The voluntary redemption of the shares of a limited liability shareholder is a convenient instrument for the withdrawal of the shareholder from the company. We suggest what to pay attention to in the process of liquidation of a certain share capital.
Article 199 Act of 15 September 2000 Commercial Companies Code (Journal of Laws of 2000, item 1037, t.j. Journal of Laws of 2017, item 1577, ‘KSH’ is the legal basis for the redemption of shareholders' shares in a limited liability company.
The redemption in its essence results in the liquidation of a certain share of the share capital (share) and the legislature in Article 199 KSH only outlined the general conditions for the admissibility of the application of the said institution, allowing for distinction third the procedures for the redemption of the shareholder's shares, including, inter alia, the voluntary redemption of the shares.
Form of acceptance of the waiver of shares
Voluntary redemption of shares according to Article 199(1) KSH sentence second, is the redemption of the shares of a limited liability company, with the consent of the shareholder, by the acquisition of the shares by the company. Voluntary cancellation of participation is the legal institution sui generis. It's a complex act.
The individual components of the voluntary redemption of the participation by the institution, i.e.
the consent of the shareholder whose shares are to be decommissioned and the adoption by the meeting of shareholders of a resolution of a specific content based on the authorisation contained in the articles of association, determine its content and form (so judgment of the Court of Appeal in Warsaw of 23 February 2018, VII AGa 166/18).
The question of the form of the consent to the waiver of shares by the shareholder whose shares will be the subject of redemption is a source of controversy and dispute in doctrine. A.
Kidyba stresses that voluntary waiver consent must be given in addition in such a way that it can be relied on in the future, and a waiver made without such consent makes the action ineffective 1 . A different position is taken by A.
Opalski, indicating that "it is not necessary to give consent in a separate declaration of intent (directed to the company and received on general passive representation basis), as it results from an agreement which is the basis for the transfer of shares" 2 . The compromise position is taken by R.
Pabis, indicating that the shareholder's consent can be expressed in any way sufficiently revealing his will, i.e. both explicitly (by making a written statement) or implicitly (by voting for a resolution on redemption or by disposing of shares in favour of the company for redemption) 3 .
However, in applying the institution of redemption of shares in practice, it seems desirable to give the shareholder's consent to redemption in an additional form, preserved for evidence purposes and the possibility to rely on it in the future.
Conduct of the voluntary redemption process
On the other hand, when discussing the content of the resolution on the voluntary waiver of shares taken by the meeting of shareholders, it should be recalled that the articles of association must provide for such redemption, even if by a laconic provision of the content of ‘Shares in the company may be redeemed’.
It should then be borne in mind that the resolution should specify, in particular, the legal basis for the redemption and the amount of remuneration due to the decommitted participation.
The wording of the resolution should also determine whether the payment of remuneration for the acquisition and redemption of the shareholder's shares will be made by reducing the share capital or from a pure profit.
Conclusion of this decision is also necessary if, in accordance with Article 199(3) KSH redemption is made with the consent of the partner and without remuneration.
The final step in the voluntary redemption process is the acquisition of shares by a limited liability company with a view to their redemption.
Standards established in Article 199 KSH and 200 KSH does not reserve the fact that the transfer of the shares between the company and the shareholder is to take place by means of a specific type of contract, and the acquisition of the shares may take the form of a sale contract or other non-named contract.
The limitation of the contractual freedom of the parties relates only to the purpose for which the company acquires its own shares.
If the acquisition takes place in accordance with the objective set out in the Act, the parties may freely shape the content of the contract while maintaining full contractual freedom (see Court of Appeal in Poznań in judgment of 11 September 2008, reference no. I ACa 544/08).
In conclusion, voluntary redemption can be used, inter alia, as a helpful tool to change the capital structure or the ownership of the company, without getting into a court dispute, which saves time, financial resources and avoids fuelling possible conflicts with existing partners.
1 A. Kidyba, Limited Liability Company. Comment. Wyd. 6, Warsaw 2014, Comment to Article 199, thesis 8 – Legalis, electronic access.
2 A. Opalski, in: A. Opalski (ed.), Commercial Companies Code. Tom IIA. Limited liability company. Comment. Article 151-226, Warsaw 2018, comment on Article 199, thesis 6.
3 R. Pabis, in: J. Bieniak, M. Bieniak, G. Nita-Jagielski ed.), Code of Commercial Companies. Comment by Wyd. 5, Warsaw 2017, comment on Article 199 - thesis 17, Legalis – Electronic access
Author:
Michał Skwarek – a lawyer application in the Legal Department. Graduate of the Faculty of Law and Administration of the University of Warsaw