Transplanting Fairness: The Italian Reinvention of the Scheme of Arrangement

A Reform with Surgical Precision

In October 2025, the Italian Council of Ministers approved, in preliminary examination, a legislative decree amending both the Italian Financial Act and the Civil Code—a comprehensive reform designed to revitalise Italy’s capital market, strengthen corporate flexibility, and enhance competitiveness.

Among the most intriguing novelties lies Article 112-bis of the Italian Financial Act, which introduces the so-called ‘acquisto totalitario’—literally, ‘total share acquisition’. It allows a listed company, by extraordinary resolution, to authorise the sale of all its shares to a designated acquirer, under the supervision of the Italian supervisory authority.

This contribution seeks to assess the measure as a legal transplant: a deliberate grafting of a foreign organ—the English ‘scheme of arrangement’—into the civil-law body of Italian corporate regulation. This comparative resonance currently also extends beyond Europe. In the United States, a former New York bankruptcy judge has recently renewed calls for the adoption of a mechanism akin to the scheme of arrangement which, in his view, could permit companies to restructure funded debt alone and thereby remedy the so-called ‘Texas Two-Step problem’.

Like any transplant, its success depends not only on the surgeon’s technique but on the host’s ability to integrate the new tissue without rejection. What follows is an examination of this new institutional anatomy—its design, its distributive logic of power, and its potential complications.

The Architecture of Italy’s ‘Total Share Acquisition’

Article 112-bis currently under discussion outlines a procedure that redefines the frontier between corporate autonomy and regulatory oversight. The process begins with a binding purchase proposal made to the company. The board evaluates it, assisted by an independent committee, and discloses it both to the Italian supervisory authority and to the market.

The decisive moment comes when the extraordinary shareholders’ meeting authorises the sale—but with the notable exclusion of the bidder and any shareholder holding more than 10%. This disenfranchisement of control transforms the ordinary hierarchy of corporate governance: those accustomed to commanding must now remain silent, and legitimacy is transferred to the ‘residual majority’.

This inversion performs the function of a corporate whitewash—a mechanism that cleanses conflicts by filtering consent through disinterested hands. Temporarily, Italy’s model of capitalism suspends its own logic of control and entrusts corporate destiny to a purified electorate. 

So, the new feature at stake is built upon a triad of safeguards that together perform a ritual of legitimacy:

1. Procedural fairness — independence of judgment by a board committee free from conflicts;
2. Substantive fairness — a minimum cash price, pegged to a six-month market average or the highest price recently paid;
3. Institutional fairness — CONSOB’s powers to suspend, amend, or annul the procedure.

These layers work not as bureaucratic formalities but as instruments of ‘purification’. Coercion, inevitable in collective decision-making, is rendered legitimate through transparency, timing, and independence. 

The English Model: Fairness under Judicial Conscience

The intellectual lineage of Italy’s total share acquisition traces unmistakably to the English scheme of arrangement, codified in Part 26A of the Companies Act 2006. The scheme has long represented the common law’s most refined reconciliation of private autonomy and collective justice—a judicially supervised consensus mechanism, skeletal in statutory form yet fleshed out by a century of Chancery jurisprudence into a constitution of fairness.

At its core, the scheme allows a company to restructure or be acquired through a court-sanctioned compromise, binding even dissenting minorities once approved by the requisite majorities: seventy-five per cent in value and a simple majority in number within each class. The statutory text is deceptively spare, but the Chancery courts have, through case law, constructed around it a procedural cathedral whose pillars are class composition, fair representation, reasonableness, and legality.

The High Court plays the role of constitutional conscience. At the convening stage, it examines whether those invited to vote share sufficiently similar legal rights to consult together in a single class—a doctrine first crystallised in Re Dorman Long & Co Ltd [1934] Ch 635 and Re English, Scottish and Australian Chartered Bank [1893] 3 Ch 385. Since the Practice Statement (Schemes of Arrangement with Creditors) [2002] 1 WLR 1345, following Re Hawk Insurance Co Ltd[2001] EWCA Civ 241, the court adjudicates class composition at this preliminary stage to ensure procedural regularity and pre-empt later challenges. This anticipatory scrutiny of equality within classes functions as a constitutional firewall against majority oppression.

At the sanction stage, the court’s inquiry deepens. The now-canonical four-fold test, articulated in Re Telewest Communications Ltd (No 2) [2004] EWHC 1466 (Ch) and reaffirmed in Re TDG plc [2009] 1 BCLC 445, requires that: (i) all statutory requirements have been met; (ii) the class was fairly represented and the majority acted bona fide; (iii) an intelligent and honest member of the class might reasonably approve the scheme; and (iv) there is no blot—no illegality, procedural defect, or abuse of process. This ‘fairness quartet’ substitutes for unanimity: it ensures that majority rule, though potent, never metastasises into majority coercion.

Disclosure stands as the lifeblood of this judicial democracy. The court demands that members or creditors receive an explanatory statement adequate to form an informed judgment on the proposal’s merits. In Re Heron International NV[1994] 1 BCLC 667 and Re Ophir Energy plc [2019] EWHC 2246 (Ch), inadequate or opaque disclosure prompted judicial scrutiny, affirming that information asymmetry can vitiate the fairness of consent. The explanatory statement, therefore, becomes not a formality but a constitutional guarantee of deliberative equality.

This equilibrium between deference and discipline defines the English tradition. As early as Re Canning Jarrah Timber Co [1900] 1 Ch 708, the court made clear that it would not second-guess commercial wisdom but would intervene where procedural integrity faltered. Likewise, in Re NFU Development Trust Ltd [1972] 1 WLR 1548, the doctrine of the ‘absence of a blot’ crystallised the judiciary’s right—and duty—to refuse sanction when the scheme contravenes law or fairness.

In practice, the English courts’ measured pragmatism has allowed the scheme to evolve into the dominant route for friendly takeovers and complex restructurings. Their approach balances market efficiency with moral oversight: liberal enough to accommodate innovation (including hybrid or cross-border schemes), yet anchored in the discipline of fairness. The court’s oversight functions as a constitutional safety valve—preventing consent from becoming coercion and ensuring that the voice of the minority, though outvoted, remains heard within the judgment of justice.

Ultimately, the English model institutionalises fairness as conscience. The judiciary transforms private bargains into public acts of legitimacy. Fairness here is not procedural ornament but substantive morality: the law’s assurance that efficiency does not eclipse equity, and that in the governance of capital, even the smallest dissent is absorbed within the architecture of justice rather than silenced by it.

Italy’s Variant: From Judicial Democracy to Regulatory Corporatism

Italy’s total share acquisition mirrors the purpose but not the structure of the English scheme. It displaces fairness from the judiciary to the governance system itself: independent directors serve as internal judges, the Italian supervisory authority as external auditor. The result is a model of regulatory corporatism—legitimacy through codified procedure rather than interpretive judgment.

The difference is not merely institutional but philosophical. In the common law, fairness lives in discourse and discretion; in the civil law, it resides in protocol and predictability. The Italian reform thus replaces equity’s flexibility with the bureaucratic precision of administrative oversight. The law becomes the surgeon’s scalpel: capable of excision, but incapable of empathy.

From Scholarly Vision to Legislative Architecture

The intellectual blueprint of Article 112-bis owes much to Luca Enriques’s 2014 proposal for a compulsory share exchange as a new European business combination form. Enriques diagnosed a chronic inefficiency in EU corporate law: acquirers seeking full ownership were trapped between two imperfect procedures—the takeover bid with its squeeze-out threshold, and the cross-border merger with its procedural burdens and tax frictions.

His remedy was conceptually elegant: a third path—a corporate-law mechanism allowing 100% acquisitions without resorting to the market or to merger integration. The guiding philosophy was that coercion could be legitimised through procedure, and that the minority’s loss of autonomy could be whitewashed by transparency, fairness, and collective approval.

Enriques’ insight has now found legislative form in Article 112-bis, which internalises market transactions within the company’s constitutional life. The shareholders’ resolution becomes the democratic ritual through which compulsion is converted into consent. The minority’s expropriation is accepted not because it is voluntary, but because it is procedurally immaculate. 

In this theoretical architecture, due process replaces unanimity as the new currency of legitimacy. The Italian reform translates that ideal into legal code.

Yet this domestication is not without risk. Enriques envisioned fairness as a living equilibrium between efficiency and legitimacy. The Italian version risks formalising that equilibrium into bureaucracy—a whitewash that may, if over-institutionalised, lose its moral hue.

The Whitewash and the New Cartography of Power

The new Article 112-bis reconfigures the geography of corporate influence. By excluding controllers, it amplifies the role of residual shareholders—a constituency that, in today’s markets, increasingly includes hedge funds, arbitrageurs, and activist investors. This procedural democracy can quickly become a battlefield of tactical minorities. Short-term investors, motivated by speculative arbitrage, may hold decisive power to block or monetise consent. The mechanism designed to neutralise domination may thus generate new forms of veto and rent-seeking.

In contrast, the English scheme diffuses dissent through judicial mediation; the Italian version concentrates it in the hands of those who remain. Fairness, once safeguarded by conscience, is now exposed to bargaining. The whitewash, if applied too mechanically, risks whitening the façade while leaving the underlying asymmetries intact.

Policy Implications and Future Outlook

From a policy perspective, Article 112-bis TUF is more than a procedural novelty: it is an experiment in re-constitutionalising corporate control. Its implications reach beyond Italy’s borders.

1. A Structured Path to Delisting. The new instrument offers a controlled exit route for listed companies, reducing the cost and uncertainty of traditional takeovers. It could encourage corporate reorganisation and ownership fluidity, particularly in mid-cap firms with stagnant shareholder bases.
2. Rebalancing Corporate Democracy. By excluding controllers, the reform empowers minority shareholders. Yet policymakers should remain alert to the unintended empowerment of speculative capital — and may consider safeguards such as ‘minimum holding periods’ or ‘record-date thresholds’ to prevent opportunistic vetoes.
3. A New Role for CONSOB. The regulator now acts as arbiter of fairness in lieu of the judiciary. Its interpretive prudence—especially in detecting collusion, manipulation, or artificial pricing—will determine whether the procedure becomes a credible governance tool or a bureaucratic ritual.
4. Towards a European Model of Whitewashed Coercion. The total share acquisition could serve as a prototype for future EU harmonisation, bridging the divide between market mechanisms and corporate autonomy. It embodies a distinctly European ethos: efficiency tempered by procedural morality.
5. Sustainability of the Transplant. The ultimate success of this legal transplant depends on institutional culture. A transplanted organ can function only if it receives oxygen—in this case, the genuine independence of directors and the integrity of regulatory oversight.

Conclusion: The Pulse of a Transplanted Heart

All in all, Article 112-bis is more than a technical amendment; it is a moral experiment in corporate design. It reimagines fairness as a function of governance rather than judgment.

By transplanting an English organ into an Italian body, Italy has performed a legal surgery of rare ambition—grafting an English logic of fairness onto a civil-law organism. The reform aspires to harmonise two legal temperaments—the equity of conscience and the order of code. Yet every transplant has its immune system, and carries risk. If procedural independence degenerates into box-ticking, or if opportunistic minorities exploit their newfound power, the body may reject the organ. Also, the Italian host may integrate the new tissue, but the circulatory system is different: regulatory blood runs thicker than judicial equity.

The new organ may beat, but will it breathe?

If procedural independence becomes mechanical or exploited by opportunistic minorities, the reform could ossify into ritual. But if animated by genuine integrity—by independent judgment, transparent oversight, and ethical governance—Article 112-bis may become a living testament to Montesquieu’s axiom: that the law’s true task is not to destroy power, but to teach it restraint.

The pulse, then, is there. Whether it will sustain life depends on the hands—and hearts—that keep it beating.

Maria Lucia Passador is an Assistant Professor of Corporate Law and Financial Markets Regulation at Bocconi University