Appealing in opposition to shareholders’ resolutions is one of the most debatable aspects of Polish organization law. A recent Supreme Court decision states that the courts cannot annul the shareholders’ decision of a restricted liability organization just because its provisions are opposite to the provisions of the articles of association. (1) A decision that infringes the articles of association can be annulled simply if it similarly undermines the interests of the organization or is geared toward harming shareholders. The Supreme Court decision might appear to put an end to many years of controversy.
Controversy
Article 249(2) of the Commercial Companies Code states as follows:
A resolution of shareholders that is contrary to (a) the articles of affiliation or (b) concepts of morality and (c) adversely affecting the pastimes of the organization, or (d) aimed at harming the shareholder can be appealed against by means of an action brought by the company for an annulment of the resolution. (2)
The interpretation of the above provision has been a matter of controversy for decades. Most of the judiciary took into consideration that for a decision to be annulled, at least one of the factors (a) and (b) and one of the elements (c) and (d) need to be fulfilled concurrently. Nevertheless, a few authors (in addition to a few courts) assumed that:
a contradiction with an organization’s articles of association turned into an independent foundation for repealing a shareholders’ resolution; and
Only while a contradiction with right practices is said, one of the conditions (c) or (d) must be met.
The Gdansk Court of Appeals, inspecting the case for an annulment of the shareholders’ resolution, submitted a motion to the Supreme Court to clear up the above controversy by resolving the resolution. Supreme Court resolutions are not officially binding (except for the case immediately at issue); however, in practice, they may be of fundamental importance and affect the shape of all court rulings.
Decision
The Supreme Court ruled that a shareholders’ resolution of a constrained legal responsibility business enterprise opposite to the articles of association can be annulled simplest if it further undermines the agency’s pastimes or aims toward harming shareholders. The Supreme Court consequently authorized the dominant interpretation of the provision.
First, the Supreme Court assumed that the provision’s textual interpretation strongly supported a majority interpretation. Second, in the Supreme Court’s opinion, the general public’s interpretation turned into an extra-rational one. (It lets the courts look at whether or not the annulment of a decision is clearly suitable in positive instances.) A minority interpretation might require the court to repeal the resolution due to the mere formal contradiction of the decision with the articles of affiliation.
Third, the Supreme Court raised the argument that a majority interpretation is supported by way of the principle of stability of prisoners and women (i.e., organizations). An alternative interpretation would allow minority shareholders who disagree with the general public to miss resolutions based on any formal war with the articles of affiliation. According to the Supreme Court, a majority interpretation protects against such practices, as it calls for the real negative results of this kind of decision to be proven.
