The court declared the resolution on profit distribution invalid as a result of RKKW’s client lawsuit

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The Court of Appeal accepted RKKW’s arguments about the invalidity of the resolution of the shareholders’ meeting regarding profit distribution in the proceedings initiated by RKKW’s client against a limited liability company.

RKKW’s client, a shareholder entitled to half of the shares in the company, filed a lawsuit against the company, in which he mainly demanded that the court declares the resolution on profit distribution invalid. The claimant pointed to its independent legal standing in the court proceedings. The claimant raised procedural allegations that the shareholders’ meeting had been convened in a defective manner, e.g. by failing to observe the two-week period between the date of sending the invitation to the meeting and the date of the meeting required by the provisions of Article 238 § 1 of the Commercial Companies Code (CCC, in Polish: Kodeks spółek handlowych, the acronym: KSH). As well, he raised allegations of an unlawful entry in the share register in which the spouse of the shareholder was wrongfully disclosed as the joint holder of the client’s shares. Also, the claimant argued that the management board added the shareholder’s wife to the share register – as an alleged co-holder of the shares that she never took up – without a legal basis as the shareholder alone established the corporate relationship with the company to the exclusion of his wife. What is more, the management board acted in an illegal manner in order to pay the shareholder’s wife half of the dividend due exclusively to the shareholder.

The Regional Court and the Court of Appeal agreed with arguments of RKKW’s client. The Regional Court acknowledged the independent legal standing of RKKW’s client. The Court agreed with well-established jurisprudence of the Supreme Court and academic writing stating that only property rights, not corporate rights, may belong to the joint property of spouses. Thus, the share in its material manifestation reflecting the property rights becomes an element of the joint property, while corporate rights are exercised only by the spouse who took up shares. Only the person participating in the action of taking up shares is a party to the articles of association of the company, and thus a shareholder of the company, even if he or she is married, and the funds to cover the shares come from the joint property of the spouses. The above results from the necessity, emphasized by the Supreme Court, to separate the internal sphere (property sphere, a sphere between spouses) from the external sphere (corporate sphere, a sphere between the shareholder taking up shares and the company). Only the spouse who has taken up shares in the company is a shareholder in the company, regardless of the source of funds used for covering the shares, and therefore regardless of the property regime existing between the spouses. It is not the property regime between spouses that determines the vesting of corporate rights, but only the act of taking up shares.

Additionally, the Court of Appeal clearly indicated that the change of the property regime between spouses (from joint property to separate property) does not change the abovementioned rule. The establishment of the separate property between spouses (as an event remaining outside the company relationship, i.e. an event from the internal sphere between spouses and pertaining only to their property rights) does not change the past action of taking up shares and establishing a corporate bond with the company exclusively by one of the spouses, who thus became independent in exercising corporate rights.

The Regional Court also found that the procedure for convening the shareholders’ meeting was defective, as the two-week deadline for sending notices of the meeting to the shareholder – RKKW’s client – was not observed. The Court agreed with the position presented by the claimant in this respect, supported by the case law, that the minimum two-week period under Article 238 § 1 of the CCC is met only when it ends on the day preceding the day for which the meeting was convened. The Court also rightly pointed out that due to the absence of the incorrectly notified shareholder – RKKW’s client – at the meeting, all shareholders of the company were not present. Thus, the meeting was not authorized to adopt resolutions, as it did not meet the requirements of Article 240 of the CCC. The Court, in line with the established jurisprudence of the Supreme Court, indicated that a violation of Article 240 of the CCC constitutes a defect so important that it always has an impact on the content of the adopted resolution. Such legal assessment of both issues was shared by the Court of Appeal. The Court dismissed the company’s appeal in its entirety.

The judgment is final and binding.

Damian Dworek – attorney-at-law and partner at RKKW, Maria Czaińska – attorney-at-law, Wojciech Rzepiński – advocate and Natalia Ruszkowska – advocate’s trainee, were involved in the case.