The process of registration of a shareholders' resolution in
a limited liability company can be suspended by obtaining an
interim injunction before the court where the invalidation claim is
to be filed, according to the Supreme Court.
Shareholders' resolutions generally take effect as soon as they
are adopted. Changes resulting from the resolutions are then
entered into the national court register by proceedings in the
registration court.
Third parties usually only discover the terms of a resolution once
it is entered in the national court register. This makes the
registration process particularly important in the case of
resolutions to appoint or dismiss members of the management board
or supervisory board, where there may be disputes about whether an
individual is authorised to act on a company's behalf.
Under the Commercial Companies Code, a company's bodies and
shareholders may use court proceedings to invalidate a
shareholder's resolution that is contrary to law, but an order
to suspend the registration process may only be granted by the
registration court after a full trial.
The Supreme Court ruling means that third parties or company bodies
wanting to invalidate a shareholders' resolution can get an
interim injunction suspending registration until its validity or
otherwise has been established at trial.
It also means the injunction application can be made without the
other party (in this case the company) being present; the element
of surprise is often important to ensure the challenge is
effective.
Another effect is that the issue will effectively be decided by
the court hearing the injunction application, and not the
registration court. It may be made before a statement of claim is
filed, and, if granted, will require the statement of claim to be
filed within two weeks at the latest.
By suspending the registration of a resolution, the previous
entries in the register will continue to be binding on third
parties. If, say, the resolution is to appoint or dismiss a member
of the management board, the individuals authorised to act on
behalf of the company would continue to be those comprising the
management board before the resolution was passed.
This article was written for Law-Now, CMS Cameron McKenna's free online information service. To register for Law-Now, please go to www.law-now.com/law-now/mondaq
Law-Now information is for general purposes and guidance only. The information and opinions expressed in all Law-Now articles are not necessarily comprehensive and do not purport to give professional or legal advice. All Law-Now information relates to circumstances prevailing at the date of its original publication and may not have been updated to reflect subsequent developments.
The original publication date for this article was 27/09/2011.
