The adoption of a resolution by the general meeting of a limited liability company with respect to a matter not placed on the agenda is a condition for the resolution to be considered non-existent
In order to protect shareholders against defective resolutions being used in transactions, the Commercial Companies Code provides for a closed list of legal instruments.
A distinction is made between defects justifying an action to invalidate a resolution that is inconsistent with law and defects justifying an action to repeal a resolution that is inconsistent with the articles of association or good practice and is detrimental to company interests or is intended to harm a shareholder.
In certain cases, however, shareholders resolutions may be considered non-existent pursuant to Article 189 of the Code of Civil Procedure.
What are non-existent resolutions
Non-existent resolutions are resolutions that have no legal effect. In legal terms, they are considered not to exist and to never have existed.
In its decision of 25 August 2016, case file V CSK 694/16, the Supreme Court characterises non-existent resolutions as follows:
“Non-existent resolutions differ from resolutions that are inconsistent with law, with the former being characterised by a drastic, extreme degree of defectiveness that justifies considering them as non-existent, i.e. producing no legal effects ab initio.”
What are the conditions for a resolution to be declared non-existent
In its judgment of 12 December 2008, Case No. II CNP 82/08, the Supreme Court sets out the following conditions for resolutions to be considered non-existent:
“- a resolution is considered non-existent if it is adopted by persons who are not actually shareholders.
– a shareholders resolution is considered non-existent if a general meeting is self-convened by a group of shareholders without complying with the required procedure (…).
– a resolution is considered non-existent if the quorum required for its adoption is not present, if the resolution does not receive the required majority of votes, if the voting results are falsified, if the resolution is recorded without a vote or if it is adopted with respect to any matter that is not on the agenda (…).
– in accordance with the general rules on non-existent legal acts, a shareholders resolution is considered non-existent if physical coercion is used against shareholders, the resolution is adopted not in earnest, or if the content of the resolution is incomprehensible and its meaning cannot be determined by interpretation.”
Below, we take a closer look at the reasons why a resolution on an item not placed on the agenda is considered non-existent.
Absence of a given matter on the agenda of a general meeting
According to Article 238 § 2 of the Commercial Companies Code, an invitation to a general meeting must state the date, time, place and detailed agenda of the meeting.
Although this provision allows for a concise formulation of the agenda and does not require the wording of the proposed resolutions to be indicated, it does not allow for the agenda of a general meeting to be so vague and imprecise as to mislead shareholders.
According to the above Supreme Court case law, the omission of an item from the agenda when it is subsequently put to a vote may result in the resolution being considered non-existent.
Interestingly, the Court of Appeal in Warsaw came to a different conclusion when deciding one of our own cases.
In its judgement of 8 September 2022, Case No. VII AGa 875/21, the Court of Appeal stated that if the shareholders’ meeting of a limited liability company adopts a resolution that was not on the agenda of the meeting, the resolution may not be considered non-existent.
In particular, the Court of Appeal in Warsaw used the following arguments:
“Pursuant to Article 250(4) in fine of the Commercial Companies Code, those entitled to bring an action for repealing a shareholders’ resolution include shareholders who did not attend the shareholders’ meeting, in the event the resolution concerns a matter not included in the agenda. Similarly, in accordance with Article 252 of the Commercial Companies Code, such shareholders have the right to bring an action for declaring invalid a resolution contrary to statutory law. These provisions, although concerning the issue of locus standi to bring an action for the repeal or declaration of invalidity of a resolution, may not be disregarded when examining the sanction for the adoption of a resolution on a matter not on the agenda.
There is no systemic justification for the view that a resolution may be declared non-existent. Indeed, this would mean that if a shareholder was not present at a shareholders’ meeting at which a resolution on a matter not on the agenda was adopted, the shareholder would be entitled to bring an action for the repeal of that resolution or for declaring it invalid (in accordance with Articles 250(4) and 252 § 1 of the Commercial Companies Code), while if the shareholder was present at the meeting at which the resolution on the matter not on the agenda was adopted, they may effectively seek such resolution to be declared non-existent. Such a differentiation of sanctions, depending on whether or not the shareholder attended the shareholders’ meeting at which the resolution on a matter not on the agenda was passed, has no systemic justification.
In the hypothetical situation where, in its invitations to the shareholders’ meeting, the management board intentionally fails to communicate a particular issue to be voted on at the shareholders’ meeting – the sanction varies depending on whether or not a shareholder was actually misled about the agenda of the meeting. If the shareholder is misled by the wording of the invitation and, relying on such wording, does not attend the shareholders’ meeting (assuming that no matters of interest to them will be discussed at the meeting), and subsequently a resolution is adopted at the meeting in respect of a matter not on the agenda, the shareholder will be entitled to claim that the resolution be repealed (Article 250(4) of the Commercial Companies Code) or – if the resolution is contrary to statutory law – declared invalid (Article 252 § of the Commercial Companies Code). By contrast, if a shareholder, having received an invitation with an agenda not corresponding to the actual agenda, does attend the meeting at which a resolution is adopted on a matter not on the agenda, the resolution will be non-existent. Thus, paradoxically, if the shareholder is ‘successfully’ misled by the wording of the invitation (i.e., trusting the invitation, they do not attend the meeting), they will be entitled to a weaker sanction (an action for the repeal of the resolution, which may be brought within specific time limits), than they would be if they attended the meeting (not having trusted the invitation).”
This example shows that, although the concept of non-existent resolutions is generally accepted in doctrine and case law, the actual list of conditions for considering a resolution non-existent remains an open question in some cases.
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Changes to commercial companies law at the turn of the year