Mergers and Acquisitions - Pre-emption Clauses

A. Pre-emption Clauses in General.

Pre-emption clauses are recognised as valid under Italian law. In fact, Article 2355, § 3 of the Italian civil code ("c.c.") provides that the deed of incorporation of a company may make transfers of the company's shares subject to certain conditions.

Where the pre-emption clause is contained in the company's by-laws, it will be treated as a pre-emption right for all purposes ("prelazione reale"): meaning that a sale of the shares to a third party in breach of the clause would be null and void. If, however, the pre-emption right is merely contained in a shareholders' agreement, it will have effect purely as between the parties. This means that it will only bind the parties to the shareholders' agreement and is unenforceable against third parties.