Unwanted tenant at company headquarters

In the market, a popular way to organise a business is to create holding structures. Holding company shares in parent companies is not only convenient, but also reduces the risk that problems in one branch of the business will bury others. However, holding company structures require the creation of multiple theoretically independent entities, most often incorporated companies. In this connection, it should be borne in mind that each of such companies must have its own management board, which may not agree with the actions of the representatives of the parent company. It was precisely such a situation that caused one of the Firm’s clients numerous problems.

In the case in question, 100% of the shares of company A (which, for simplicity, let’s call it the daughter company) belonged to company B (which, for simplicity, let’s call it the parent company). At the same time, X, whom for the purposes of this text we will refer to as the President (who was the chairman of the board of directors of the company¬s subsidiary and at the same time a shareholder of the parent company). The President undertook to manage the daughter company in accordance with the wishes of the persons representing the parent company¬ and in accordance with the arrangements made prior to the acquisition of the daughter company’s shares by the parent company from a third party.

However, only a few months after his appointment to the daughter company’s board of directors, the President began to violate the arrangements made prior to the acquisition of the daughter company, which, in the eyes of the other persons involved in the parent company, were detrimental to the parent company’s operations and thus indirectly to their interests. The president initially violated the arrangements in a minor way, disrupting the subsidiary’s production facility, interfering with products without consulting anyone else or encroaching on the authority of the subsidiary’s operational staff.

However, as a result of the increasing number of violations, a conflict arose between the President and the proxy of the subsidiary, referred to for the purposes of this text as the Proxy, whose appointment was one of the conditions for the President to remain on the board of the subsidiary. One of the bases for this conflict was the fact that the Proxy was responsible, among other things, for finding an entity interested in investing in the subsidiary, and one of the conditions set by the investors with whom the Proxy was in talks in this regard was the removal of the President from the subsidiary’s board. As a result of the conflict described above, the President terminated the Proxy’s power of attorney, at the same time dismissing the daughter company’s managerial employees loyal to the Proxy and the owner of the daughter company (i.e. the parent company), expelling both the Proxy and these employees from the daughter company’s office.

As if in response to these actions, particularly in the context of the parent company’s financial problems, the parent company sold 100% of the shares in the subsidiary to an investor, who promptly held a shareholders’ meeting of the subsidiary at which he removed the President from the board. However, such actions did not suit the Chairman who, in his mind, was thus losing the daughter company.

When the new management board of the subsidiary arrived at the company’s headquarters on the evening of the day of the sale of the subsidiary’s shares and the change in the management board, it found the chairman preventing the board from entering the building by locking the door from the inside. The new management board of the daughter company called the police to the scene, but the officers, after a cursory look at the documents presented by the new management board and reading a copy of the Register of Entrepreneurs of the National Court Register, presented by the President, only spread their arms and refused to intervene in any way. Consequently, the new management of the subsidiary company left the property rented by the company.

Then, on the following day, the new management of the daughter company arrived at the building where the company’s headquarters were located and discovered that the President was still in the building, blocking the door, despite the fact that the new management of the daughter company had not only summoned him to leave the company’s property, but had also presented him with a notice of termination of his employment contract, severing the last legal link that formally bound him to the company. The chairman, of course, paid no heed to the summonses of the new management. What is more, he allowed employees of his choice into the daughter company’s premises and then intimidated and forbade contact with both the new management and those in charge of the parent company. Moreover, the police summoned by the new management of the daughter company once again spread their hands, indicating that in their view the dispute was of a civil nature and that they could not interfere in any way.

The circumstances described above not only seemed irrational (the board unable to get into the company’s premises occupied by a de facto third party and the police refusing to help), but were also very disruptive to the subsidiary itself, whose employees were unable to carry out their duties undisturbed. Due to this turn of events, the new management of the subsidiary decided to reclaim the seat of the subsidiary through civil proceedings. However, given the average length of proceedings in the capital’s courts, a final judgment in the case of a suit for infringement of possession could be expected even only in several years. This action enabled the new management of the subsidiary to regain the premises of the subsidiary within less than two weeks of its appointment, and the additional risk of a fine effectively discouraged the Chairman from continuing to directly violate the mirrors of the subsidiary, who was left only to circulate around the property belonging to the subsidiary and glare ominously at the working plant from behind his car window.