in liquidation.

Another issue is whether the economic effects of the transaction prompting the shareholder’s withdrawal should influence the valuation.

While dissenting from the transaction suggests a wish to opt out of its consequences, the transaction’s gains are reflected in the company’s overall value[23].

This underscores the usefulness of preparing a separate accounting statement based on the latest approved financials to inform the valuation process.

Such a document could serve an informational role for the shareholder meeting, setting a provisional liquidation value subject to final adjustment based on future financials.

If so, the payment to the withdrawing shareholder would be a provisional amount, subject to future adjustment or reimbursement, depending on the final outcome.

2.Even though the withdrawing shareholder no longer seeks to remain involved in the business, the value of their shares still reflects the company’s ongoing operations.

Some courts have ruled that a “minority discount” may apply, reflecting the lower return and limited influence of minority holdings, and their reduced marketability[24].

However, the application of “minority discounts” or “majority premiums” is controversial, especially when withdrawal is treated as equivalent to a share sale.

It is clear that the liquidation value must not incorporate any negative effects of the shareholder resolution that triggered withdrawal[25].

Although Articles 2437-ter and 2473 do not say this explicitly, the enabling legislation requires valuation methods that adequately protect withdrawing shareholders.

Including negative effects of the resolution would undermine withdrawal as a protective mechanismThus, no matter which valuation method is used, the resolution’s effects must not impact the redemption price.

The current Articles 2437-ter and 2473 allow deviation from the financial statements, enabling shareholders to obtain market-based values and meeting the needs of investors seeking to re-allocate capital.

This is reinforced by Article 2437-ter, paragraph 5, which requires valuation to take place before the relevant resolution is passed, enabling shareholders to make informed decisions about withdrawing.

As such, even in listed companies, withdrawal may represent a viable alternative to sale for accessing invested capital.

Valuation must focus on future income prospects—the higher the expected earnings, the greater the company’s value[26].

Though the rules aim to ensure shareholders receive the real value of their shares, company bylaws may contain provisions that, while deviating from Article 2437-ter, still prevent overvaluation and protect company capital and creditors.

By emphasizing fair value, Italian law aligns more closely with international standards favoring market-aligned asset valuation.

Ultimately, withdrawal results in a monetary payment to the departing shareholder, replacing their shareholding. That shareholder must not suffer a loss for exercising a legal right.

Likewise, it is clear that the other shareholders have an opposing interest in ensuring that withdrawal does not result in a devaluation of their own shareholdings and, on another level, in an unjustified reduction of the resources available to the company.

For these reasons, the subject of the so-called liquidation of the share extends far beyond aspects relating merely to the valuation thereof[27].

Indeed, starting from the statutory provisions, Article 2473, paragraph three, of the Civil Code provides that the withdrawing shareholder is entitled to “obtain reimbursement of their shareholding in proportion to the company’s net assets,” determined “taking into account its market value at the time of the declaration of withdrawal”[28].

The ministerial explanatory report accompanying the 2003 reform stated that the regulation of the liquidation of the share was intended “to ensure that the value of the liquidation of the shareholding be determined as closely as possible to its market value”[29].

The statutory provision, far more succinct than that envisaged for joint-stock companies, has given rise to few doubts, primarily concerning the meaning to be attributed to the expressions “in proportion to the company’s net assets” and “market value.” The reference in Article 2473, paragraph three, to the concept of proportion can be interpreted in at least two different ways.

On the one hand, adhering to a strict mathematical interpretation, it has been argued that the valuation process for the shareholding should be exhausted in identifying the unknown (X) in the following proportion, based on a theorised “principle of proportionality between the value of the shareholding and the company’s net assets”[30].

Thus, a two-stage approach should be adopted, first calculating the value to be attributed to the company’s net assets and then recognising to the withdrawing shareholder a fraction of the same exactly corresponding to their interest in the share capital, with a significant consequence: the so-called majority premiums and minority discounts would be excluded from consideration—i.e., those amounts added (in the case of premiums) or subtracted (in the case of discounts) to the strictly proportional value in order to reflect the influence on corporate governance that the individual shareholding may confer.

Alongside this majority view, however, there is another position, which interprets the term “proportion” “less restrictively, as synonymous with ‘to an appropriate extent,’ ‘in comparison with,’ or ‘relative to’,” thereby adopting an open attitude toward such adjustments[31].

The reference to “market value,” moreover, gives rise to even greater uncertainty, especially if one considers that the vast majority of Italian limited liability companies (and the same argument can be extended to joint-stock companies) are far removed from the model of the publicly held or even listed company, where it is truly possible to speak of the existence of a market for shareholdings.

Although the explanatory report to the 2003 reform made express reference to the market for shareholdings, the difficulty of giving substance to such a concept, coupled with literal considerations, has led the prevailing doctrine and majority case law to deem the reference to the market to relate to the company’s assets rather than to the individual shareholding[32].

In particular, the reference to the “market” is interpreted to mean that the company’s assets should not be calculated abstractly, through accounting operations based solely on the company’s financial statement data, but rather in concrete terms.

This allows for the determination of a value that is “rendered real in some manner,” through the use of corrective criteria aimed at representing the actual consistency of the company’s net assets. However, there is no unanimous agreement on the precise scope of what may be subject to valuation.

Therefore, under the current legal framework, the prevailing view in both doctrine and case law is that one must first calculate the actual net assets—or more precisely, the value of the business as a whole—taking into account its market value. Following this, the simple proportion described earlier is then applied[33].

There is nothing preventing the use of business valuation methods for this purpose, or the consideration of the company’s income prospects, as well as any other relevant valuation criteria, provided they help ensure that the liquidation value aligns with reality.

However, while the enhancement of statutory autonomy is one of the defining features of the 2003 reform, it is important to also examine how this principle affects the regulation of shareholding valuation. This examination is complicated by the fact that, unlike in other contexts, Article 2473 of the Civil Code does not refer to any potential role for statutory autonomy in this area.

At first glance, it would seem that there is no provision in the articles of association for introducing different or supplementary valuation criteria.

To clarify this point, it is useful to refer to the corresponding regulation in joint-stock companies. Article 2437-ter, paragraph four, of the Civil Code states that the articles of association may establish “different criteria for determining the liquidation value, indicating the balance sheet assets and liabilities that may be adjusted in relation to the values resulting from the balance sheet, along with the criteria for adjustment, as well as other elements subject to asset valuation to be taken into account”.

In joint-stock companies, furthermore, the “modification of the criteria for determining the value of the share in the event of withdrawal” is considered a mandatory, non-derogable cause for withdrawal (which differs from limited liability companies).

Therefore, the corresponding regulation for limited liability companies is not fully superimposable—not only due to the absence of an express reference to statutory autonomy but also because there is no analogous mandatory cause of withdrawal that could protect shareholders in the event of a change in the criteria for liquidation[34].

It is certainly important to emphasise that statutory autonomy must allow for a valuation that is as reliable and consistent as possible with the company’s economic reality.

Conversely, the validity of a clause clearly intended to prejudice the withdrawing shareholder—by adopting a criterion based exclusively (as in previous legislation) on the values derived from the last approved financial statements—must be questioned.

Additionally, statutory criteria could serve as guidance for directors in determining the value of the withdrawal to be carried out fifteen days before the date of the shareholders’ meeting.

The directors’ valuation would be used to reimburse the potentially withdrawing shareholder, without prejudice to the shareholder’s right, as we will discuss in more detail, to contest such a determination and request the application of a criterion based on the company’s actual net assets and income prospects[35].

If we accept that the reference to “market value” allows for the use of the most appropriate criteria to determine the real value of the company’s assets, then it is reasonable to include, in the articles of association of a limited liability company, criteria that may supplement or specify the valuation criteria and/or guide the interpreter in determining the liquidation value, provided this does not derogate from the principles of the Civil Code and does not prejudice the shareholder’s position[36].

This conclusion is subject to a limitation based on compliance with the criteria set forth in paragraph three of Article 2473 of the Civil Code, at least in relation to the so-called legal grounds for withdrawal.

Such a limitation would also arise from the absence of an adequate protective mechanism for non-consenting shareholders in the event of a change in the valuation criteria under the legal grounds for withdrawal. Some scholars have argued that changes in a more favorable direction (melius) would be legitimate, while changes in a worse direction (peius), compared to the codified regulation, would not be[37].

In contrast, there would be no significant limits concerning statutory causes of withdrawal.

Since these are causes not provided for by law, there is no need to protect the right of withdrawal in such cases: the inclusion, within the articles of association, of an additional cause beyond those provided by law still offers shareholders a greater benefit compared to the statutory regime, which may be freely modulated by the shareholders themselves[38].

In this context, it is worth quoting the clear and reasonable position expressed by the Milan Notarial Council, which stated: “precisely because the articles of association may provide no further possibility of withdrawal, they may instead grant such a possibility, albeit on conditions that differ significantly from those observed in the cases provided by law: here, statutory autonomy reigns supreme, as the effect of an unfair exit price merely renders the exercise of a non-existing withdrawal right inapplicable”[39].

The possible elimination of a statutory cause of withdrawal for which specific valuation criteria have been established—even in derogation of paragraph three of Article 2473 of the Civil Code—shall nonetheless constitute a legal cause of withdrawal, resulting in the application of the statutory liquidation criteria, which may be supplemented but not derogated from by the articles of association[40].

In light of the difficulties inherent in determining an objective value of the company’s net assets, situations of conflict may arise between the shareholder and the company’s directors.

For this reason, it appears necessary to identify valuation criteria that are relatively simple, demonstrable, rational, and general.

It may be advisable, in this regard, for the company’s articles of association to define, with relative precision, the procedures to be followed by the experts appointed by the parties or by the court to determine the value of the shares held by the withdrawing shareholders.

Following this logic, the value of the shareholding to be liquidated would appear less open to dispute, as the value estimated would derive from measurable figures, whose degree of subjectivity has been relatively limited.

The shareholder would, indeed, have full control over the value proposed by the directors, being able to verify compliance with the criteria identified in the articles of association.

It seems appropriate to specify that, in the procedure for determining the value of the shareholding, the directors are not under any obligation to prepare a specific balance sheet pursuant to Article 2423 of the Civil Code.

However, in order to determine the value of the company’s net assets more reliably, they should draw up a financial statement that aggregates the assets and liabilities according to the “balance sheet model,” as understood in business economics literature.

To this end, it has been argued[41] that a useful instrument could be an interim financial statement, free of constraints, and tailored to the company’s need to measure the periodic results of its management.

3.The criteria established for unlisted società per azioni (joint-stock companies) and for società a responsabilità limitata (limited liability companies) do not seem to raise any significant issues in this regard.

They require that the determination of the redemption price be carried out by the administrative body through an assessment that can be contested using the special mechanism provided under Article 2437-ter, paragraph six. This is based on a set of general parameters that are non-mechanistic in nature—that is, they are not based on a simple mathematical formula from which the redemption price can be derived, nor starting from a specific initial value that is uniquely identifiable, as is the case with the criteria laid down for listed società per azioni.

These criteria offer the directors, as will be elaborated upon below, sufficient flexibility to determine a redemption value that disregards the effects of the transaction on the value of the withdrawing shareholder’s shares or quotas.

Some reservations arise regarding the capacity to shield from the negative effects of the resolution when considering the liquidation criterion specific to listed companies.

Article 2437-quinquies of the Civil Code lays down a single rule: shareholders of a company listed on regulated markets who did not take part in the decision to exclude the listing (not necessarily dissenting but also merely absent) have the right to withdraw[42].

This provision aligns with the overall exit framework for the company, as it ensures that those who did not vote in favor of a decision, which through delisting makes it more difficult to sell shares in the future, have the right to withdraw.

The general interest underlying the regulation of listed companies issuing widely held securities implies the subjection of their shareholders to various mandatory rules laid down in special legislation, as well as compliance with a corporate interest imbued with a “public law” element, which in turn mitigates the participatory rights of shareholders[43].

However, this compromise translates into granting full freedom in trading shares, which remains a key feature of the company and the shareholder’s position.

It is important to note that exclusion from listing only entails the loss of the right of withdrawal, irrespective of any amendment to the corporate purpose or statutory structure.

Moreover, it should not be overlooked that the legal grounds for withdrawal—both mandatory and optional—have increased for all types of companies; more precisely, the latter have appeared for the first time[44].

If, however, we consider only the mandatory grounds (since the others may be eliminated by private autonomy), and reflect on the fact that they are all subject to majority control as to their occurrence, one may easily conclude that, in regard to closely held società per azioni and società a responsabilità limitata, the claim that exit opportunities have undoubtedly increased is misleading.

Indeed, by placing restrictions on the transferability of shares while minimizing the legal grounds for withdrawal and ensuring that no circumstances arise legitimating withdrawal, it is now possible to create società per azioni or società a responsabilità limitata that are considerably more “closed” than before, where the majority—even in società per azioni—may prevent a shareholder from exiting for a period of up to five years.

This is all without prejudice to the right of withdrawal when such restrictions are introduced.

This possibility, in addition to constituting the keystone upon which the entire withdrawal framework is based, represents the strongest point of contact between the otherwise distinct regulatory regimes of companies listed on regulated markets and closely held companies.

That is, the will to attract investment by assuring the investor-shareholder that there will be no surprises regarding “exit” possibilities.

Therefore, companies listed on regulated markets represent a type of società per azioni that, in some respects, is more remote from closely held società per azioni than the latter are from società a responsabilità limitata.

Indeed, in closely held companies, statutory autonomy allows for both a wide expansion of withdrawal grounds—which may raise concerns about asset depletion (e.g. withdrawal in indefinite-duration companies)—and significant restrictions on such grounds, aimed at ensuring continuity in company ownership.

Despite constituting substantially opposing tools, both of these options may ultimately serve the same purpose: fostering investment in the company. On one hand, ensuring the possibility of exit may attract funding; on the other, preserving a stable shareholder base may make the company more appealing to certain investors.

The discretion granted to private autonomy in identifying additional withdrawal grounds—particularly the default right of withdrawal in companies of indefinite duration—inevitably raises the question of how this autonomy interacts with the mandatory rules protecting share capital.

Compared to the prior regime, the 2003 reform clearly shifts the balance toward private autonomy. However, this shift does not override core mandatory protections for share capital, which continue to apply to both società per azioni and società a responsabilità limitata[45].

Under current rules, the redemption price of “shares listed on regulated markets” is determined “with reference to the arithmetic mean of the closing prices over the six months preceding the publication or receipt of the notice of call of the shareholders’ meeting whose resolutions legitimise withdrawal.”

It is worth noting that the regulation found in Article 2437-ter, paragraph three—being applicable to companies with shares listed on regulated markets—does not apply to companies whose securities are traded on alternative trading systems (e.g. the SME growth market).

For such companies, the criteria under Article 2437-ter, paragraph two, which govern unlisted società per azioni, would apply.

 These include consideration of the potential market value of the shares, allowing the use of prices from multilateral trading facilities when determining the redemption amount.

Further concerns have emerged regarding the applicability of the six-month average price rule in cases where shares have been listed for less than six months or where trading has been suspended. In these instances—since Article 2437-ter, paragraph three, is inapplicable—resort may be had to the valuation rules for unlisted companies, despite those rules being generally considered mandatory.

As previously noted, the choice of market price as the criterion for determining the value of shares in listed companies is based on the reasonable and widely accepted assumption that the market price of a listed share typically offers the most accurate approximation of its actual value. This is understood to provide shareholders with the “adequate protection” envisaged by the legislator in the enabling law[46].

What is of particular interest here, however, is the dies a quo—the starting date—from which to retrospectively calculate the six-month reference period used to determine the average share price.

The legislator opted for the date of publication or receipt of the notice of the shareholders’ meeting, rather than the date of adoption of the resolution itself. This choice clearly signals the intention to rely on a price history that is not yet influenced by the effects of the resolution that may trigger the right of withdrawal[47].

From a formal legal standpoint, prior to the publication of the notice, no specific resolution exists in relation to which a shareholder could assert an interest in withdrawing. However, this approach fails to account for a significant practical consideration: information about the planned transaction—which legitimises withdrawal—often circulates well before the formal notice is issued. As a result, share prices during the six-month reference period may already reflect at least some of the anticipated adverse consequences of the forthcoming decision, particularly for minority shareholders[48].

It is important to recognise that the decision to withdraw is not made near the start of this six-month period, but rather much later, typically within fifteen days of the registration of the shareholders’ resolution in the Companies Register.

In most cases involving listed companies, the resolution triggering withdrawal is adopted at the shareholders’ meeting itself [49].

Yet, the average market price calculated during the reference period serves as a preliminary benchmark for shareholders—whether they intend to withdraw or not—to assess the potential “cost” or economic impact of exercising the right of withdrawal [50].

It is, in effect, a decision-making tool, guiding how shareholders might choose to vote and whether to remain invested in the company.

This is precisely why the valuation should ideally be conducted as close as possible to the date of mandatory prior disclosure, to ensure that the redemption price accurately reflects the prevailing market value of the shares at the time of the meeting.

This approach enables shareholders to exercise both their voting rights and potential withdrawal rights in a well-informed and economically rational manner [51].

If, instead, a significant time lag separates the “crystallisation” of the redemption price from the moment the withdrawal decision is actually made, there is a high likelihood that the current market value will diverge from the redemption value.

Such divergence may result in either under-compensation or over-compensation of withdrawing shareholders—undermining the equitable and functional operation of the withdrawal remedy itself.

The liquidation criterion provided for listed companies also reveals a significant limitation: it lends itself to strategic circumvention or “arbitrage” by the majority.

A particularly effective tactic—deliberately discouraging withdrawal in the context of market-unfavourable transactions, which may reduce the value of minority shares—is to issue notice of the intended transaction following a period of substantial appreciation in the company’s share price.

In such scenarios, minority shareholders are disincentivized from exercising their withdrawal rights, even when the proposed transaction reduces the value of their shareholding below its current market price prior to the announcement—provided that the price remains above the lowest average price calculated over the prior six-month period.

Conversely, the current criteria may also lead to over-compensation of the withdrawing shareholder. This, in turn, distorts the incentive structure by making withdrawal economically attractive even in relation to transactions that do not, in substance, harm the shareholder.

The resulting disincentive for the majority to pursue value-generating transactions creates a further impediment to the company’s strategic development[52].

Where transaction costs associated with selling the shareholding on the open market are substantial, determining the redemption value based on fair value criteria may result in the shareholder being excessively compensated.

This is because they are effectively allowed to realise the full market value—or even a higher amount—of their shares without bearing the costs that would normally accompany a sale.

Thus, the shareholder receives a sum they could not have obtained through a market transaction, from which transaction costs would have had to be deducted—something that does not occur in the context of withdrawal.

This issue is especially relevant for companies where the sale of shares entails significant costs, which is typically the case for non-listed companies.

Although the applicable legal criteria differ in form depending on whether the company is a società per azioni or a società a responsabilità limitata, they are broadly convergent in substance.

In the former case, the redemption value is calculated based on the company’s net assets, income prospects, and the potential market value of the shares. In the latter, the value is determined in proportion to the company’s net assets, assessed based on their market value at the time the withdrawal is declared.

Despite their different formulations, both criteria permit the inclusion of value elements—such as goodwill, income prospects, and intangible assets—that are often only partially, if at all, reflected in the company’s financial statements.

These components are, however, typically captured in the market price of the shares and in company sale valuations. Accordingly, the liquidation value of shares or quotas tends to align closely with their market value[53].

The legislator’s objective was, indeed, to ensure that the withdrawing shareholder receives an amount that reflects the “fair value”—that is, the actual or intrinsic value—of their shareholding.

 This value, at least in principle and particularly where the withdrawing party is a minority shareholder, should not be lower than what the shareholder could reasonably obtain from selling their shares or quota on the market.

However, the statutory criteria currently used for liquidation often result in a payout exceeding the actual market value of the shareholding. This leads to an over-compensation effect, which, in turn, distorts incentives: shareholders may be encouraged to exercise the right of withdrawal even when the underlying transaction does not cause them actual harm.

This distortion largely stems from how the criteria are interpreted and applied. They often overlook key contextual elements, such as: a) the minority nature of the interest held, which typically confers no significant influence over company management and is particularly vulnerable to expropriatory practices by controlling shareholders, especially in widely held companies; b) the illiquidity of such holdings, which third-party buyers routinely factor into their valuation through price discounts.

4.As previously discussed, the prior determination of the share value is designed to give each shareholder adequate notice of the worth of their stake.

This allows them to make an informed decision regarding the resolution at issue, especially if it may trigger a right of withdrawal.

In essence, the legislator sought to provide shareholders with a genuine spatium deliberandi—a period in which they can assess, with full knowledge of the relevant facts, the cost–benefit balance between voting in favour of the resolution, thereby forfeiting the opportunity to exit, or withholding their support and retaining the right to withdraw.

A failure to determine the liquidation value of the shares within the fifteen days preceding the shareholders’ meeting—as well as the failure or delay in filing the directors’ valuation and the opinion of the supervisory body—constitutes a procedural defect. As such, it renders the resolution voidable under Article 2377 of the Civil Code and may expose the directors to liability pursuant to Article 2395[54]. That said, this remedy is arguably inadequate to fully protect the shareholder’s compromised interest.

Moreover, the legislator provides the withdrawing shareholder with a means to challenge the valuation determined by the administrative body. If the shareholder contests the valuation—by submitting the challenge together with their declaration of withdrawal—the redemption value must then be determined, within ninety days, by a court-appointed expert via a sworn valuation report[55].

The court also rules on the allocation of costs, upon application by the more diligent party (Article 2437-ter, paragraph six, Civil Code).[56]

From a reading of the aforementioned provision, several key points emerge.

First, the challenge to the valuation may only be brought by shareholders who, having not supported the resolution legitimising withdrawal, have exercised their right of exit, or by the heirs of an outgoing shareholder.

Second, the challenge must, under penalty of forfeiture, be submitted in the same statement by which the shareholder declares their intention to exit the company.

 However, part of the legal literature does not exclude the possibility of a challenge submitted after the withdrawal declaration—provided it is nonetheless filed within the legal deadline for communicating the withdrawal to the company[57].

A further aspect to note is that, in the event of a challenge, the liquidation value of the holding is determined by a court-appointed expert, designated upon application by the more diligent party—either the withdrawing shareholder or the directors.

The expert must submit a sworn valuation report within ninety days of the exercise of the right of withdrawal.

Although the law is silent on this point, it is reasonable to assume that the court may extend this deadline upon a specific request by the expert, should the complexity of the task warrant it.

As expressly stated in the final part of Article 2437-ter, paragraph six, the expert’s powers are those provided under Article 1349 of the Civil Code.

Therefore, unless it is clear that the parties intended to submit to the expert’s mere discretion, the expert must perform the valuation with fair judgment, applying the legal or statutory criteria.

It is worth noting that neither the company nor the outgoing shareholder may challenge the expert’s determination—except in cases where it is manifestly inequitable or erroneous, in which case they may request the court to substitute the expert’s assessment with its own[58].

If multiple shareholders independently challenge the valuation, it is advisable—absent an express statutory provision—that the court appoint a single expert to avoid conflicting determinations of the shares’ liquidation value, which could result in unequal treatment of withdrawing shareholders[59].

In this context, the company, if summoned in one challenge proceeding, should inform the court of any other pending challenges so that either a single expert may be appointed or, if multiple appointments are required, that the same individual be assigned.

Further debate arises with respect to the determination of the liquidation value and the shareholder’s right to challenge it in cases where withdrawal is not based on a shareholders’ resolution legitimising exit. In such scenarios—where the withdrawal arises from grounds other than those set out in Article 2437, paragraphs one and two—the absence of a resolution precludes the application of the procedure outlined in Article 2437-ter.

In such cases, where no prior information can be provided, and absent any provisions in the articles of association, the only viable solution is for the administrative body to determine the share value and disclose it to shareholders within the shortest time reasonably necessary.

As this is a subsequent rather than a prior valuation, it seems permissible to consider that it should be carried out “with reference to the value of the shares at the time the factual basis for the withdrawal occurred”[60].

In the event of a challenge by the withdrawing shareholder, it will nevertheless be possible—by analogy with the procedure described above—to apply to the court for the appointment of an expert, who shall prepare a sworn valuation report within ninety days of the assignment.

The provision refers to Article 1349, paragraph 1, of the Civil Code, commonly described as an “arbitration” mechanism. Judicial intervention in this context is permitted only in cases of “manifest unfairness or error.” When applied to the valuation of the shareholding, such intervention can only be contemplated in the case of manifest technical errors—those concerning the calculation itself, the identification of the relevant period for averaging, or stock market values—rather than errors of fairness, which would instead relate to the contractual balance (synallagma)[61].

It is also arguable that the residual rule in Article 1349 of the Civil Code could apply to listed companies in cases of erroneous determination of the average value of the last six months of trading. In any case, a challenge may be brought for clear factual or computational errors relating to stock market values.

It should be emphasised, given the practical relevance of the issue, that the valuation is not subject to conditions or negotiations[62].

It is particularly significant that a withdrawing shareholder may always challenge the valuation of listed shares when the value obtained through application of the statutory criteria is lower than that which would result from using the arithmetic mean of the closing prices. In such cases, the shareholder may request application of the more favourable statutory method (Article 2437-ter, paragraph 3, final sentence, Civil Code).

However, the provision does not specify a time limit within which the valuation may be contested on grounds of inaccuracy. As such, the right to contest may be difficult to enforce.

 It would therefore be logical and advisable for the articles of association to establish a specific deadline for challenging the valuation.

No equivalent provision exists for unlisted companies—neither the ability to invoke the statutory criterion when the contractual one is less favourable, nor a direct application of this rule to them. Consequently, there is a clear disparity in treatment between holders of the same right: the withdrawing shareholder of an unlisted company cannot demand application of the more favourable statutory criterion, and, once the statutory valuation has been challenged as less advantageous than the contractual one, must await a determination by the expert. By contrast, a shareholder of a listed company may directly demand application of the statutory valuation method.

Economically distinct parameters apply in the specific case of withdrawal due to loss in value of a contribution in kind.

These parameters isolate the value of the contributed asset itself, rather than the value of the shareholding, and the regulation differs due to its protective purpose—namely, to shield the shareholder from a loss suffered involuntarily.

This implies that the return of the asset, where it cannot be realised, must be reconstructed by equivalence.

 The amount to be paid will therefore correspond to the value “for which the contribution was made,” as certified by the expert’s report (Article 2343, final paragraph, Civil Code).

This value coincides with the asset’s worth at the time of contribution, which was subsequently assessed by the company as no longer equivalent and thus insufficient to justify the acquisition of the shareholding.

It may then be natural to attribute relevance to the directors’ valuation, assuming that if the declared value is accurate, there would be no reason to liquidate it inaccurately[63].

However, even assuming an error in the expert’s valuation (and not, more plausibly, a reassessment based on the market value at the time of contribution), the last proposed solution would implicitly and unpredictably determine the inaccuracy or falsity of the court-appointed expert’s valuation, which does not always seem sustainable.

The solution that refers to the valuation of the independent expert appointed by the court appears consistent; a solution that, even on a systematic level, would not prejudice the interest of the withdrawing party and which seems to align with the intent of the legislator of the 2003 reform, which sought a legal framework capable of encouraging investment in companies.

The legislative model envisaged for unlisted public limited companies is flexible in structure, as the value is determined not by a mere mathematical calculation, but through a complex activity of the directors, wherein the choice of the most appropriate criteria is left to their discretion.

The relevant provision is Article 2437-ter, second paragraph, Civil Code, which states that “the liquidation value of the shares shall be determined by the directors, having heard the opinion of the board of auditors and of the person appointed for statutory auditing of accounts, taking into account the company’s assets and income prospects, as well as the possible market value of the shares”.

From the mere reading of the rule, a fundamental shortcoming is evident: the fact that it does not expressly indicate the new value to be referred to.

Indeed, Article 2437-ter of the Civil Code uses a concept of “value” that is entirely generic and non-technical, which is precisely the reason behind the main issues arising in connection with withdrawal in unlisted companies and, particularly, in relation to the determination of share value.

The numerous doubts and uncertainties that exist in this regard can only be adequately addressed by clarifying the cardinal points that define every valuation (valuation reference date, valuation unit, sought-after value configuration, and valuation approaches to be followed).

Without this, there is not only ex ante indeterminacy of the valuation process, but also an increased risk of arbitrariness by the directors, who, depending on the chosen criterion, may reach disparate outcomes.

Hence, the need to limit the discretion granted to directors and to define the applicable criteria for the determination of the share value becomes crucial.

A useful reference in this respect is the wording of Article 2437-ter, second paragraph, Civil Code, which mentions the “market value of the shares.”

The directors may assign different weights to the values determined based on the aforementioned criteria (“asset-based,” “income-based,” and “market price-based”) depending on the circumstances of the case. For example, the availability of more or less significant share prices might lead to attributing greater or lesser importance to reference to market values.

The need to take into account the three elements of judgment mentioned certainly does not imply the obligation to give equal weight to all three.

There may be cases where it is not economically appropriate to consider income prospects or an asset-based measure of invested capital value. This could be the case for newly established companies lacking reliable data for reasonable estimates of future cash flows or businesses in high-tech sectors, where assets may be limited to patents recorded at historical cost on the balance sheet.

In such cases, the directors may decide that one (or two) of the criteria should be given virtually no weight in the final valuation[64].

With this expression, the legislator not only reiterates that the identification of the real value of the shares is the primary goal of the valuation exercise but also emphasizes that it must not harm the withdrawing shareholder.

The directors are, therefore, required to adopt criteria that allow for the identification of a value that balances the various interests involved: the withdrawing party’s interest in receiving an equitable settlement, the other shareholders’ interest in purchasing the shares at a price not higher than the actual value, and the creditors’ interest in avoiding the depletion of the company’s assets.

As a result of in-depth studies, academic doctrine has concluded that the only instrument truly capable of balancing these interests is the disinvestment value, holding that the shareholder is entitled to a refund equal to the current economic return on the investment originally made.

Based on these considerations, it is possible to address the issue relating to the boundaries of the discretion granted to the directors in determining the share value due to the withdrawing shareholder. Indeed, the discretion of the directors is not absolute but limited, as they may use any valuation method (financial, asset-based, or income-based), taking into account the specific peculiarities of the individual case, provided it ensures the disinvestment value.

It must be clear, however, that in applying the legal criterion, the discretion recognized in the valuation of the shares cannot be used arbitrarily. It is obviously functional to the determination of a “truthful” value, meaning one that is determined by a rational and economically sound procedure. This is the “technical” discretion necessary to calculate the “fair value” of the holding.

This objective must be pursued, where possible, even when statutory criteria are introduced in derogation of the legal ones. In this case, the discretion of the directors will be circumscribed within the (different) boundaries laid down in the articles of association, which will not necessarily—but on this point, we will return later—allow the achievement of a “fair value”.

Furthermore, there is no hierarchy among the various methods available, as the directors are only required to identify the criterion that best achieves the goal of obtaining a fair valuation of the shares[65].

In conclusion, the withdrawal value in unlisted companies must express the intrinsic pro-rata value of the company that the shareholder contributed to forming at the valuation date.

This value must therefore represent that which the shareholder renounces by leaving the company—i.e., the amount corresponding to the current result of the investment.

Liability of the directors may arise when a breach of the rules leads, conversely, to an unlawful overstatement of the company’s asset base, with consequences that give rise to damages to be compensated to the company itself, individual shareholders, and third parties.

Finally, the one-hundred-and-eighty-day period within which the directors are to verify and, if necessary, revise the valuation (Article 2343, third paragraph, Civil Code) sets the deadline for the entire procedure: verification and revision; communication of the valuation; the contributor’s decision on whether to supplement the difference or to renounce the acquisition; possible contribution by the other shareholders; and the possible resolution to reduce the capital.

It follows that the inaction of the directors will not result, from the contributor’s perspective, in acceptance of the expert’s valuation but rather in the potential initiation of an action for damages as provided under Article 2395 of the Civil Code.

On the other hand, the impression is that the referred term pertains to the administrative office and not to the contributor. A period, it is noted, which properly indicates the time within which the review of the valuation must be concluded.

Even in terms of protection, the contributor would appear to be sufficiently assisted by the ability to claim damages against the company, exercisable within thirty days of the expiry of the period granted to the directors for the valuation if they have failed to carry it out, whether entirely or on time.

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[1] See M. Rossi, The Right of Withdrawal from the Joint Stock Company before the Reform of Company Law (Art. 2437, Civil Code), in Rivista di diritto commerciale, 2004, I, p. 549 ff. The new regulation significantly altered the valuation of unlisted shares, detaching it from financial statement results. While the system for valuing listed shares remained largely unchanged, the new rules for unlisted shares stipulate that the liquidation value shall be determined “taking into account the company’s asset base and its income prospects, as well as the possible market value of the shares.” Furthermore, the articles of association can “establish different criteria for determining the liquidation value, indicating the assets and liabilities in the financial statements that may be adjusted with respect to the values resulting from the balance sheet, together with the criteria for adjustment, as well as other elements subject to patrimonial valuation to be taken into consideration” (Art. 2437-ter, paragraphs 2 and 4, Civil Code). See also C. Angelici, On Article 2437, First Paragraph, Letter g), Civil Code, in Rivista del Notariato, 2014, I, p. 865 ff.

[2] Reflecting the legislator’s disapproval of withdrawal in 1942, this criterion significantly penalized the withdrawing shareholder. It did so because these criteria did not allow for attributing the actual value of their corporate participation. The Court of Cassation has indeed affirmed that in the event of withdrawal, the liquidation of the shareholder’s entitlement must be carried out, pursuant to Article 2437, first paragraph of the Civil Code (in the version prior to the reform implemented by Legislative Decree No. 6 of 2003), with reference to the company’s asset position as evidenced by the last financial statements. This refers not to the last approved balance sheet but to the financial statements relating to the last year ending prior to the date of withdrawal, considering only the elements that may be entered in such balance sheet, according to the criteria set out in Articles 2423 et seq. Civil Code. Thus Cass. 2 July 2010, No. 15785, in all-in-lavoro.seac.it; Cass. 26 August 2004, No. 17012, in avvocato.it; Cass. 22 April 2002, No. 5850, in Foro Italiano, 2003, No. 1, vol. 126, pp. 265–272.

[3] See P. Piscitello, Reflections on the New Regulation of Withdrawal in Capital Companies, in Rivista delle società, 2005, p. 518 ff., especially p. 524; see V. Di Cataldo, The Withdrawal of the Shareholder of a Joint Stock Company, in The New Company Law. Liber Amicorum Gian Franco Campobasso, directed by P. Abbadessa and G.B. Portale, vol. 3, Turin, 2006, p. 222; M. Cian, The Liquidation of the Withdrawing Shareholder’s Quota at Nominal Value (On a Statutory Clause Derogating from the Legal Criteria for the Valuation of Shares), in Rivista del diritto delle società, 2010, p. 301 ff., especially p. 303.

[4] Among others in legal scholarship, see L. Delli Priscoli, The Voluntary Exit of the Shareholder from Capital Companies, Milan, 2005, and idem, Of Amendments to the Articles of Association. Right of Withdrawal, in The Civil Code. Commentary, founded by P. Schlesinger and directed by F.D. Busnelli, Milan, 2013; V. Di Cataldo, The Withdrawal of the Shareholder of a Joint Stock Company, cit., p. 219 ff.

[5] Among business economists, see M. Reboa, Valuation Criteria for Shares in Case of Shareholder Withdrawal: Some Reflections on Article 2437-ter of the Civil Code, in (edited by) M. Notari, Dialogues Between Jurists and Business Economists on Extraordinary Transactions, Milan, 2008, p. 399 ff., especially p. 401. Among jurists, see V. Di Cataldo, The Withdrawal, cit., p. 234; M. Maugeri – H. Fleischer, Legal Issues Regarding the Valuation of Shares of the Withdrawing Shareholder: A Comparison Between German and Italian Law, in Rivista delle società, 2013, p. 89 ff. However, M. Cian, The Liquidation of the Withdrawing Shareholder’s Quota at Nominal Value (On a Statutory Clause Derogating from the Legal Criteria for the Valuation of Shares), cit., p. 303 ff., argues that while the reference to the “company’s asset base” seems innocuous, the reference to “income prospects” and the possible “market value” of the shares clearly indicates the legislative intent to align the liquidation quota with the real measure of the participation’s value. This leaves no uncertainty in that regard.

[6] The income-based method is based on income flows. It “derives the value of economic capital from the analysis of the expected return flows – whether income or cash – that can be stably produced in the future by the considered company” (M. Reboa, Valuation Criteria for Shares in Case of Shareholder Withdrawal: Some Reflections on Article 2437-ter of the Civil Code, cit., p. 404). In other words, the company’s assets are considered here not as a “mere aggregate of autonomous and isolated elements, but as an operating economic complex (going concern entity)” (M. Maugeri – H. Fleischer, Legal Issues Regarding the Valuation of Shares of the Withdrawing Shareholder: A Comparison Between German and Italian Law, cit., p. 78 ff., especially pp. 81 and 90); see also M. Caratozzolo, Valuation Criteria of the Shares of the Withdrawing Shareholder in Joint Stock Companies (Part I), cit., p. 1209 ff.

[7] From the perspective of business economics doctrine, the asset-based method would consider the current value of the company’s assets and liabilities, thus adjusting balance sheet components. It would disregard income prospects but (at least in its “complex” version) consider intangible assets, even if not recorded in the financial statements, net of potential fiscal effects. See P.M. Iovenitti, The New Right of Withdrawal: Valuation Aspects, in Rivista delle società, 2005, p. 459 ff., especially p. 466 ff.; M. Caratozzolo, Valuation Criteria of the Shares of the Withdrawing Shareholder in Joint Stock Companies (Part I), in Società, 2005, p. 1209 ff.; M. Reboa, Valuation Criteria for Shares in Case of Shareholder Withdrawal: Some Reflections on Article 2437-ter of the Civil Code, cit., p. 402; M. Maugeri – H. Fleischer, Legal Issues Regarding the Valuation of Shares of the Withdrawing Shareholder: A Comparison Between German and Italian Law, cit., p. 90.

[8] The method of valuing the company according to the market value of the shares is subject to greater uncertainty (cf. P.M. Iovenitti, The New Right of Withdrawal: Valuation Aspects, cit., p. 472 ff.), given the diversity of approaches suggested by business economics literature. It is based both on the consideration of the actual market trend of the company’s securities and on “relative valuations,” which involve applying multiples or market multipliers that translate the company’s performance into values of economic capital. This approach estimates the company’s value “on the basis of homogeneous and comparable market observations with the reality considered: homogeneity and comparability of the sample companies, which, in practice, often represent the critical aspect for an effective adoption” of such method (M. Reboa, Valuation Criteria for Shares in Case of Shareholder Withdrawal: Some Reflections on Article 2437-ter of the Civil Code, cit., p. 407 ff.). On the method, see also M. Caratozzolo, Valuation Criteria of the Shares of the Withdrawing Shareholder in Joint Stock Companies (Part II), cit., p. 1340 ff.

[9] Cf. D. Galletti, On Articles 2437 ff., in (edited by) A. Maffei Alberti, The New Company Law, II, Padua, 2005, p. 1472 ff., especially p. 1568, who observes that, in the world of legal concepts, there is neither “reality” nor “effectiveness,” except in relation to the function assigned by the legal system to an institution.

[10] On the subject, see, among others, M. Ventoruzzo, Valuation Criteria for Shares in Case of Shareholder Withdrawal, in Rivista delle società, 2005, p. 368 ff.; M. Caratozzolo, Valuation Criteria of the Shares. Of the Withdrawing Shareholder in the Joint Stock Company, loc. cit.

[11] On the subject of “extraordinary” financial statements, see the study – although referring to the particular case of the ascertainment of significant losses pursuant to Article 2446 of the Civil Code – by P. Sfameni, Loss of Share Capital and Extraordinary Financial Statements. Informative and Organisational Function, Egea, Milan, 2004, especially p. 97 ff.

[12] Thus, M. Ventoruzzo, Valuation Criteria in Case of Shareholder Withdrawal, cit., p. 373 ff.

[13] Thus, M. Reboa, Valuation Criteria for Shares in Case of Shareholder Withdrawal: Some Reflections on Article 2437-ter of the Civil Code, loc. cit.

[14] Cf. G. Ferri Jr., Investment and Contribution, Giuffrè, Milan, 2001, p. 163 ff.

[15] For a distinction of the different configurations (simple income-based method and complex income-based method), cf. G. Zanda – L. Lacchini – T. Onesti, Company Valuation, Giappichelli, Turin, 4th ed., 2001, p. 92 ff.

[16] He defines “profit” as “any increase in the value of the patrimony, which occurs with respect to the share capital” G. Rossi, Balance Sheet Profits, Reserves, Dividend, Giuffrè, Milan, 1957, 66. As recalled by L.A. Bianchi, The Fairness of the Exchange Ratio in Mergers, Il Sole 24 Ore, Milan, 2002, p. 225: “the estimate based on income-based methods does not aim to ascertain the operating profit – in its corporate sense – but rather the expected income over a given time horizon, that is, a significantly different estimated quantity.” On the concept of profit, see also G.E. Colombo, The Annual Financial Statement, in (directed by) G.E. Colombo – G.B. Portale, Treatise on Joint Stock Companies. Annual and Consolidated Financial Statements, vol. 6*, Utet, Turin, 1994, 483 ff., where also extensive bibliographic references may be found.

[17] See, G. Zappa, Business Income. Double Entry Bookkeeping, Accounts and Financial Statements of Commercial Enterprises, Giuffrè, Milan, 2nd ed., 1937, p. 326, who qualifies such definition as “nominal” in that “it refers to the undetermined notion of business capital, and to the not better distinguished notion of change in capital,” further distinguishing it from the concepts of “profit,” “gain,” and “earning,” ibid., p. 326 ff.

[18] Cf. M. Allegrini, Concepts of Income and Consequent Valuation Logics, Giuffrè, Milan, 2001, p. 91 ff.

[19] The opinion is that of V. Calandra Buonaura, The Withdrawal of a Shareholder from Capital Companies, in Giur. Comm., 2005, p. 314.

[20] See M. Reboa, Criteria, cit., p. 401; P.M. Iovenitti, The New Right, cit., p. 476 ff.; M. Cian, The Liquidation, cit., p. 306; M. Maugeri, Shareholding and Business Activity, Milan, 2010, p. 210 ff.; similarly already M. Callegari, Sub Article 2437-ter, in (directed by) G. Cottino, G. Bonfante, O. Cagnasso, P. Montalenti, The New Company Law, vol. II, Bologna, 2004, p. 1420 ff., esp. p. 1427 ff.

[21] It has been noted that the “possible market value” does not appear to be the regulated one, otherwise falling under the hypothesis envisaged by paragraph three of Article 2437-ter, which refers to the liquidation of listed shares. It results that the formula would be linked to “the price set on the occasion of previous acts of circulation of shares of the same company.” Although, it has been observed, a market price of the shares will materialize only in the presence of a certain volume of trading. Significant in this regard is the fact that the exceptionality of the sale of shares related to a single transaction does not preclude the fact that there is “still a market-derived value of the shares.” Cf. M. Ventoruzzo, Valuation Criteria in Case of Shareholder Withdrawal, cit., p. 378.

[22] See Tribunal of Rome, 5 March 2013, in Corriere Giuridico, 2013, p. 1396 ff., with note by M. Rossi, On the Valuation of Shares in Case of Withdrawal.

[23] Thus M. Maugeri – H. Fleischer, Legal issues concerning the valuation of shares of the withdrawing shareholder: a comparison between German and Italian law, loc. Cit.

[24] Thus, Supreme Court (Civil Division), 15 July 2014, no. 16168, in Giurisprudenza Italiana, p. 119 ff., with note by E. Fregonara, Statutory Criteria for the Liquidation of Shares and the Principle of the So-called “Going Concern.”

[25] Thus, M. Stella Richter – A. Pontecorvi, Withdrawal and Exclusion from Capital Companies, Editoriale Scientifica, 2022, p. 93 ff.

[26] The business-economic doctrine and professional practice have extensively addressed company valuation but have not identified a universally preferred method. Therefore, solutions have been sought to reduce subjectivity and arbitrariness without resolving general valuation problems. Considering that a shareholding’s value depends on many factors, the expert must clearly describe the model and underlying parameters in their report to reduce shareholder conflict over the liquidated share’s value. A clear description allows understanding of the expert’s valuation process and the degree of arbitrariness and discretion used. Another crucial element for reducing subjectivity and arbitrariness is determining a general, rational, and demonstrable value. This value should be abstracted from the specific situations of the parties involved and based on logical and demonstrable elements.

Based on these considerations, when valuing a share upon a shareholder’s withdrawal, the following should be considered: a company’s value is a function of its income-generating ability, and a company’s value cannot be less than its net liquidation value. Starting from these concepts, it is appropriate to primarily use an income-based valuation method and use a patrimonial method as a control. Income-based methods express a company’s value as the present value of expected future incomes. While theoretically less methodologically sound than financial methods in fully accounting for the temporal evolution of revenues and expenses, they present fewer forecasting difficulties, fully satisfy generality and objectivity requirements, and are considered indispensable in company evaluation by continental European doctrine.

If income-based methods can ensure compliance with the first condition for correctly determining a withdrawing shareholder’s share value, the second requirement can be usefully satisfied by a patrimonial method. These methods express a company’s value as the sum of the current value of individual assets, net of liabilities. Generally criticized for contradicting the assertion that a company’s value differs from the sum of its individual components, patrimonial methods can determine the minimum value attributable to a business unit by simulating liquidation. From an operational perspective, one should determine the company’s value and, consequently, the shareholding’s value using both methods and liquidate the share to the withdrawing shareholder based on the higher value. Cf., on the topic, R. Rordorf, The withdrawal of a shareholder from capital companies: initial reflections after the reform, inSocietà, 2003, p. 923; A. Morano, Analysis of statutory clauses in light of the reform of capital companies, inRiv. not., 2003, p. 303; F. Galgano, The new company law, in Trattato Galgano, Padua, 2003, p. 360; V. Calandra Buonaura, The withdrawal of the shareholder in capital companies, in Giur. Comm., I, 2005, p. 292. In this sense, O. Cagnasso, Sub art. 2473 Civil Code, in (ed. by) G. Cottino, G. Bonfante, O. Cagnasso, P. Montalenti, Il nuovo diritto societario, Bologna, 1840; M. Faieta, Closed limited liability companies, exit rights and reimbursement techniques of the shareholding value, in Riv. not., 2004, p. 309. For a pre-reform analysis: S. Cappiello, Perspectives for reform of the right of withdrawal from capital companies: foundations and limits of statutory autonomy, in Riv. dir. comm., 2001, p. 243. V. Buonocore, The shareholder’s legal positions, Naples, 1960, p. 197; G. Frè, Joint-stock companies, in (ed. by) A. Scialoja – G. Branca, Commentary to the Civil Code, Rome-Bologna, 1982, p. 756; G. Ferri, Manual of commercial law, Turin, 1980, p. 445; F. Fenghi, Capital reduction. Premises for a study on the function of capital in joint-stock companies, Milan, 1974, p. 91; D. Galletti, On the forms and procedures of withdrawal in capital companies, inGiur. Comm., 1999, II, p. 247 ff.

[27] The point is substantially undisputed in legal literature: see, ex multis, M. Perrino, The withdrawal of the shareholder and its “moment”, in Riv. Dir. comm., 2014, no. 2, p. 237; M. Ventoruzzo, Withdrawal and the value of the shareholding in capital companies, Giuffrè, Milan, 2012, p. 114; Id., Withdrawal from limited liability companies and valuation of the withdrawing shareholder’s interest, in Nuova Giur. Civ. Comm., 2005, no. 6, II, p. 468.

[28] Cf., on the subject, Cass. Civ. 18 March 2015, no. 5449, in giustiziaediritto.it, according to which, in a partnership, the company’s net situation to be used, under Article 2289 of the Civil Code, for the purpose of liquidating the outgoing partner’s shareholding, cannot be drawn up—unlike what is done in the case of withdrawal from a joint-stock company—by reference to the last financial statement or, in any case, using the criteria for drafting the annual financial statement, but must rather reflect the actual state at the time of the partner’s exit. Therefore, in determining goodwill—which, as an asset, projects into the future, translating into the probability (based on present and past data) of greater profits for the remaining partners—consideration must be given not only to the company’s past performance but also to prudent projections of future profitability. Along the same lines, cf. also Cass., 15 July 2014, no. 16168, in Giur. Comm., 2015, II, p. 481, with note by L. Tronci, The use of the “going concern” principle in share valuation, a ruling confirming the validity of a statutory clause stating that the company’s net worth—referred to in Article 2437-ter, paragraph two, for purposes of liquidation in the event of withdrawal—shall be assessed according to a criterion considering the use of assets under the going concern perspective, given that, on the one hand, net worth may be assessed using various criteria, so that the statutory choice of the “going concern” criterion cannot be deemed unlawful, and, on the other, such criterion aligns with the condition of assets organised as a business, whose overall value is not the mere sum of the static value of each component, but is necessarily influenced by the prospect of continued activity.

[29] The shareholder normally lacks an actual means of ascertaining the company’s real situation, since the only source of such knowledge lies in the corporate books. Furthermore, the majority shareholders may, within the limits of their discretion, set a low redemption value for the withdrawing shareholder’s shareholding. However, the final paragraph of Article 2437-ter and the third paragraph of Article 2473 Civil Code provide, precisely to remedy this issue, for recourse to the courts. Cf. G. Baralis, The new limited liability company: “Hic manebimus optime”. Reflections on the issue of legislative gaps, in Riv. Not., 2004, p. 1113, who considers such provision applicable by analogy to limited liability companies. Cf. also A. Bartolacelli, Brief notes on the forms and methods of exercising the right of withdrawal, in Giur. Comm., 2005, II, p. 334, according to whom the rationale of the rule lies in enabling the shareholder to assess the convenience of potential withdrawal even before the condition arises—thus allowing the value to be “purged”, evidently, of market fluctuations caused by the resolution’s adoption. In this sense also L. Sorgato, The need to update tax rules on the exclusion of shareholders, inCorr. Trib., 2003, p. 141, who points out that “the withdrawal of a shareholder in partnerships is fiscally penalised compared to that in capital companies (where economic rights cease to accrue before the withdrawal notice), since in partnerships the cessation of patrimonial rights is, in civil law, delayed with respect to the withdrawal notice”.

[30] X: company’s net worth = nominal value of the share: nominal capital.

[31] On the disruptive effects for the integrity of company assets, also from the perspective of protecting third-party creditors, see P. Piscitello, Organisational withdrawal and patrimonial rights of the exiting shareholder in joint-stock companies, Turin, 2018, p. 82. The enabling law for the reform of corporate law (Law 3 October 2001, no. 366), in Article 4, point 9(d), provided that the delegated legislator, in revising the rules on withdrawal, should “identify valuation criteria for the redemption value adequate to protect the withdrawing shareholder, while safeguarding in all cases the integrity of share capital and the interests of company creditors”.

[32] On the criteria for valuation of the withdrawing shareholder’s interest, cf. M. Ventoruzzo, Withdrawal, cit., p. 168; A. Iovenitti, The new right of withdrawal: valuation aspects, cit., p. 459; F. Chiappetta, New regulation of withdrawal from capital companies: interpretative and practical issues, inRiv. Soc., 2005, p. 511; L. De Angelis, Withdrawal declaration and credit for the liquidation of the shareholding, in Società, 2004, p. 1379.

[33] Thus, G.A.M. Trimarchi, Private autonomy and shareholder withdrawal from capital companies. Part Two, p. 248. On the topic, see also A. Toffoletto, The valuation of shares and quotas in the event of withdrawal: notes on the article by Mauro Bini, in Società, 2014, no. 11, p. 26 ff., where it is stated that: “the valuation of individual shares or quotas is merely the result of a mathematical operation dividing the total value by the fractions represented”; M. Bini, The liquidation value of shares in unlisted companies for withdrawal purposes, in  Società, 2014, no. 11, p. 14 ff. (with reference to joint-stock companies).

[34] Cf. M. Stella Richter Jr., Withdrawal from the limited liability company, cit., p. 1221; G.A.M. Trimarchi, Private autonomy and shareholder withdrawal from capital companies, cit., p. 246 ff. In case law, cf. Trib. Padova, 23 May 2014, rejecting the consideration of control premiums and minority discounts, and Trib. Milano, 21 July 2015, no. 8902, which upheld the opposite view.

[35] Thus M. Ventoruzzo, Withdrawal, cit., p. 237.

[36] As regards the possible market value, it supports the notion that the determination of the liquidation value of shares should reflect all those elements which, although not accounted for in the financial statements, typically become relevant in the context of a market transaction. As far as the S.r.l. is concerned, reference to the “company’s assets” in Article 2473 Civil Code recalls the pre-reform liquidation criteria and at first sight seems to disregard elements such as income prospects, which are difficult to assign patrimonial value to. However, the provision states that the valuation of the company’s assets must take place “having regard to their market value at the time of the withdrawal declaration”, and this allows for the inclusion of all those elements—such as income prospects—which at first seemed “lost”, thereby aligning in practice the valuation of the withdrawal share in *S.r.l.*s with that of shares in *S.p.A.*s. On the point, cf. G. Zanarone, On the limited liability company, Vol. I, Giuffrè, Milan, 2010, p. 829; M. Tanzi, Article 2473, in (ed. by) G. Niccolini – A. Stagno-D’Alcontres, Capital companies: Commentary, Jovene, Naples, 2004, p. 1542, according to whom the provision implies that the valuation of company assets must be made “as if a hypothetical transfer were to take place”.

[37] For example, goodwill; on the point, cf. C. Frigeni, Interpretative insights from recent case law on withdrawal in capital companies, in (ed. by) M. Cera – P.F. Mondini – G.M.G. Presti, The reform of corporate law in “enterprise jurisprudence”, 2017, p. 187 ff.

[38] Cf. D. Maltese, The (alleged) mandatory nature of shareholding liquidation criteria for contractual withdrawal scenarios, inGiur. Comm., 2022, no. 6, p. 1064 ff.

[39] Thus, Milan Notarial Council Opinion, 22 November 2005, no. 74, Contractual grounds for withdrawal (Articles 2437 and 2473 Civil Code), and, to the same effect regarding control premiums and minority discounts, Opinion H.H.8 of the Interregional Committee of Notarial Councils of the Three Venices, 2015, Provision of a control premium or a minority discount in the statutory clause for share valuation in the event of withdrawal.

[40] Cf. V. Turinetti di Priero – F. Fidanza,Withdrawal, in (ed. by) S. Sanzo, S. Legnani, The quotas of limited liability companies. Statutory clauses and practical profiles, Giuffrè, 2024, p. 209 ff.

[41] Cf. G. Agrusti – R. Marcello, The withdrawal of a shareholder in limited liability companies: methods, deadlines, effectiveness and liquidation of the quote, in Società, no. 5, 2006, p. 574.

[42] Cf. P. Montalenti, The shareholder of a listed company, in Riv. Dir. comm., 2020, I, p. 220. See also Trib. Genova, Business Law Section, 12 November 2020, no. 6695, in Riv. Dir. comm., 2021, I, p. 89. The resolution of a company with two categories of shares admitted to trading on a market, which entails the delisting of one category (preference shares), does not give rise to the right of withdrawal under Article 2437-quinquies of the Civil Code, since the same resolution allows—prior to the merger—the optional conversion of preference shares into ordinary shares, which remain listed. Therefore, on the one hand, it cannot be stated that the merger necessarily results in the delisting of such shares; on the other hand, one must conclude that the delisting is primarily the effect of the free decision of shareholders not to convert the preference shares into ordinary ones.

[43] Cf., in this sense, M. Notari, Withdrawal for delisting in the new Article 2437-quinquies of the Civil Code, inRiv. Dir. comm., 2004, I, p. 529. See also Article 2325-bis, paragraph 1, which considers companies listed on regulated markets to be a subset of the broader category of companies that resort to the capital market, which includes not only listed companies but also those widely held among the public. Paragraph 2 further provides that the rules applicable to joint-stock companies shall apply to companies with shares listed on regulated markets insofar as not otherwise provided by other rules of the Civil Code or by special laws.

[44] Cf. M. Cera, Shareholders of listed companies in Italy between interest diversity and regulation, in Giur. Comm., 2023, I, p. 557; F. Fornasari, Listings on growth markets and issuer regulation, inGiur. Comm., 2022, I, p. 805.

[45] Consider, in this regard, the complex and detailed provisions of Legislative Decree no. 58 of 1998 (so-called TUF), which apply only to listed companies and which, inter alia, provides under Article 127-bis that, for purposes of exercising the right of withdrawal under Article 2437 Civil Code, any person in whose favour the registration of shares has been made—after the date of first notice and before the shareholders’ meeting is opened—is deemed not to have contributed to the approval of the resolutions. On this point, cf. M. Maugeri, Record date and the “new” indivisibility of the shareholding, in Riv. Dir. comm., 2011, I, p. 107; L. Furgiuele, Record date and exercise of challenge and withdrawal rights, inRiv. Dir. comm., 2011, I, p. 157.

[46] Cf., on the point, C. Frigeni, Shareholding in capital companies and the right to disinvestment, 2nd ed., Giuffrè, Milan, 2009, p. 155 ff.

[47] Cf., on the point, S. Carmignani, Commentary on Article 2437-ter, in (ed. by) M. Sandulli – V. Santoro, The reform of companies, Vol. II, p. 890 ff.; V. Di Cataldo, The withdrawal of the shareholder from joint-stock companies, cit., p. 239.

[48] ] Cf. L. Delli Priscoli, Withdrawal from joint-stock companies, in (founded by) P. Schlesinger, Commentary to the Civil Code, Giuffrè, 2024, p. 196.

 

[50] Cf., in this sense, G. Olivieri, Capital and equity in the reform of the company, inRiv. Dir. civ., 2003, II, p. 271 ff., according to whom the new rules on shareholder withdrawal seem to suggest a principle of progressive variability of share capital, which significantly departs from the opposite rule previously derived from the legal system. The legislative provision prohibiting such withdrawal in listed companies is thus quite appropriate, given that investors in such companies are typically less aware of the company’s internal dynamics. In closed companies, by contrast, shareholders have greater awareness of the applicable exit rules, the result of informed contractual negotiation; in companies open to public investment, however, the prevailing need is to avoid “surprises” for the investor-shareholder, in line with the general rule that withdrawal is only allowed in exceptional cases, with share transfer being the “normal” and typical means of exit.

[51] Cf., on the point, C. Frigeni, Shareholding in capital companies and the right to disinvestment, 2nd ed., Giuffrè, Milan, 2009, p. 155 ff.

[52] In this sense, cf. M. Ventoruzzo, Withdrawal, cit., p. 100. The six-month period is also deemed excessive by V. Di Cataldo, Withdrawal, cit., p. 238 ff., who also criticises the use of an arithmetic rather than a weighted average. Indeed, as M. Ventoruzzo observes, Withdrawal, cit., p. 99, if one accepts the premise that the stock price is more accurate the higher the trading volume from which it is derived, a volume-weighted average price should be preferred

[53] This observation resonates somewhat with the reflections of D. Galletti, Article 2437-ter, in AA.VV., The new company law, edited by A. Maffei Alberti, II, Cedam, 2005, p. 1576, who emphasises that where share transfer is impossible or exceedingly difficult due to the absence of a secondary market, liquidation at book values—as under the pre-reform regime—“may represent a more efficient liquidation benchmark, because it mitigates the risk of the company’s dissolution to satisfy the disinvestment needs of a single shareholder, while adequately protecting the interest of a shareholder who, in the alternative, lacks any means of monetising their investment”. It must nevertheless be acknowledged that liquidation at book values excessively penalises the shareholder and thus prevents withdrawal from operating as a tool for checking the proper exercise of majority power. Yet, it is also a fact that book-value liquidation, precisely because it is penalising, does not generate any overcompensation effect and, therefore, does not induce the shareholder to withdraw in the face of efficient and fair decisions. Thus, S. Gilotta, Withdrawal and corporate governance in capital companies, Giappichelli, 2024, p. 119.

[54] The unlawful act of directors, in order to be relevant under Article 2395 Civil Code, must have been committed with fault—that is, through negligence, imprudence, or incompetence, or without observing the precautionary rules required by the specific case—or with intent, i.e., with the will to commit the act (or, at the very least, accepting the risk of doing so), even though it is not necessary for the harm to have been intended: in fact, intent only requires the will to commit the act (e.g., the preparation of a false financial statement), and it is irrelevant whether the author of the act foresaw or intended the damage that later ensued (e.g., a third party who, based on that financial statement, voluntarily purchased the company’s shares at a price higher than their actual value). See, on this topic, G. Ragusa Maggiore, Individual liability of directors (Article 2395 Civil Code), Giuffrè, 1969, p. 273 ff., where it is stated: “Liability in such cases may arise when the directors engaged in merely passive conduct only if, in the specific situation, the directors—by express provision of law—had a duty to prevent an event, the occurrence of which therefore becomes imputable to them under Articles 40 and 41 Criminal Code.” Cf., on the subject, ex multis, C. Masucci, On the liability of directors under Article 2395 Civil Code, inGiur. Comm., 1984, no. 2, p. 590 ff.; G. Bartalini, The liability of directors and general managers of joint-stock companies, Utet, Turin, 2000, p. 438 ff.; F. Bonelli, The liability of directors of joint-stock companies after the corporate reform, Utet, Milan, 2004, p. 451 ff.; C. Angelici, The joint-stock company. Principles and problems, in (directed by A. Cicu – F. Messineo – L. Mengoni) AA.VV., Trattato di diritto civile e commerciale, I, Giuffrè, Milan, 2012; C. Marchetti, The liability of directors of capital companies, in (directed by C. Marchetti), AA.VV., Rules and practices of joint-stock companies, Giappichelli, Turin, 2021; A. Franchi, Directors’ liability and causal relevance of the conduct of individual shareholders and third parties, note to Trib. Roma, Business Law Section, 5 June 2017, no. 1127, in ius-giuffre.it.

[55] Cf. M. Bione, Information and exit: brief notes on withdrawal in joint-stock companies, in Liber Amicorum Campobasso, vol. 3, Turin, 2007, p. 211; also M. Callegari, The right of withdrawal, in (directed by) G. Cottino – G. Bonfante – O. Cagnasso – P. Montalenti, Il nuovo diritto societario, cit., p. 1427.

[56] In this sense, Trib. Roma, 13 December 2007, in Riv. Not., 2009, p. 1531.

[57] Cf. this opinion in V. Di Cataldo, The withdrawal of the shareholder from joint-stock companies, cit., p. 240.

[58] Thus V. Di Cataldo, The withdrawal of the shareholder from joint-stock companies, cit., p. 241.

[59] In this sense Trib. Milano, 30 April 2008, in Giur. It., 2008, p. 1944.

[60] See M. Stella Richter Jr. – A. Pontecorvi, Withdrawal and exclusion from capital companies, cit., p. 104. In the same sense, M. Ventoruzzo, Withdrawal and value of the shareholding in capital companies, Milan, 2012, p. 109.

[61] Thus, M. Stella Richter, Withdrawal, Section I, Withdrawal from the joint-stock company, in (ed. by) V. Donativi, Trattato delle società, vol. III, Milan, 2022, p. 1111 ff.

[62] In this sense, in case law, see Trib. Milano, 5 March 2007, in Giur. It., 2007, p. 2775.

[63] Cf. S. Masturzi, Withdrawal under Article 2343 Civil Code, in Riv. Dir. comm., 2011, no. 4, p. 905 ff.

[64] One might also ask whether the margins of flexibility permitted by the statutory criterion laid down in Article 2437-ter, paragraph two, Civil Code, are even broader, and whether the three “reference” values listed in Article 2437-ter, paragraph two, Civil Code, must necessarily be the only ones directors can use to assess value under the legal criterion. The fact that these must be “taken into account” does exclude the possibility of ignoring them, but might not prevent other evaluation elements from being added. From a lexical point of view, “to take into account” implies a composite judgment, based—if appropriate or necessary—on several evaluation criteria: it would not be entirely incompatible with the wording of the provision to assume that the legislator intended to identify three elements (net worth, income prospects, and the possible market value of the shares) that must be necessarily considered, but which can be usefully supplemented. This interpretation might be supported by the fact that the following paragraph, regulating the valuation of listed shares, takes care to specify that it must be based “exclusively” on market prices, thus without “taking into account” other elements. Despite these considerations, which are reported for the sake of completeness, a solution allowing directors to consider values determined using criteria other than those indicated by law would not be acceptable. The preferable interpretation is that the legislator intended, in the absence of an explicit statutory option, to provide flexible but appropriate criteria for reaching a reliable determination of share value. Broadening the discretion given to directors (which, as will be seen, is far from insignificant even under the statutory criterion) would lead to substantial indeterminacy in the legal valuation criterion and could ultimately penalise the shareholder.

[65] Cf. A.A. Dolmetta – G. Pericoli, Notes on the procedure under Article 2343 Civil Code, inVita not., 1992, p. 95.

Author

*  Alma Agnese Rinaldi is Commercial Law Researcher

** Carmela Robustella is Full Professor of Economic Law – University of Foggia

The entire work has been thought and discussed by both authors; however, paragraphs 1 is attributable to Carmela Robustella, while paragraphs 2, 3 and 4 are attributable to Alma Agnese Rinaldi.