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The requirement for a just cause to be material to the extent
explained above becomes even more important bearing in mind the
possibility Art. 636 TCC grants the court to rule for the squeeze out of
the claimant shareholder or for another suitable solution instead of rul-
ing for the termination of the company.
Court Rulings for Other Suitable Solutions
Pursuant to Art. 636 TCC, if a termination lawsuit is filed, the
court may rule for the squeeze out of the claimant shareholder or for
another suitable solution. This discretion granted to the judge is very
important bearing in mind the main principle of ensuring a company’s
continuity and resorting to termination only when there is no other
viable solution.
This provision is similar to Art. 531 TCC which, for the first time,
regulates the termination of joint stock companies by just cause. The
TCC accepts, by regulating alternative solutions to termination by just
cause, that termination of a company is a very heavy consequence both
for joint stock companies and limited liability companies. The termi-
nation of a company should only be a last resort.
Given the novelty introduced under Art. 636 TCC, the court does
not have to rule for the termination of a limited liability company, even
if it finds the reasons brought forward by the claimant shareholder jus-
tified. If the continuity of a company is more convenient from an eco-
nomic and rational perspective, the court may squeeze out the claimant
shareholder instead of terminating the company. This provision there-
fore accepts that the shareholder will incur no harm in being squeezed
out of the company whose termination it is requesting. In both cases,
the shareholder will exercise their shareholding rights and their share-
holding shall cease.
In the event a lawsuit for termination by just cause is filed, the
court is not limited with the option to squeeze out the claimant share-
holder, and may rule for other suitable solutions. Notwithstanding, the
TCC does not state what those solutions may comprise. Art. 636 TCC
grants the judge broad discretion and the judge shall evaluate the con-
flict presented before the court.
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