A former member of the board and at the same time a partner of the Polish limited liability company. does not have an active card in the case of repealing the resolution of the ordinary assembly of shareholders refusing to grant him discharge, as stated by the Court of Appeal in Białystok.
The case began with the action of S.S. to annul resolutions of the Ordinary Meeting of Shareholders of limited liability company with its registered office in O., and in the absence of grounds for annulment, to repeal them.
The judgment in question by the Bialystok Court of Appeal is in line with the general interpretation of the courts, refusing to give an active card to any entity other than those expressly indicated under Article 250 k.s.h.
Reason, which is an associate of Sp. z o.o. based in O., having 25 shares (25% Share capital), he accused the company of the following shortcomings related to the adoption of resolutions at an ordinary meeting of shareholders:
- •
- holding a meeting outside the company’s registered office (infringement of the provision Article 234 KSH),
- •
- election of the chairman of the assembly by public ballot,
- •
- preventing discussion of individual resolutions,
- •
- irregularities in voting on resolutions and in the calculation of votes.
However, the defendant company requested that the action be dismissed.
The District Court of Olsztyn dismissed the action to order the annulment of the resolutions of the ordinary assembly of shareholders of the company, repealed the discharge resolution and dismissed the action to the remainder. The Court took into account the majority of the defendant's allegations and concluded that the substantive law infringement indicated by the plaintiff did not affect the content of the resolutions and that the facts indicated by him were not supported by evidence.
On the other hand, as regards the request for repeal of the resolutions of the Assembly, the Court of First Instance held that only a resolution refusing to grant discharge to the plaintiff deserves to be abrogated because of its conflict with good manners and intent to harm the partner.
The Court of First Instance, in the context of its factual findings, found that the reason and second Member of the Management Board – S.T., they were on the board of directors of the Polish limited liability company., based in O., from the moment of its establishment to 10 August 2015 Since March 2015 the company began to incur losses and 10 August 2015 the reason has been withdrawn from the position of a member of the Management Board. The company suffered further losses also in the year 2016, which is confirmed in the financial documentation.
The Court then held that the liability for economic decisions resulting in a negative financial result of the company between March and 10 August 2015 the entire board is assumed, not just the reason.
The court did not accept the claims second a member of the Management Board that the members of the Management Board had separate powers and therefore only the reason is responsible for the financial situation of the company.
On the other hand, he stated that such a division of powers on the board of directors was not confirmed in the remaining evidence and, given the small size of the company, second The board member could not have been unaware of the difficult financial situation of the company.
According to the court, the assessment of the individual members of the board of directors' activities for discharge should be based on uniform criteria.
Circumstances of the negative financial result of the company since March 2015, the undertaking of which the company could not comply and the decision making of incompatible management rules shall be borne by both members of the Management Board and not only the plaintiff. Therefore, if S. T.
was granted discharge, there is no reason not to grant discharge to the plaintiff. Moreover, the Court’s assessment of the decision refusing to grant discharge to the plaintiff was based on emotional considerations related to the conflict among the partners.
These circumstances argue that the discharge resolution has been taken in violation of good morals.
Since the refusal to grant discharge makes it possible to hold a member of the board of directors liable, it may harm the plaintiff by exposing him to compensation. So, in the judgment of the court, second the grounds for the action to repeal the resolution, i.e. taking care of your partner.
The defendant company made an appeal against the judgment of the District Court, alleging, inter alia, that there was no legitimacy to bring an action for repealing the resolutions of the company on the plaintiff's side, and therefore a violation of the provision Article 250 KSH. As a result of taking into account the appeal, the Court of Appeal in Białystok dismissed the motion to repeal the resolutions (reference no. Cases: I ACa 416/17).
The appeal court found the plea of lack of an active identity of the claimant to be valid. In his opinion, the list of entities entitled to bring an action for repeal of resolutions provided for by Article 250 KSH is closed, exhaustive and excluding its applicability to cases not covered by it.
In the present case, the plaintiff could not vote on the resolution granting him discharge for the performance of the duties of a member of the board of directors on the grounds of content Article 244 KSH.
The Court of First Instance considered that the mere submission of opposition to the resolution in the absence of a vote against it was not sufficient to consider that the plaintiff had the legitimacy to revoke the resolutions of the assembly of shareholders.
It has also been found that the requirement to vote against the resolution is a conscious legislative procedure aimed at preventing the company from blocking the initiative in its action concerning the liability of such a partner. The Court of First Instance, referring to the case-law guidelines, stated that the shareholder could only raise objections concerning the resolution after the company’s liability lawsuit had been brought against him.
Next, the appeal court referred to the resolution 7 Supreme Court Judges dated 1 March 2007 (III CZP 94/06). This resolution states that the person dismissed from the composition of the company's body from the o.o. does not have the right to challenge the resolutions which dismiss them from their duties.
He also stated that the dismissed member of the body could use the legal instruments provided for in the Civil Code and the Labour Code for the protection of his interests.
Furthermore, it was considered that such an interpretation had been accepted by the Constitutional Court on the reservation that the dismissed member of the body must have the legal means to exercise his right to court if the resolution infringes his rights.
The judgment in question by the Bialystok Court of Appeal is in line with the general interpretation of the courts, refusing to give an active card to any entity other than those expressly indicated under Article 250 k.s.h.
However, the doctrine of law and practitioners rightly criticise this direction of interpretation, indicating that it is inappropriate in the event that a former member of the board of directors challenges a resolution of the assembly refusing to grant him discharge. It should also be noted that the position of doctrine is partly based on the case law of the Supreme Court.
In bringing the above to the ground of the case before the Court of Appeal in Białystok, it must be pointed out first of all that the interpretation made by the court leads to the conclusion that the former member of the board of directors of the company, who is at the same time an associate, is deprived of the right to a court to contest the grounds for not granting him discharge. It was stated that a former member of the board of directors could raise allegations against the validity of the resolution not granting him discharge only in a case concerning his liability to the company for acting as a member of the board of directors.
Thus, in the opinion of the Court of Appeal, the plaintiff should challenge an important and effective resolution of the assembly of shareholders in proceedings other than proceedings for annulment or repeal of the resolution of the assembly of shareholders. It should be borne in mind that the resolutions of the meeting of shareholders of the company remain valid and effective for the company and shareholders until they are repealed or annulled.
Compliance with this instruction by the appeal court would result in the liability court of a member of the board of directors always having to recognise the validity of the resolution and would always have a basis for a liability ruling, regardless of the circumstances of the case. So his responsibility would be automatic.
On the other hand, even if a court on the liability of a member of the board of directors considered a flaw in the resolution, it would have to issue an internal conflicting judgment – to regard the resolution as flawed when it remains valid and effective in relation to the company and the other shareholders. Such a proposal is difficult to accept.
In addition, the appeal court wrongly referred to the resolution 7 Supreme Court judges from 1 March 2007 The subject of this resolution was the issue of the existence of an active card of a person dismissed from the composition of the company's body to challenge a resolution calling it back from office.
This resolution, on the other hand, is not relevant to the subject-matter of the ruling on the case where it concerns the legitimacy of the Board member dismissed to challenge the resolution not to grant him discharge. Thus, the resolution referred to by the Court of Appeal does not concern the same issue which arose in the case.
Furthermore, in the very wording of the Supreme Court resolution referred to by the Court of Appeal, decisions clearly stating the existence of the credentials of the Board member dismissed to challenge the resolution on granting him discharge can be found. In Supreme Court judgments: from 15 December 2005 (reference no.
II CK 19/05), on 9 February 2005 (reference no. III CZP 82/04) and 13 February 2004 (reference no. II CK 438/02) It was clearly stated that former members of the boards of capital companies had the legitimacy to challenge the discharge resolution.
However, the Court of Appeal does not seem to notice these judgments, not to mention the attempts to respond to the arguments contained therein.
Thus, there is a selective and erroneous appeal to a single Supreme Court resolution. The Court of Appeal did not note the existence of a different case law, which was even cited in the very content of the resolution of the Supreme Court of 1 March 2007, nor did he seek to justify his lack of relevance to the facts of the case.
Furthermore, it did not observe that the interpretation of the provision Article 250 The KSH in the present case leads to absurd results limiting the right to the courts of former chaplains of capital companies.
Author:
Aleksandra Księżyk
Director of the Legal Department in Warsaw. Legal advisor, from 2013 associated with Russell Bedford. He runs the Legal Department at the Chancellery Russell Bedford. He has many years of experience in working in Warsaw Law Firms mainly for medium and large enterprises, but also for companies of the State Treasury.
In her practice, she dealt with legal and administrative proceedings, as well as the creation of various types of contracts, including elements of intellectual property law, agreements, regulations, internal documentation, as well as purchasing.
However, the main area of practice and interest is commercial law and business transformation processes with elements of tax and balance sheet law. He prepares and then implements and conducts merger, division and transformation processes, as well as the creation and elimination of entities.
In the field of proceedings, he shall develop procedural or negotiated strategies. It implements custom projects and implements custom solutions, prepared according to individual customer needs. The author of articles on mainly aspects related to transformation processes.