We close the 2024 digest with a notable decision by the Supreme Court (Case No. 27 Cdo 1246/2024), addressing the approval of remuneration for a member of a governing body. The case addressed a service agreement (including remuneration) of a managing director – at the same time the majority shareholder of the company – which was approved by the votes of the majority shareholder.
Other shareholders, however, disagreed with the content of the service agreement. They objected to both the method of performance of the office (the managing director was to perform the duties personally or through an agent) and the remuneration, which they considered inadequate.
The Supreme Court reiterated that even before the recodification, it had been established that a defect in a document for approval could justify the declaration of invalidity of a resolution of the general meeting. This was the case, for example, when approving financial statements. Depending on their severity, defects in the financial statements could also be grounds for declaring a resolution of the general meeting invalid.
The Supreme Court held that the same applied to the approval of a managing director‘s service agreement. If the service agreement is invalid due to non-compliance of the remuneration section – the main reason for the legal requirement of general meeting approval – the invalidity can justify the declaration of invalidity of the general meeting‘s resolution approving the agreement.
Thus, even if the general meeting itself was conducted without procedural defects, the resolution can still be invalid due to defects in the underlying document – the service agreement. Therefore, courts may examine, upon the petitioner’s objection, whether or not the service agreement was validly concluded in its essential terms.
This case shows that the area of remuneration should not be underestimated or treated lightly. Both the process of approving remuneration at the general meeting and the service agreement itself must be free of defects.
