Court of Venice, Specialized Business Division 19 June 2025, judgment no. 3072
7 minute read | July.22.2026
The Court of Venice held that the resolution to increase the share capital of a limited liability company (S.r.l.), even if subscribed predominantly through set-off against shareholder loans, is not abusive as long as it serves a legitimate corporate interest (such as strengthening the equity base and creditworthiness), nor does it constitute a conflict of interest unless it is potentially harmful to the company.
In private equity transactions where a fund holds a majority stake, any resolution for a capital increase must serve the genuine corporate interest and must not be aimed solely at harming minority shareholders. The ruling of the Court of Venice confirms that the legitimacy of the transaction, even where it entails a significant dilution of minority shareholders, is contingent upon a genuine justification in the interest of the company and the preservation of the subscription rights afforded to all shareholders, in order to prevent challenges based on abuse of majority or conflict of interest.
From the perspective of a minority investor (or re-investor) — a scenario typical of reinvestments made by selling shareholders or management in the context of private equity transactions — it is advisable to provide, during the negotiation phase, adequate governance mechanisms (such as veto rights over capital increase resolutions and anti-dilution clauses) capable of neutralizing recapitalization operations which, although formally legitimate, may compress the value of the minority interest. The ruling in fact confirms that the mere preservation of the option right may not constitute a sufficient safeguard where the minority shareholder does not have the liquidity necessary to exercise it.
The ruling under examination lies at the intersection of multiple statutory provisions and case law principles. With regard to conflict of interest, Article 2373 of the Italian Civil Code, applicable to joint-stock companies (S.p.A.), provides that a resolution approved with the decisive vote of a person bearing an interest in conflict with that of the company is voidable, provided it may cause damage to the company itself. For limited liability companies (S.r.l.), Article 2479-ter of the Italian Civil Code provides a substantially analogous regime, allowing the challenge of decisions taken with the decisive vote of a shareholder in conflict of interest when they are potentially prejudicial to the company.
Article 2377 of the Italian Civil Code completes the procedural framework by governing the general conditions for the voidability of shareholders’ meeting resolutions.
On a more general level, the principles of good faith and fairness in the performance of the corporate contract are relevant, as enshrined in Articles 1175 and 1375 of the Italian Civil Code, which constitute the doctrinal foundation of the concept of abuse of majority.
Case law of the Supreme Court, in particular with decisions Cass. no. 9353/2003 and Cass. no. 1361/2011, has defined the boundaries of this concept: abuse occurs when the majority’s voting right is exercised exclusively for the purpose of harming the interests of the minority or procuring an unjustified advantage for the majority itself, without any justification in the corporate interest and in violation of the standard of objective good faith.
The dispute originated from the challenge, by the minority shareholders of an S.r.l., of the extraordinary shareholders’ meeting resolution of 12 September 2023, by which a share capital increase from €50,000 to €1,700,000 had been approved, for consideration and divisible, with option rights proportional to the shareholdings held and the possibility of subscription through set-off against existing shareholder loans, including those not yet due pursuant to Article 1252 of the Italian Civil Code.
The shareholding structure comprised two groups: the majority shareholders (the director and his family members, with a combined holding of approximately 74%) and the minority shareholders (with the remaining approximately 26%).
Both groups had made shareholder loans, with the majority contributing a proportionally greater amount.
The majority shareholders proceeded to subscribe the increase (for €70,375.55 and €1,112,292.14 respectively, the latter inclusive of a cash payment of €38,331.31), predominantly through set-off against the loans.
The minority shareholders, by contrast, did not exercise their option rights.
The result was a drastic dilution of the minority interest, reduced from 26% to approximately 1.02%.
The minority shareholders challenged the resolution alleging: (i) abuse of majority, arguing the absence of a genuine corporate need and the purely dilutive purpose of the operation; and (ii) conflict of interest of the majority shareholders.
The Court carefully distinguished the two concepts. The conflict of interest under Articles 2373 and 2479-ter of the Italian Civil Code presupposes the existence of an interest of the shareholder incompatible with that of the company, together with the potential harmfulness of the resolution to the entity. The conflict should not be understood as an absolute incompatibility, but rather as a relative situation capable of diverting the determination of the corporate interest.
Abuse of majority, according to the settled case law of the Supreme Court (Cass. nos. 9353/2003 and 1361/2011), occurs when the majority exercises its voting right with the exclusive or prevailing purpose of harming minority rights, without any justification in corporate interest, in violation of the principle of good faith in the performance of the corporate contract.
The Court dismissed both claims.
With regard to abuse of majority, the ruling highlighted that the capital increase responded to concrete corporate needs: the strengthening of the equity structure, the need to obtain the renewal of a bank guarantee in favour of the Veneto Region (the bank had requested a counter-guarantee of €2,800,000), and preparation for future investments.
The evidentiary findings, and specifically the banking documentation and witness testimony, confirmed that the capital increase had been of critical importance for the credit institution’s assessment, which, following the operation, had issued a new guarantee on significantly more favourable terms.
The Court further clarified that subscription through set-off against loans cannot be characterized as without outlay, but rather as without further outlay, given that the sums had been previously disbursed.
The minority’s failure to subscribe was attributed to a free choice by the shareholders, made in a context where all shareholders were in the grip of uncertainty regarding the outcome of the pending administrative litigation.
As to the conflict of interest, the Court observed that, since the capital increase was not potentially harmful to the company, having in fact strengthened its equity position and creditworthiness, the essential requirement of potential harm to the entity was lacking. The interest of the majority shareholders in the subscription coincided, in this case, with the corporate interest.
The Venice Court’s solution aligns with the consistent precedents of Court of Milan, 31 July 2015, no. 9189 (which excluded abuse in a capital increase justified by corporate needs, although carried out through set-off) and Court of Milan, 31 January 2022, no. 804 (according to which a capital increase at par without premium does not constitute abuse where option rights are preserved).
The ruling reaffirms a consolidated legal principle: capital increases supported by legitimate corporate purposes maintain their validity even where they entail significant dilution of minority shareholders, provided that option rights are preserved.
This ruling offers operational guidance of particular relevance, especially in private equity and M&A contexts.
On the documentation front, preparing adequate justification for the corporate purpose behind a capital increase is crucial. This should be achieved through detailed meeting minutes, reports by the administrative body and, where appropriate, independent opinions. Similarly, subscription through set-off against shareholder loans, although legitimate, must be supported by adequate documentation attesting to the existence and amount of the loans.
From the perspective of protection of minorities, the preservation of the option right constitutes an essential safeguard against claims of abuse majority. Nevertheless, where the increase lacks a genuine justification in the corporate interest, the risk of annulment for abuse or conflict of interest remains, particularly in joint venture or private equity structures where minority protections form the subject of specific negotiation.