Share may be decommissioned only after its entry in the register and only if the articles of association so provide (Article 199(1) (ksh). The waiver of shares as regards the rules requires the adoption of a resolution by the shareholders, which should specify in particular the legal basis for the redemption and the amount of remuneration of the shareholder for the decommitment.
The waiver of shares in a limited liability company may be made on a fee basis, either by reducing the share capital or from a pure profit, or free of charge, i.e. without remuneration as provided for by Article 199(3) k.s.h.
The waiver of shares in a limited liability company without remuneration does not require a reduction in share capital.
On the other hand, the type of redemption depends on whether it involves the obligation to reduce the share capital of the company. The provisions of the Commercial Companies Code, and this Article 199(6) k.s.h. explicitly provides that no reduction in share capital is necessary in the event of the redemption of the share of the pure profit. In that case, the share capital of the limited liability company differs from the product of the remaining shares in the company concerned and their nominal value.
This is confirmed by the established jurisprudence of the Supreme Court, according to which the write-off of the shares from a pure profit does not lead to changes in the amount of share capital and is therefore irrelevant to external relations.
However, we are faced with a particular – although acceptable under the law on limited liability company – situation where the product of the number of existing shares and their nominal value is lower than the share capital.
However, a smaller number of shares, although there was no corresponding reduction in share capital due to the redemption, translates into the carrying amount of the remaining shares. For the purposes of calculating this value (see judgment of the Supreme Court of 20 March 2009, II CSK 608/08, LEX No. 584732).
A similar approach is also found in the resolution of the Supreme Court of 9 April 1997, III CZP 15/97, It states that ‘The redemption of shares without prejudice to the share capital consists in reducing the number of shares, while maintaining the change in share capital.
As a result of this operation, a situation arises in which the sum of the retained (still existing) shares is lower than the share capital. The ratio in which the shareholders' shares remain to share capital shall determine the proportion in which the shareholder participates in the company's assets.
At the time of the redemption of part of the shares in profit, the balance sheet share capital shall not be changed. The sum of the nominal values of all shares is reduced. This creates a gap corresponding to the difference between two indicated sizes’.
In case of free redemption of shares with the consent of the shareholder (Article 199(3)) k.s.h.) the question of financing the redemption remuneration becomes manifestly irrelevant. The shareholder whose shares are redeemable under this procedure is not entitled to any remuneration claim that the company would have to finance.
Consequently, as in the case of the redemption of the shares from pure profit, the redemption of the shares in a limited liability company without remuneration does not require a reduction in the share capital.
In this context, the above-mentioned considerations of the Supreme Court remain valid also in relation to unremunerated redemption.
Author: Magdalena Mączka Legal Advisor, Russell Bedford Dmowski and Associates Law Firm Sp. k.