For June, after a short pause, we are returning to the right of a shareholder to seek redemption of their share by the controlling person, addressed in judgment case no. 27 Cdo 1605/2023.
That right exists on the shareholder’s part if:
- there is (at least one) controlling person in the company;
- the shareholder requesting the redemption is not a controlling person;
- the shareholder’s position has significantly deteriorated or their legitimate interests have been otherwise significantly prejudiced;
- those consequences are due to the actions of the controlling person; and
- the shareholder cannot fairly be required to remain in the company.
If these conditions are met, the controlling person becomes automatically obliged to submit to the aggrieved shareholder an offer to redeem their share at a reasonable price without undue delay.
In the case at hand, the reason for the redemption was the alleged curtailment of the shareholder’s right to a share of profits (although this reason was not examined). Interestingly, however, the company had three shareholders with a 30% stake each and one shareholder with a 10% stake. Thus, at first sight, there was no decisive power in the company, i.e. no controlling person.
However, the general courts of law held that two of the 30% shareholders acted in concert. If we add up the voting rights of these persons acting in concert, we are able to identify controlling persons in the company with a combined 60% stake. The presumption of acting in concert is based on a number of factors - apart from a real family or legal relationship, those factors included the execution of an agreement on the exercise of voting rights (the so-called shareholders’ agreement).
In this particular case, the Supreme Court concluded that where persons acting in concert together “in the aggregate” constitute a controlling person, a shareholder may choose whether to seek redemption of his share from all such shareholders acting in concert or only from any one (or more) of his choice. As a result, the shareholder could ultimately seek the redemption from a smaller shareholder acting in concert, who is considered to be the controlling person in such a case.
