The Court of Appeals in Wroclaw confirms that the suspension of a shareholder’s share rights also applies to personal rights

The suspension of a shareholder’s shareholding rights also extends to the personal rights held by the shareholder and granted to him in the articles of association.

Two panels of the Court of Appeals in Wroclaw, in two proceedings concerning resolutions challenged by a suspended shareholder, while dismissing his appeal, indicated that the suspension of shareholding rights on the basis of an order granting security in a shareholder-only case also extends to the suspension of his personal rights granted to him in the articles of association.

The facts in the pending proceedings coincided. Proceedings are pending against a shareholder who, based on the articles of association, has the personal power to appoint the chairman of the board of directors in the company. In the course of these proceedings, the court granted security to the other shareholders for the duration of the proceedings by suspending the excluded shareholder from his rights under Article 268 of the Companies Act.

In order to stabilize the situation in the company, the remaining shareholders, after obtaining security, dismissed the previous CEO and appointed a new board of directors, and passed resolutions aimed at normalizing the situation in the company. However, the excluded shareholder, who was also the dismissed chairman of the board, challenged some of the resolutions passed by the shareholders and tried – twice using his personal power – to reappoint himself as chairman of the board.

The above circumstances were first confronted by two panels of the Regional Court in Wroclaw, which, although not fully sharing the arguments of the Company and the Shareholders, dismissed the claims of the excluded shareholder, pointing to the lack of legitimacy to support the claim in view of the absence of the status of a member of the board of directors authorized to challenge resolutions and the lack of effective appointment by the excluded shareholder of herself as chairman of the board.

In their justifications, the courts pointed out that the security issued under Article 268 of the Companies Act does not exclude personal rights. However, in a situation where a member of the board of directors is dismissed for valid reasons, it is unacceptable for that member, exercising the personal powers granted to him by the articles of association, to reappoint himself as chairman of the board of directors, in view of which the attempt to appoint a board member in such circumstances should be viewed as invalid – as it aims to circumvent the law.

Both judgments were appealed by the excluded shareholder.

The Court of Appeals in Wroclaw, however, in dismissing both appeals, indicated that:

“Thus, the Courts shared the view presented by the Company and the Shareholders from the very beginning in the above proceedings, that the suspension of a shareholder in his shareholding rights also includes the suspension of his personal rights granted to him in the company agreement.”RetryClaude can make mistakes. Please double-check responses.