The desire to remove one of the shareholders from
a limited liability company may be for a variety of
reasons. The Polish Commercial Companies Code
offers two principal solutions to that issue.
The first way is to have the shareholder excluded
by a court on the grounds of material reasons. The
exclusion request needs to be made by all the other
shareholders, with their shares accounting for more
than a half of the share capital. Consequently, a
majority shareholder cannot be excluded under this
procedure. Further, unanimity of the other
shareholders is always required – all the
shareholders have to request exclusion. However,
this rule can be modified under the company’s
articles of association, with the right to request
exclusion being granted to a smaller number of
shareholders, but even then their shares still have
to represent more than one half of the share
capital, and the action for exclusion needs to be
brought against all the remaining shareholders.
The main issue with this shareholder exclusion
procedure is the need to meet the requirement of
material reasons. This term is quite vague, and
hence it raises interpretation concerns. While since
Commercial Companies Code is in effect, a list of
circumstances that are likely to be deemed
material reasons by the court has been developed,
each situation of this sort needs to be meticulously
studied as unique, and it is only on these grounds
that the decision can be made whether or not the
reasons cited can indeed be deemed material
reasons. This is how the court will decide whether
to accept the shareholders’ request and exclude
the unwanted shareholder or to dismiss it, with the
shareholder remaining at the company.
The other way to remove a shareholder from a
limited liability company is to effect a mandatory
redemption of the shares held by the shareholder.
This occurs without the consent of the shareholder
whose shares are being redeemed. However, in this
case it is necessary for the company’s articles of
association to include the relevant clause, providing
for the conditions of and procedure for the
mandatory redemption. It is particularly important
for these conditions to be correctly stated. They
must be specific and lend themselves to objective
verification. If they are incorrectly stated, the
action can be deemed an attempt at circumventing
the law. It is a matter of dispute whether such conditions can relate to the shareholder himself or
herself, his or her culpability, or the inappropriate
conduct. That is why each case needs to be
reviewed in detail and the conditions carefully
chosen.
A mandatory redemption of shares is effected under
a resolution of the meeting of shareholders, which
needs to provide the legal grounds, amount of
remuneration, and the reasons for the share
redemption. The remuneration cannot be below
that stipulated under the statute.
An automatic redemption is a special type of
mandatory redemption, which happens when the
company’s articles of association provide that
shares are redeemed upon occurrence of a specific
event, with no resolution of the meeting of
shareholders required. If the event occurs, the
management board should adopt without delay a
resolution to reduce the company’s share capital,
unless the shares are redeemed against net profit.
MILLER, CANFIELD,
W. BABICKI, A. CHEŁCHOWSKI I WSPÓLNICY SP.K.
ul. Batorego 28-32
81-366 Gdynia
Tel. +48 58 782-0050
Fax +48 58 782-0060
gdynia@pl.millercanfield.com
ul. Nowogrodzka 11
00-513 Warszawa
Tel. +48 22 447-4300
Fax +48 22 447-4301
warszawa@pl.millercanfield.com
ul. Skarbowców 23a
53-125 Wrocław
Tel. +48 71 780-3100
Fax +48 71 780-3101
wroclaw@pl.millercanfield.com
Disclaimer: This publication has been prepared for clients and professional associates of Miller Canfield. It is intended to provide only a summary of
certain recent legal developments of selected areas of law. For this reason the information contained in this publication should not form the basis of any
decision as to a particular course of action; nor should it be relied on as legal advice or regarded as a substitute for detailed advice in individual cases.
The services of a competent professional adviser should be obtained in each instance so that the applicability of the relevant legislation or other legal
development to the particular facts can be verified.