When a decision taken in execution of a shareholder pact may constitute a contract in favour of third parties (with a question as regards the resolutions of corporate bodies).

The Court of Cassation, with judgment no. 36092/2021 published on 23 November 2021 (rapporteur: L. Nazzicone), set out the following principle of law: “in order for the director designated in a shareholder pact to acquire, pursuant to Article 1411 of the Civil Code, the right to vote in the shareholders' meeting by the shareholders who are signatories of the pact, in favour of his appointment and a set remuneration, decided therein, it is necessary to ascertain the intention of the shareholders to directly and immediately attribute a right to the third party, since in such a case, the director may then have a claim for compensation in this regard, where all the constitutive elements exist.”In this case, some shareholders, who had signed a shareholder pact, designated the future director and decided to vote in the shareholders’ meeting for his appointment and also decided on the amount of his remuneration. The subject of the dispute was the re-election of the director after the expiry of the first three financial years: envisaged by the signatories to the pact, but denied by the shareholders’ meeting. As a result of his failure to be re-elected, the director brought an action for damages, claiming that the decision taken by the shareholders in execution of the pact constituted a contract in favour of a third party which would have entitled him to re-election, pursuant to Article 1411 of the Civil Code, by the mere fact of its stipulation (i.e. the agreement entered into by the shareholders). 

The Court of Cassation is aware of the “very significant consequences” of classifying the arrangement entered into by the shareholders adhering to the pact as a contract in favour of a third party: the third party acquires the right against the promisors by virtue of the stipulation alone and, moreover, the stipulation cannot be revoked or modified by the will of those shareholders once the third party has declared (expressly or tacitly) that they wish to profit from it.  And this means significantly limiting the power to change the structures that the shareholders wanted to establish by signing the pact. It must be said that the Supreme Court probably did not overlook the fact that the case of a contract in favour of a third party is also likely to have effects as regards the resolutions of shareholders’ meetings and management bodies, with not insignificant consequences. For this reason, the Court ruled that “it is necessary to ascertain with particular rigour whether the intention of the shareholders is such as to render the agreements reached between them truly attributable to the legal framework of a contract in favour of a third party, or whether, on the contrary, they are agreements intended to be effective solely in relation to the parties.” It is therefore necessary to distinguish the case of those contracts in which the benefit to the third party arises accidentally or indirectly, whereby the third party has a mere interest in enjoying the benefit as the recipient of the contractual performance. On the other hand, in order for the decision taken in the context of the shareholder pact to also have the effect of binding the contracting parties vis-à-vis the third party, it is necessary “that further specific negotiating content [be] included in the contractual agreement between the shareholders, consisting of the unequivocal intention to grant a perfect right directly to the third party.” Consequently, “the mere mention, in the shareholder pact, of the name, remuneration and term of office of a future director (...) does not constitute the meaning of a manifestation of intention aimed at giving a binding effect on third parties, between the parties to the pact, with the reciprocal obligation to appoint him, nor even with those given terms and clauses.”