Insights

The so-called "russian roulette" is a common clause in by-laws, shareholders’ agreements and JV agreements (including international agreements) of equally owned companies, as it allows to overcome decision-making deadlocks in shareholders’ meetings and/or administrative bodies. It allows a shareholder to make a binding offer to purchase the shareholding of the other shareholder at a price fixed in advance, whereas the latter has the alternative to either sell its shareholding at such price or to purchase the shareholding of the offering shareholder at the same price. The clause has been the subject of recent discussions by the Supreme Court (see order no. 13545/22), preceded by rulings of the Notary Councils of Milan and Florence, acknowledging its applicative complexity. Moreover, the lawfulness of this clause had already been confirmed by the case law (judgment no. 782/20 of the Court of Appeal of Rome), even in the absence of a mechanism for the fair evaluation of the shareholding, since, among other things, it would not breach the so-called "leonine agreement" (which excludes a shareholder from participating in profits or losses) where the circumstances of the decision deadlock are accurately represented and the sale price is calculated on an objective basis.