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29 June 2020
In a recent decision, the Court of Milan examined the simul stabunt simul cadent clause in a joint stock company's articles of association (Company Section Decision 57633 of 14 January 2020).
Pursuant to a simul stabunt simul cadent clause, if a director resigns from the board of directors, the entire board is no longer in charge of the company. As a result, under Article 2386 of the Civil Code, a shareholders' meeting must be called to appoint a new board of directors.
In several cases, directors have used this clause to dismiss an undesirable board member and have the shareholders' meeting appoint a replacement who is more aligned with the shareholders' policies.
If an ousted director who has not been reappointed to the new board can prove that this clause has been used illicitly and that such use amounts to an abuse of power by the company, the ousted director can be compensated for damages suffered under Article 2383 of the Civil Code as a result of a de facto revocation without cause (Court of Milan, 28 July 2010).
In the present case, the Court of Milan rejected the request for damages from the company's managing director, who was ousted through a simul stabunt simul cadent clause, for the following reasons:
For further information on this topic please contact Eugenio Vaccari at Grieco e Associati by telephone (+39 06 420 3881) or email (email@example.com). The Grieco e Associati website can be accessed at www.griecoassociati.com.
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