We begin the new year where we left off at the end of the previous one. The above-mentioned decision was already cited in our previous Top Corporate Law Judgment update in the context of shareholder protests. This time, we return to it to address its second part, which deal with the concept of ‘marginal defects’ in resolutions of a general meeting.
Under statutory rules, a court reviewing a motion to declare a resolution of a company’s supreme body invalid must first assess whether the challenged resolution complies with the law and the company’s constitutional documents. Only if the court concludes that the resolution breaches the law or those documents does it then consider whether the resolution should be declared invalid, or whether – the specific circumstances – one of the grounds for ‘marginal defects’ applies, preventing such a declaration of invalidity.
In doing so, the court must distinguish between the gravity of the interference with a shareholder’s fundamental rights (which is relevant for determining the right to adequate satisfaction) and the gravity of the legal consequences caused by the unlawful resolution. Not every serious interference with a shareholder’s rights necessarily results in grave legal consequences.
For a court not to declare a resolution invalid, even if it is contrary to the law or the constitutional documents, two conditions must be met simultaneously: (i) the breach of the law or the constitutional documents has not resulted in serious legal consequences; and (ii) refraining from declaring the resolution invalid is in the company’s interest deserving of legal protection. This rule is intended to safeguard the stability of a company’s internal affairs and uphold the principle of proportionality. Many breaches of the law or constitutional documents may not have consequences serious enough to justify such a fundamental interference with the company’s internal affairs as declaring a resolution of its supreme body invalid.
As mentioned previously, in this case the company had intentionally failed to prepare and send an invitation to the general meeting. Once the other minority shareholder learned that the general meeting was taking place, they left the meeting (without raising a formal protest).
The Supreme Court emphasised that participation in a general meeting is one of the fundamental rights of a shareholder. For this reason, the law regulates both the form and content of the invitation, as well as the notice period for convening the meeting. The situation must therefore be assessed as a breach of the law with serious legal consequences for the applicant, and there was no legitimate interest of the company in not declaring the resolution invalid.
It should also be noted that this conclusion is not affected by the fact that the majority shareholder held a sufficient number of votes to adopt the resolution even at a substitute general meeting, meaning that the applicant did not have enough votes to influence the outcome. Even such a circumstance does not justify refraining from declaring the resolution invalid (Case No. 27 Cdo 2026/2019).
