Cross-border Mergers, Change of Applicable Corporate Laws and Protection of Dissenting Shareholders: Withdrawal Rights under Italian Law

The European common legal framework for cross-border mergers and acquisitions is becoming ever clearer. In the light of the principle of freedom of establishment, a cross-border merger can either have the side-effect, or be primarily justified by, the goal of a change of the applicable company laws for one – or some – of the companies participating in the transactions. In this respect cross-border mergers, often driven by substantial economic factors, also become a crucial issue for regulatory competition in European company law. This Article addresses the issue of the protection of minority shareholders who do not consent to the merger (or acquisition), discussing what seems to be one of the most important protections provided under Italian law: withdrawal rights. An analysis of protection of minorities vis-à-vis a change of the applicable company laws, in particular achieved through a merger, is very relevant, but often overlooked, in the discussion on the development of a market for rules in Europe. In fact, the existence and relevance of effective minority protections, such as a withdrawal or appraisal right, contributes to both define the relative attractiveness of the different legal systems from the point of view of the company's stakeholders, and to limit the ability of majority shareholders and/or managers to shop around for the fittest company law system.