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Italian corporate law: Liability action of the company against the managing director of a limited liability company

Company law

Italian corporate law: Liability action of the company against the managing director of a limited liability company

A recent judgment of the Court of Bologna on the liability of directors of an Italian Ltd. (S.r.l.) gives rise to some comparative considerations.

The Court of Bologna clarified once again (judgment of 10.11.2023) that a liability action against the managing directors of a S.r.l. can be brought not only by the shareholders but also by the company. What may be a matter of course for a German lawyer seems strange to an Italian lawyer. In contrast to what the German GmbH (LLC) Act expressly provides for (Art. 46 GmbHG), the Italian Code does not provide for active legitimization of the company, which is in fact the right of every shareholder (Art. 2746 para. 3 of the Italian Civil Code). In principle, any shareholder, regardless of the amount of their shareholding and without the need for a prior resolution by the shareholders' meeting, can bring a corporate action against the directors who have caused damage to the company. The shareholder asserts a right of the company in his own name, which is a form of procedural substitution.

This legal regulation would be beneficial to the shareholders of a German GmbH, as liability lawsuits are often blocked by the need for a company resolution and the resistance of the other shareholders involved in the management of the company. The opposition of the other shareholders does not necessarily mean that no company resolution can be passed, as managing shareholders are generally excluded from voting rights due to conflicts of interest. Rather, German case law requires that the shareholder must first challenge an unfavorable resolution. Only in exceptional cases has case law partially remedied this excessive formalism by legitimizing the shareholder to take legal action directly against the managing directors on behalf of the company. In Germany, this possibility is described by the term actio pro socio; the more correct term would have been actio pro societate, i.e. the shareholder acts on behalf of the company.

However, the extent of this exception is limited; most recently, the Federal Court of Justice (judgment of 25.1.2022, RG II ZR 50/20) confirmed the inadmissibility of a direct corporate action brought by a minority shareholder against a non-shareholder managing director, as the individual shareholder only has standing to sue in the case of actions against a shareholder-managing director.

This case shows once again how seemingly minor differences in legislation can have a major impact on the actual chances of enforcing one's own rights. German minority shareholders would prefer Italian Ltd. law in many respects.