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Excessive duration of the company and right of unilateral withdrawal of the shareholder

The Court of Cassation returns to rule on the subject of the applicability of the discipline of the S.r.l. established for an indeterminate duration to the S.r.l. established for a duration that exceeds the lifetime of its shareholders, for the purpose of recognizing the free exercise of the right of unilateral withdrawal of the shareholder in the latter case.

 The decision of 29 March 2019 follows, and at times restates, the decision no. 9662 of 22 April 2013 which constitutes, so far, the synthesis of the debate on the possibility that a defined duration which is disproportionately long may justify the right of withdrawal of the shareholder from a limited liability company.

The Supreme Court, in 2013, had observed how the establishment of a very long duration made it impossible to reconstruct the actual will of the parties, resolving, in fact, to a failure to determine the duration of the company, since such a term could frustrate the effect of an established duration thereof.

The risk that the practice of indicating a final term too far in time concealed an elusive purpose, aimed at circumventing the regulation on withdrawal from the limited liability company, pushed the Supreme Court judges to come up with an interpretation that allows  the application of the protection that the legislator has, instead, codified only for the companies explicitly established for an indefinite period.

With the latest decision on this topic, the judges of the Supreme Court intended to contain the disruptive effects that a too elastic interpretation of the expiry term of the company contract could produce, putting a brake on that tendency by which it seemed to be admissible to withdraw from the S.r.l. whenever the latter had a duration equal to or greater than the entire lifetime of one of the members, as it happens, for example, in private partnerships (art. 2285  of the Civil Code).

To confirm, in a certain sense, the legitimacy of an analogical application of the provisions of article 2285 of the Civil Code to capital companies would, in fact, have had the effect of circumventing the legislation, enrooted in the Civil Code, on the subject of withdrawal in the S.r.l.

With the reform of company law of 2003, the legislator had, in fact, set forth a specific list of cases in which the shareholder could exercise the withdrawal. Widening the said list of cases for unilateral withdrawal by interpretation, by using the disfavour that our legal system shows for perpetual constraints, would mean operating a reading of the above discipline that almost runs contrary to the law.

For the Court Cassation, in order to understand if an excessively long duration of the company is legitimate, and therefore not elusive of the law that allows the unilateral withdrawal only in case of indefinite duration, one should look at the compatibility of the duration of the company with the fulfilment of the company object: there can be assimilation to the indefinite duration only where the term established in the articles of association goes beyond the reasonable date of fulfilment of the object, without keeping into consideration such factors as the life expectancy of the withdrawing shareholder or the average life duration of the shareholders.

This principle could also be applied with reference to the hypotheses of withdrawal from the S.p.A., if it has been constituted with a very long duration: the debate on this point now seems to be based on the order of the Court of Milan of 30 June 2018, in which the analysis and solutions identified by the Cassation with decision no. 9662 of 2013 were held applicable also to the S.p.A., but it is expected a decision of the Supreme Court to trace a clear interpretation also with reference to this type of company.