COMPANY BYLAWS AND THE “RUSSIAN ROULETTE” PROVISION

The Milan Notarial Council recently issued an explanatory interpretation (massima no. 181/2019) describing the presence of a Forced Buy-Sell clause in the by-laws of joint-stock or limited liability companies—a clause otherwise known as “Russian roulette” or “Chinese” clause—as legitimate.

According to said interpretation, it is within the rights of a company’s founders or directors to include this kind of anti-deadlock clause in company by-laws. They still have to comply with the criterion of a proper assessment of the value of the shares one of the parties is being forced to sell, but this limitation does not necessarily imply that such clauses must explicitly mention how the value of said ownership shares is to be established as envisaged in case of a legal termination of the agreement.