An institution which deprives shareholders of the right to collect shares is an interesting example of how theoretical considerations concerning the definition of the interest of the company influence trading practice.
The right to collect shares is a corporate right to give shareholders priority to the inclusion of new shares issued in connection with the increase in the share capital of the company. Institution of the right to collect shares described in Article 433(2) KSH serves to protect the interests of existing shareholders against the ‘dissolution’ of their shares in the company. Depriving the right to collect is only allowed if it is in the interests of the company.
The exclusion of the right to collect shares of existing shareholders for the sake of the company may occur where the persons in favour of which the right to collect shares has been excluded can provide the company with funds which the former shareholders are unable to contribute
Definition of the company’s interest
The doctrine presents different views on how to define the interests of the company. There is a radical concept that the interests of the company, as a separate legal entity, should be constructed and assessed in isolation from the interests of its shareholders.
There is also another radical position according to which the interest of the company is in line with the interest of the shareholder (shareholder) of the majority, but this position is not generally accepted among the representatives of the doctrine.
The most common view now assumes that the interest of the company is a result of the interests of all groups of its shareholders and of the common purpose set out in the contract or in the statutes of the company. Thus, there cannot be a separate, independent interest of the company as a legal person.
The concept of the company’s interest as an ‘accident interest’ is confirmed in the case law (the Supreme Court’s position expressed in judgment[5], dated the fifth of November in 2009, I CSK158/09, OSN2010, No 4, item 63).
The impact of theory on practice
Taking the view that the interest of the company, as a separate legal entity, should be constructed and assessed in isolation from the interests of its shareholders, it should be assumed that it will be possible to exclude the right to collect shares whenever the benefits of the company resulting from such exclusion are less than any damage to the shareholders.
The adoption of the concept of the company's interest as an ‘accident interest’ means the need to assess also from the perspective of balancing the diverse and abrading interests of shareholders in the company. In making such an assessment, the advantage that the company (and its shareholders) will receive, e.g. from the fact that a new investor has been acquired, with a detriment on the shareholders' side of the reduction of their participation in the company.
As examples where the exclusion of the right to collect shares may almost always be in the interest of the company, it can be mentioned: directing the issue of shares to the employees of the company, aport issue (exempting from the need to acquire certain assets for the company, e.g.
shares in other companies), a public offer of shares prior to the company's efforts to allow its shares to be traded on a regulated market or an alternative trading venue.
In practice, it is often encountered to exclude the right to collect shares of existing shareholders when new shareholders are to contribute funds, non-monetary contributions or other unique services and services which the former shareholders are unable to bring, and when a strategic investor is to join the company.
However, in any event, it should be considered whether disposing of shareholders of the right to collect shares is more advantageous for the company than leaving them that right. For example, the Bialystok Court of Appeal in judgment of 28 May 2014 (I ACA3/14, Legalis) ruled that the exclusion of the right to collect shares of existing shareholders on account of the company's interests may occur where the persons in favour of whom the right to collect shares has been excluded can provide the company with funds which the former shareholders are unable to contribute.
Practical relevance
Where the general meeting is to decide on the disenfranchising of shareholders, the Management Board shall present a written opinion justifying the disenfranchised. In its opinion, the Management Board should justify that disqualification of shareholders of the right to collect takes place in the interests of the company.
By way of derogation, for a public company, this means that the board of directors must be consulted on the company’s website (Article 4021(1)(3) KSH).
Importantly, the assessment of whether it is in the interest of the company to deprive shareholders of the right to collect is covered by the cognitive scope of the registration court in the course of the proceedings conducted on the basis of a request for an increase in capital to the register.
Because of the failure to fulfil this condition, the resolution to deprive shareholders of the right to collect is invalid, and therefore the agreements to receive shares are also invalid as contracts violating the statutory right to collect. Consequently, a list of purchasers of shares is attached to the proposal.
However, in practice, the substantive examination of this issue usually goes beyond the capacity of the register courts.