1.3.3 Developments in civil-law countries

In civil-law countries, on the other hand, the development and design of exit proceedings differ significantly. Firstly, various countries have some kind of oppression remedy in place.

In 1936, Switzerland was the first country to incorporate an oppression remedy in statute. Further to a company-law reform that entered into force on the 1 ^st of January 2008, Swiss statute provides for a more elaborated system of exit rights applicable to the Swiss GmbH. Swiss law provides for a winding-up remedy and, in addition, for expulsion and exit proceedings. A shareholder can invoke the exit proceedings and the winding-up remedy (both against the company) when there is an important ground to do so, i.e. aus wichtigem Grund.1During the exit (and expulsion) proceedings, the court can order the suspension of some or all rights and obligations in connection with the shares of the defendant-shareholder.2 If the shareholder exits due to an important reason, he is entitled to the full value of the shares.3 In the event that co-shareholders claim an exit as well, on the ground that there is an important reason to do so, the company should treat the shareholders equally in proportion to their shareholdings.4

In Germany, a comparable exit right available to shareholders in a GmbH was introduced in the first half of the twentieth century in case law. In German legal literature the existence of this oppression remedy is undisputed.5 However, until today, this right has not been enacted in German legislation, despite several efforts of the legislator. A similar exit right is recognized in Austria in case law as well as literature.6

In Belgium, exit proceedings applicable to the Belgian private limited company were included in statute in 1996.7 For these proceedings, inspiration was sought in Dutch proceedings for the settlement of disputes.

Secondly, some countries lack an oppression remedy, but do have a set of appraisal rights in place. Spain substantially reformed its legislation relating to the private limited company by Act 2/1995, of the 23^rd of March 1995.8 In Chapter IX of this Act, a list of appraisal rights is found. For instance, a shareholder who voted against a change of the objects of the company or against the transfer of the seat of the company abroad, is entitled to an appraisal right (Art. 95 of the Act). The list of appraisal rights has little changed over the subsequent years.

Italy took similar steps in 2004, introducing an even more extensive list of appraisal rights.9 One of the exit rights in Italy is worth mentioning, because of its unusual character. In the case of a private limited company (Società a responsabilità limitata) set up for an indefinite term, an exit right at will is available. The shareholder (according to Italian law indicated as quota holder) may exercise this exit right at any time, subject to a notice of 180 days.10 The articles of association may provide for a longer notice period which however cannot exceed one year. The shareholder who exercises the exit right, is entitled to obtain the reimbursement of its shares (quotas) in proportion to the assets of the company. The assets are valued at their market value at the date of the exit notice. Upon receipt of the exit notice by the company, the reimbursement must be made by the company within 180 days. In the alternative, the shares may also be transferred to the co-shareholders or to a third party jointly designated by the shareholders. If such a transfer does not take place, the reimbursement has to be paid out of the company's distributable reserves or through a reduction of the share capital. The company is put into liquidation if payment of the reimbursement is not possible. In the case of a private limited company set up for a fixed term, the exit right at will is not available.

It should be noted, however, that most of the Italian private limited companies are set up for a fixed term, at which the exit right at will does not apply. Recently, the possibility to set up a private limited company for an indefmite term has been introduced, but not many private limited companies opt for this possibility. Several Italian commentators have argued that the laffer fact may be explained by a preference for companies in which the exit right is not at will, yet of a restricted character. These legal authors put forward that an exit right at will entails the risk that any shareholder may withdraw his investment from the company at any time. This may not only be unpredictable, but may also cause a serious financial burden to the company.11

A second country that was familiar with a mandatory exit right at will that applies to the private limited company was Russia.12 As appeared from practice, similar to Italy, the exit right at will was exactly the reason for investors to opt for another legal form of company at which the exit right at will does not apply, such as the closed stock company.13 Recently, the Russian legislator reviewed the law on 000s. The new Russian rules on 000s entered into force on the 1 ^St of July 2009. One of the key company-law changes is the abolishment of the exit right at will. The Russian legislator decided to allow participants in an 000 to include an exit right at will in the charter of the 000 instead of making an exit right at will mandatory or of a default character. This new exit right at will can only be included in the charter of the 000 by unanimous consent of all participants.

As a final point, some countries only offer a winding-up remedy as an available exit right. An example in this respect is France.14 Several French commentators have pointed out that the introduction of an oppression remedy would be desirable. The Sénat has drafted a proposal for this purpose. Nonetheless, until today this proposal has not been passed into legislation by the French legislator.15