Companies limited by shares, such as limited liability companies and joint-stock companies, are governed by the Commercial Companies Code (CCC). Certain legal acts performed by these companies require approval from shareholders, the general meeting, or the supervisory board. The consequences of not obtaining such approval can vary.
Firstly, according to Article 17 of the CCC, if a statute requires a resolution from the shareholders, general meeting, or supervisory board for a legal act, performing the act without the required resolution renders it invalid. However, the necessary approval can be given either before or after the company’s declaration, but no later than two months after the declaration. This retroactive approval means the legal act takes effect from the date it was performed.
When the approval is required solely under the company’s articles of association, an act performed without such approval remains valid. However, this does not exempt the management board members or liquidators from liability for breaching the articles of association.
These general principles are outlined in the CCC, but there are specific provisions that exclude the invalidity rule of Article 17. For instance, Article 230 of the CCC states that disposing of a right or contracting an obligation exceeding twice the value of the share capital of a limited liability company requires a shareholders’ resolution, unless the articles of association state otherwise. This provision excludes the application of Article 17 § 1.
Another important scenario is when a resolution approving a legal act is later annulled or declared invalid. According to Article 254 §2 of the CCC, if the validity of an act depends on a shareholders’ resolution, annulling the resolution does not affect third parties acting in good faith. Thus, the legal standing of third parties remains unaffected by the annulment or invalidation of the resolution.
To determine the legal standing after a company limited by shares performs an act without the required approval, it is crucial to identify whether the approval requirement is based on statutory provisions or the company’s articles of association. This distinction will determine whether the act remains valid or not.