The most important property law of the partner in the company z o.o. is the right to profit earned by the company. Nevertheless, one profit gain by the company with the o.o. does not mean that the partners will receive their dividend. The profit of the company, as part of its assets, is the subject of regulations of the meeting of shareholders, which, as the chief body of the company of o.o., has the right to decide on the purpose of the profit achieved in a given financial year.
What should we do if the majority of the partners regularly adopt resolutions on leaving the company with a profit, depriving the other shareholders of the right to dividends? It is particularly justified to challenge a resolution which deprives the shareholder of his right to profit if the partners transfer the return to the capital every year and the financial condition of the company allows the dividend to be paid. It also remains a more radical action in the form of a company's dissolution.
Action to repeal the resolution
Article 249(1) KSH gives the partner the right to bring an action for repeal of the resolution if it is contrary to the company's agreement with or good manners and agrees with the interests of the company or aims to harm the partner.
It should be borne in mind that in order for a motion to revoke a resolution to be taken into account, a cumulative fulfilment of at least two the reasons for the flaw in the resolution.
Thus, the resolution should be contrary to the articles of association or good manners, and at the same time reconcile the interests of the company or seek to harm the partner.
Given the previous case law, it must be stated that the notorious depriving of a shareholder of a dividend may constitute a condition for the company to terminate
In judicature, it is generally assumed that Article 249(1) KSH a general clause of good morals are such behaviours which have a positive impact on the functioning of the company and are related to the perception of merchant integrity in conducting business activity.
This is, in general, a decent procedure which takes due account of the various interests serving all in the company.
In this context, depriving a shareholder of the right to a dividend may be qualified as a disadvantage in relation to the company only if the possible payment of profit does not harm the interests of that legal person and would therefore not conflict with the purpose of his business, market conditions or the necessity to carry out the necessary investments.
According to the judgment of the Court of Appeal in Katowice - First Civil Division of the day 29 June 2018 I AGa 471/18 the exclusion of the right to dividend may, on the other hand, be considered contrary to the principle of loyalty as an obligation to respect the legitimate corporate interests of all shareholders if it is not justified in the company's economic situation and affects the balance between the interests of the company and the rights of minority shareholders.
The decision to allocate the annual profit for the purposes of the company’s activities and its further development, which excludes the right to dividend, should take into account, inter alia, the purpose of its activities, necessary for its implementation and further development and market conditions, as well as the right to participate in the profit generated, one the most important powers of a partner.
The proper consideration of the interests of the company and of the partner shall decide on a positive assessment of the resolution of the meeting of shareholders.
On the other hand, the resolution of the shareholders' meeting, which allocates the entire annual profit to share capital, can be qualified as a harmful partner in relation to the company, if it results in a long-term exclusion of the profit from the division, when the reserve and reserve capital are already very significant, and the absence of any evidence of a distortion in the industry that would justify further accumulation of funds in the company, the adoption of such a development policy as a result of a permanent allocation of profits for development purposes or an overinvestment, or a transfer of profits to other companies in which the other shareholders do not have a stake.
Depriving a shareholder of the right to a dividend may be classified as a disadvantage in relation to the company only if the possible payment of the profit does not harm the interests of that legal person and would therefore not conflict with its business objective, market conditions or the necessity to carry out the necessary investments.
It is worth noting that, despite the repeal or annulment of the resolution on leaving the profit in the company, the meeting of shareholders cannot be required to adopt a resolution of the opposite substance. In practice, this may mean that instead of the repealed resolution, the Assembly of Partners will adopt a resolution of the same content. Therefore, the injured partner should consider initiating the company's dissolution procedure.
Company dissolution
Given the previous case-law, it must be concluded that the notorious depriving of the shareholder of the dividend may constitute a condition for the company to terminate. The main objective of the company is to bring profits to its shareholders in the form of dividends.
It is worth noting the Supreme Court's ruling from 10 April 2008 in case IV CSK 20/08 in which it was stated that the inability to achieve the objective of the company could be caused by a conflict, existing between the partners, when, as a result of friction between two groups of shareholders with a balanced number of votes, it is not possible to adopt resolutions, which hinders the proper functioning of the company
Further, in light of the judgment of the Court of Appeal in Białystok of 19 December 2014, And ACa 519/14, The reason for the company's termination is only if it is of a lasting nature, so it can be considered that the situation will continue in a foreseeable time. Important reasons for disbanding the company may be: the inability to make decisions in the company, the lack of authorities and the inability to appoint them, the notorious use of the position of a majority shareholder, the lack of interest in the matters of the company by shareholders, permanent conflicts between board members, the deprivation of the shareholder of significant powers by other shareholders, including dividends.
Written by Maciej Tuszyński
Legal Manager in the Legal Department. Lawyer, member of the District Bar Council in Warsaw, graduate of the Faculty of Law and Administration of the University of Warsaw. He specializes in commercial and civil law law. He has professional experience, which includes litigation and comprehensive legal advice on the day-to-day service of economic operators, in particular commercial law companies. As part of his work at the law firm, his practice focuses on corporate, civil and economic matters.