The damage to the company also indirectly affects the property situation of persons entitled to participate in profits or liquidation amounts, therefore the Commercial Companies Code equips the shareholders of the company with the power to bring an action for compensation for damage caused to the company.
According to Article 295(1) a code of commercial companies, if a limited liability company fails to bring an action for compensation of damage caused to it within one year of the date of disclosure of the injurious act, any partner may bring an action for compensation of damage caused to the company.
This is the sole right of the shareholders of the company, independent of the size and quantity of their shares. This right also functions under the name actio pro socio.
Reasons for bringing an action
The partner, acting pro socio, is entitled to bring effective damages proceedings as long as the limitation of the compensation claim has not occurred.
The condition for each shareholder to bring an action is that both of the following conditions are met together:
- • Flow one one year after the date of disclosure of the injurious act,
- • the inactivity of the company during that period of failure to bring an action.
It should be stressed that, if a year has passed since the disclosure of the injurious act and the company has not brought an action, and it has been brought by a shareholder, then the company's subsequent bringing its own action does not affect the earlier action of the shareholder.
The Company may intervene as a stand-alone intervener in proceedings pending as a result of an action by a partner in favour of the Company. It is also possible for the company or other partners to bring a separate action concerning the same claim.
However, collapse first the judgment of the final judge of the action should lead (if the other actions are not withdrawn) to dismiss the other actions because the injured company has already been granted legal protection.
If, on the other hand, compensation is charged several times and the amounts of compensation are different, the company has the right to demand the defendant to pay the amount of the largest of them, but it cannot execute all those judgments in succession.
The partner, acting pro socio, is entitled to bring effective damages proceedings as long as the limitation of the compensation claim has not occurred. Three-year period, provided for in Article 297 dd.
1 ksh - running from the moment the company found out about the damage and the person responsible for repairing it - also binds the partner. As a result he has two years to bring its own action on behalf of the company, since first A year after disclosure of the injurious act is reserved exclusively for the company.
Security to the defendant
Article 295(2) ksh introduces the possibility for the court to apply a specific security to the defendant in case he has suffered damage as a result of an action by a partner. The request for a deposit should be made with first the procedural action, under the terms of its expiry. The defendant shall be required to demonstrate that the action is unfounded and that he is in danger of harming the action. On bail, the defendant is given priority over all creditors of the plaintiff.
Liability of the partner to the defendant
As a counterweight to the possible abuse of powers resulting from this institution, Article 295(4) ksh provides for the special liability of the partner to the defendant in the compensation process if the action has been dismissed as unfounded and the partner acted in bad faith or committed gross negligence.
The very fact that pro socio is dismissed does not justify the liability of the claimant (co-operative) to the defendant. It is also necessary to bring an action in bad faith or to commit gross negligence.
Thus, the liability for damages will be borne by the partner who brought the suit, even though he knew that the defendant did no harm to the company or could easily have known it. The former defendant may bring an action against the former plaintiff(s) in the course of ten years after he was harmed by a failed pro socio action.
It should also be indicated that the analogous solution contains Article 486 ksh in respect of a public limited liability company, where, alongside a shareholder, persons who are entitled to bring an action for compensation for damage caused to the company are also entitled to another title of participation in profits or division of assets of the company (e.g. holders of founding certificates, temporary certificates or utility certificates).