In a ruling dated 22 June 2023, the Court of Milan focused on the substantive differences and on procedural solutions that distinguish fiduciary registration of shares and fictitious interposition of a person in the ownership thereof.

In a ruling dated 22 June 2023, the Companies Section of the Court of Milan highlighted the substantial differences and the different procedural solutions that distinguish fiduciary registration of shares and fictitious interposition of persons.

In this case before the Court, a party:

  • alleged that it had registered company shares in trust in the name of a third party;
  • complained that upon request for subsequent re-transfer of the shares, the third party failed to do so; and, consequently,
  • asked the Court of Milan to ascertain and declare its capacity as the beneficial owner of the shareholding and to order the company to immediately transcribe the said shareholding in the Company Register (with the consequent reduction of the shareholdings formally held by third parties).

The Court of Milan rejected the application, without entering into the merits of the dispute, applying the criterion of the 'most enforceable grounds' and recalling – in this regard – the indications of the Court of Cassation on the differences between fiduciary registration of shares and fictitious interposition of persons (and consequent remedies available in court).

According to the judges of legitimacy, in fact, "the apparent attribution of the right of ownership to a person other than the person who intends to retain its effective availability may occur either by fictitious interposition, falling within the scheme of the simulated transaction, or by real interposition, instrumental or not with respect to a trust transaction."

However, whereas in a fictitious interposition there is a manifestation of a transaction that differs from the one actually intended (a so-called simulated contract), with the understanding that it is ineffective, in the case of a fiduciary registration there is the real interposition of a third party with a legal transaction that must be considered valid and effective, albeit on the assumption that the contracting party is obliged to make a further transfer in favor of the actual beneficiary of the relationship (Court of Cassation, Sec. II, 20/07/2020, no. 15385).

In accordance with this indication, the Court of Milan therefore rejected the claim, pointing out that in the case in question it was the same plaintiff that had confirmed the operation of the shares' registration in the hands of third parties as "fiduciary" and could not, therefore, accept the request for the mere verification of the shareholder's role proposed by the plaintiff since "the transfer by a trust deed entails a real transfer of ownership of the shares, with the addition of a commitment to their re-transfer" and "the only way to regain the shares, subsisting all the prerequisites, is to act pursuant to Art. 2932 of the Civil Code", i.e. by a constitutive action aimed at obtaining a judgment in lieu of the non-concluded re-transfer agreement.

Having presented a fiduciary registration of shares (and not a fictitious interposition of a person), the plaintiff could not therefore declare to be (and be declared by the Court) the owner of the shares, but – in view of the completion of a real and effective legal transaction in favor of third party 'trustees' – should have acted to obtain a ruling on the formal transfer of the same in its favor.

In conclusion, according to an old saying, the details make the difference, but the difference is not a detail.

Originally Published by 15 September 2023

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