Success of our clients – The court ruled that evading the obligation to declare the acquisition of shares was ineffective

In mid-2018. Law Firm Clients (a married couple) sold to another married couple (the “Plaintiffs”) 100% of the shares in a limited liability company, which included a restaurant business. On the date of the sale, there was an approval of the 2017 financial statements and a change in the composition of the company’s Board of Directors from Law Firm Clients to Plaintiffs. On the same day, in addition to the share sale agreement, the parties signed a mutual settlement agreement under which they undertook to provide other services.

Shortly after the transaction, the Plaintiffs demanded the return of part of the funds from the sale of the shares and ceased to perform the mutual settlement agreement. A few months after the acquisition of the shares, they ceased the restaurant business and filed declarations “to evade the legal effects of the declaration of intent (purchase of shares) made under the influence of a fraudulent error”. The Plaintiffs alleged that, inter alia, the Firm’s Clients had not been presented with a correct balance sheet and profit and loss account prior to the acquisition of the shares and that the Firm’s Clients … had performed the mutual settlement agreement to which they had committed themselves.

At the same time, the Plaintiffs took a number of actions, inter alia, leading to their deletion from the company’s KRS as owners of shares and members of the Management Board, and brought this very action to establish the effectiveness of the declaration on the evasion of the legal effects of the acquisition of shares.

The Regional Court in Białystok, in its judgment of 30.05.2022, dismissed the Claimants’ actions in the joined case against the Law Firm’s Clients in full, sharing the Law Firm’s Clients’ position. First of all, the Court found that the Plaintiffs failed to demonstrate a legal interest in requesting the determination of the effectiveness of the rescission of the declaration of will, since they themselves indicate that they are entitled to a more far-reaching claim for payment. Secondly, in the opinion of the Court, even disregarding the above, the Plaintiffs failed to prove the premises justifying the revocation of the legal effects of their declaration of intent. As the Court pointed out:

“the plaintiffs were able to analyse the company’s situation in detail and had the opportunity to inspect any documents. The defendants did not present any document that was false, forged or falsified. They reported on how the restaurant was operating. During the months of July-September, the restaurant did not generate income – as indicated by the defendant, and in the following month a profit, albeit a small one, was made, and the reasons for the lack of economic success were attributed to the lack of experience in running the restaurant. Any minor settlement of business costs was settled by the parties in the mutual settlement agreement. Therefore, there are no grounds to conclude that the plaintiffs acted under the influence of an error as to the content of the legal act, let alone an error caused by deceit on the part of the selling party“.

This case is the clearest illustration of the fact that both in the process of purchasing shares and in choosing the right type of action, one should be assisted by appropriate advisors, as by choosing the wrong claim, one can lose before a lawsuit is filed.

The judgment is not final. The case was conducted by attorney Wojciech Bokina and attorney Aleksandra Bobińska.