Among the restrictive clauses that can be included in a preliminary or definitive contract for the transfer of company shares, are those regarding non-compete agreements. Non-compete agreements bind the parties to mutually limit their activity, so as not to use:
- company trade secrets;
- carry out customers’ abduction activities;
- share confidential information and news about operations and production methods.
Parties of non-compete agreements
Non-compete agreements are usually established between the following subjects:
- Company or employer and former employee, when the latter is hired by a competitor;
- Among companies when they are dissolved or when one or more shareholders transfer their shares;
- Among professionals and their former collaborators who might possess clientele details.
When the non-compete clause is included in the preliminary contract but not in the final one
The Court of Cassation has already ruled on non-compete clauses, thereby colliding with the CJEU due to the different definition of professional and entrepreneur according to the Italian law. More recently, the Court entered the merit of the lack, in the subsequent definitive contract for the sale of company shares, of a non-competition clause included in the preliminary contract.
Failure to include a clause already present in the preliminary agreement in the final contract for the sale of shares does not necessarily imply the renunciation of the agreement therein contained, which is not absorbed only if elements that point to this direction are obtainable from the deeds offered by the parties (Court of Cassation, Section I Civ., Ord. 11 January 2022, n. 662)
In the case at hand, the non-compete agreement did not concern a former employee with knowledge of their employer’s secrets, information, sales and production methods, nor former collaborators of professionals able to divert their clientele. The case concerned two parties, one of whom transferred the totality of the shares to the other. Among the accessory obligations of the preliminary agreement there is also the non-compete agreement, for the violation of which a penalty was imposed on the non-performing party. In the drafting of the final contract, the non-compete clause and the sanction for its violation were not reported.
Violation of the non-compete agreement clause and competition ban
However, the failure to record the non-compete clause in the final contract and the related penalty provided for in the preliminary contract did not prevent the dispute between the parties and the request for compensation, when the violation took place. The Court of Macerata accepted the request in the first grade, and ordered compensation for the violation of the non-competition agreement, while in the second instance the Court of Appeal of Ancona ordered the restitution of the sums.
Verification of the contractors’ actual will
The Court of Cassation has already established a principle according to which “the failure to reproduce in the final contract for the transfer of shares a clause already included in the preliminary agreement does not necessarily imply the renunciation of the agreement therein contained. However … the clause is not absorbed should other elements, obtainable from the documents or offered by the parties, point to the opposite conclusion. Therefore, the judge is required to investigate the parties’ actual intention, especially since the transfer agreement requires the written form only for the purpose of the enforceability of the transfer of the shares to the company, and not for the validity or proof of the agreement. Hence why it is necessary to verify whether or not, with the new deed, the parties have limited themselves to ‘formalising’ the transfer, without reporting all their commitments”.
The circumstance that all the other accessory obligations, with the exception of the clause of non-competition, had been reported in the final contract or in a separate document, prompted the Court of Cassation to the conclusion that the omitted report expressed the will of the parties to renounce that commitment, accepting, therefore, the decision of the Court of second degree. At the same time, the decision of the Supreme Court established that the competition ban is applicable in the case of transfer and sale of company shares, thereby making the decision equal to “the sale of the company, specifically envisaged by the provision contained in art. 2257 of the civil code, the transfer of company shares when it substantially produces the substitution of one subject for another in the company”.