The situation is more problematic when USCO and UKCO are shareholders of LUXCO, which in turn controls several subsidiaries, including the Italian limited company. A framework agreement between USCO and UKCO on the vote at LUXCO could remain a shareholder agreement within the meaning of Italian rules, at least as far as the Italian public limited company is concerned. Some authorities consider that an agreement is considered permanent, even if its duration is linked to that of the company or to the life of one of the parties. In these circumstances, the duration of the agreement is not simply reduced to five years; on the contrary, each party can withdraw as it pleases. Extension clauses are in principle valid. However, an extension clause must not effectively deprive a party of its right not to renew the contract. For example, some companies have proposed (and even accepted) an agreement where each party gives a mandate to give another party the power to exercise the right of extension, so that the agreement is extended by the lawyer at the end of its term. However, this is not a viable solution, as the party giving the power of attorney could challenge the entire system. The attempt to circumvent the maximum duration of five years by a form of automatic contractual extension can seriously backfire, given that the agreement can be considered permanent, in which case the parties would have the right to resign after a good reason – a typical case where healing is worse than evil.

Therefore, a shareholders` agreement remains a useful instrument only if the parties intend to commit to it for a maximum period of five years. Restrictive classification of shareholder agreements As this review of the requirements shows, not all shareholder agreements, as generally prescribed in the company`s practice, are governed by the new provisions and are therefore limited to a maximum duration of five years. For example, agreements providing for an obligation to consult or for the distribution of dividends are not subject to the maximum duration of five years. In addition, the new Regulation expressly excludes all shareholder agreements which, while fulfilling the above criteria, constitute an ancillary agreement to joint venture agreements involving undertakings wholly owned by the parties. However, the relevant definitions of this provision are not entirely clear. In analysing examples of such agreements, it is important that: Finally, Decree-Law No 58/1998 (Consolidated Financial Law) provides for a more restrictive regime for shareholder agreements with regard to listed companies: the maximum duration is three years and the agreements are notified to the Italian tax authority (Commissione Nazionale per le Società e la Borsa (CONSOB), submitted to the competent commercial register and a summary must be published in the Italian newspaper rs – but this is obviously not the case for an e. . . .