Procedure for convening a shareholders’ meeting in a limited liability company – eligible entities

 Convening a shareholders’ meeting in a limited liability company is a formalised procedure. The Commercial Companies Code contains a number of norms formulating the procedure in this respect. In addition, the company’s articles of association may also contain provisions on this matter. The basic procedural aspect is the catalogue of entities that are entitled to convene a shareholders’ meeting.

The body responsible for convening an extraordinary shareholders’ meeting is, in principle, the management board. There is a dispute in doctrine as to whether, when convening a shareholders’ meeting, a multi-member management board should act in accordance with the principle of collegial representation or whether each member of the management board is authorised to act alone. The prevailing view is that a resolution to this effect must be taken by the management board. This decision taken in the form of a management board resolution should also cover key elements of the meeting such as the date, place and agenda. However, a distinction should be made between the decision of the board to convene a meeting and the follow-up steps to implement the decision. The follow-up steps, i.e., among other things, the signing of the invitations to the meeting, can already be done by each board member alone.

In the case of a company in liquidation, the duty incumbent on the management board passes to the liquidators in this aspect.

Entities other than the management board and liquidators are also authorised under the act, and may also be authorised in the articles of association to take action in this respect. The difference, however, is that for the management board (liquidators) it is the sphere of duties, while for other entities it is the sphere of powers. It should be emphasised that a management board (liquidators) that fails to convene a shareholders’ meeting exposes itself to criminal and civil liability.

If a limited liability company has a supervisory body, i.e. a supervisory board or an audit committee, this body also has the capacity to convene a meeting. No contractual modification of this code provision is possible. In the case of an ordinary meeting, either the supervisory board or the audit committee may convene it if the management board has failed to comply with this obligation within the code deadline (or contractually if the code deadline has been modified in accordance with the regulations). An extraordinary shareholders’ meeting may be convened by the supervisor provided that the board of directors fails to convene such a meeting within 2 weeks from the date of a request to do so by the supervisory board or the audit committee. Importantly, the supervisory authority may convene an annual shareholders’ meeting not only after the expiry of the deadline for holding such meeting, but also if it is clear that, as a result of the failure of the board of directors to convene the meeting in due time, the relevant deadline will not be observed or, due to shortcomings in the composition of the board of directors, it cannot effectively address the request. In view of the principle of collegiality of the above-mentioned bodies, a resolution should have been adopted before the convening request was addressed to the board. Both the resolution and the request should indicate at least the date and the agenda of the meeting.

An analogous power to convene a shareholders’ meeting may be granted in the articles of association to another entity, albeit a shareholder or even a third party.

In statutorily defined cases, shareholders also have the possibility to convene an extraordinary shareholders’ meeting. However, this procedure is more demanding than the power of the supervisory authority described above. A shareholder or shareholders representing at least one-tenth of the share capital may request the convening of an extraordinary shareholders’ meeting and the inclusion of certain matters on the agenda of that shareholders’ meeting. Such request shall be submitted to the management board in writing no later than one month before the proposed date of the shareholders’ meeting. It may be submitted to any member of the management board regardless of the company’s rules on representation. This provision is an implementation of the so-called minority right, which does not mean, however, that the majority shareholder is not entitled to use this procedure. The articles of association of the company may indicate a lower ceiling on the share capital necessary for such a request to be possible.

Importantly, it is not possible to worsen the situation of minority shareholders by increasing the requirement set by law for the level of share capital representation. The board of directors is only entitled to refuse a request made by authorised parties in particularly justified cases. This is particularly relevant from the point of view of the board’s liability for damages. The failure of the management board to convene, within two weeks of the request, an extraordinary shareholders’ meeting with an agenda in accordance with the request does not automatically trigger the shareholders’ right to convene such an extraordinary shareholders’ meeting. Only the court of registration, after the management board has been summoned to make a statement to that effect, has the competence to grant the shareholder(s) who made the request such a right.

Monika Pawłowska-Bielas   |   03.22.2024

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Monika Pawłowska-Bielas

Monika Pawłowska-Bielas

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