Corporate, Management Body, Board of Directors, Termination, Court of Milan 12 March 2024

Art. 2385 of the civil code

Statutory clause simul stabunt simul cadent

Internal balance of composition of the board

The statutory provision of the termination of the entire board of directors as a result of the resignation of one of its members attributes to the exercise by the individual member of the administrative body the right to freely withdraw from the mandate without any need for reasons deducible from the art. 2385, co. 1, c.c. the further effect of determining the immediate forfeiture of the management body with the function, not only of preserving the internal balance of composition of the board originally desired and crystallized in the assembly resolution of appointment, avoiding in particular the alteration that could result to the detriment of the structure minority from the application of the co-optation mechanism, but also to act as a stimulus to the cohesion of the management body since each director is aware that the resignation of one or some of the others determines the forfeiture of the entire board and at the same time can contribute to that decadence when in disagreement with others.

The immediate dismissal of the administrative body following the legitimate application of the statutory clause simul stabunt simul cadent does not entail any indemnity or compensatory effect in favor of the non-resigning member since the provision specifically conforms to the management mandate assumed by each member of the board of directors with acceptance of the position.

The revocation of the director corresponds, however, to a discretionary power of the shareholders’ meeting, based on the eminently fiduciary nature of the office, which can be exercised to determine the immediate termination of the management relationship even regardless of notice or the existence of a just cause saves, however, the need in this case to pay the administrator compensation for the damage provided for by the art. 2383 of the Civil Code, having an essentially compensatory nature as it is connected to the legitimate exercise of a right.

When in the presence of the statutory clause simul stabunt simul cadent the resignation of certain members of the board of directors is intended exclusively to then allow the shareholders’ meeting to renew the administrative body with the exclusion of only the unwelcome member to remove the company from the obligation of compensation connected to the direct adoption of a meeting resolution of revocation without just cause, the abuse in the exercise of the faculties of the members of the corporate bodies involved can be considered, source of the company’s obligation to compensate the damage suffered by the non-resigning member unlawfully deprived of the compensation benefit.

The complex evidentiary burden borne by the administrator who deduces the distorted use of the forfeiture mechanism therefore concerns a real elusive procedure constituted by the concerted concatenation of negotiating acts and behaviors referable to members of different corporate bodies aimed at converging on the single purpose of the creation of an effect equivalent to the unjustified revocation without compensation of the director.

The configurability of the procedural case of the abuse in question presupposes, in particular:

1. the instrumental exercise of the right to resign by certain members of the board of directors with the sole purpose of causing the immediate forfeiture of the body in view of the planned exclusion by the meeting called for the renewal of the body of the only unwelcome component;

2. the renewal by the shareholders’ meeting of the appointment of all the other members of the board with the exclusion of only the non-resigning member;

3. the objective and subjective connection between the resignation of the directors who completed the statutory case of the forfeiture of the entire board of directors and the subsequent immediate appointment by the assembly of the new board of directors composed of all the previous members excluding the no longer welcome, characterized by the exclusive intent of obtaining his ouster without compensation from the management body.

Source Business Law

Arturo Noviello