Put options on a fixed price are all clear: the Italian Supreme Court confirms the legitimacy of the repurchase agreements regarding company shares (i.e. the agreement by which the buyer undertakes to resell the shares at a later time, upon the occurrence of certain conditions, upon simple request of the seller) without any participation in the occurred losses, and admits that such cases may pass the test for the leonina societas (under Italian law a permanent and total exclusion of some partners from participation in profits and losses is prohibited).
Those who intend to invest, instead of opting for a funding, may become part of the company structure through the acquisition of a participation in the share capital and, at the same time, insure oneself a safe way out.
To avoid suffering any negative outcomes, the silent partner may, through a shareholders’ agreement, agree with the founders of the company his exit through the sale of the equity investment at a given time, under certain circumstances and at the price of purchase. Indeed, there could be room for profit too: the put option, in fact, may include interests in the agreed price of repurchase.
Focus on this new corporate instrument is recommended. It could favour numerous strategic alliances between financiers and entrepreneurs looking for capital.
The author of this article is Giovannella Condò.