Shareholders’ meeting in a limited liability company

The shareholders’ general meeting is a corporate body structurally comprising all the shareholders of the company, to which the legislator has conferred the most significant powers in the company. This is a traditional notion, whereas it is far more precise to say that the body of the company is the shareholders acting in a certain way in corpore (as a whole, in its entirety). The shareholders’ general meeting is mandatory in every company per se, as there is no need for this body to be set up and properly appointed, such as in the case of the supervisory board and the management board. The shareholders’ general meeting is a decision-making body which carries out part of the company’s management. In addition, it can influence its representation and is also sometimes of an appellate nature. The provisions concerning the operation of this body are to be found both in the Act of 15 September 2000. Commercial Companies Code as well as in the agreements or articles of association of limited liability companies. The shareholders’ general meeting is a collegial body whose will is expressed in the form of resolutions. Shareholders’ resolutions are adopted through various procedural modes. The observance of procedures is of utmost importance from the point of view of the company’s operations, as deficiencies in respect of the same may cause far-reaching consequences for the company.

 

In particular, Article 17 of the Code of Commercial Companies requires attention in this regard, which provides for the sanction of invalidity for a legal act performed without a resolution required by law.  The necessity to adopt a resolution required by the articles of association in the context of management board members’ liability towards the company is also not without significance.

Shareholders’ resolutions are adopted in the modes regulated by the Commercial Companies Code. The rule is to act in this respect at the shareholders’ meeting, but the Commercial Companies Code introduces three exceptions to it. Shareholders may adopt resolutions without holding a meeting if all shareholders agree in writing to the provision in question, or to a written vote. In addition, it is possible to adopt a resolution using a model resolution made available in an IT system, but only in relation to companies whose contract was concluded using a model contract (so-called S24). The third case concerns a one-person limited liability company and the exercise by the sole shareholder of the powers vested in the shareholders’ meeting.

This article will discuss selected aspects of shareholders’ meetings.

The provision of Article 227 § 1 of the Commercial Companies Code stipulates the general rule according to which shareholders’ resolutions are adopted at the shareholders’ general meeting. This rule does not apply to single-member companies, in which the sole shareholder exercises all the powers vested in the shareholders’ meeting in accordance with the relevant provisions of the Commercial Companies Code. Shareholders’ meetings are divided into ordinary and extraordinary shareholders’ meetings, which differ, in principle, in the date of holding and the scope of the subject matter of the meeting. The term „extraordinary shareholders’ meeting” refers to any meeting other than an ordinary shareholders’ meeting.

Ordinary shareholders’ meeting

An ordinary shareholders’ meeting pursuant to Article 231 § 1 of the Companies Act should be held at least once a year within six months after the end of each financial year. The articles of association may stipulate a different date for its holding, however, not longer than that provided for in the Code. However, holding an ordinary shareholders’ meeting in breach of the Code or the contractual deadline is of no significance for its recognition as an ordinary meeting. Nor does it affect the validity of the resolutions adopted at such a meeting, provided that the breach of the deadline did not affect the content of the resolutions adopted. Holding a meeting after the deadline may, however, give rise to liability for damages or even criminal liability on the part of the persons obliged to convene the meeting, i.e. the members of the management board or liquidators.

The legislator has also regulated the minimum subject matter of the ordinary shareholders’ meeting. Stating quite generally, the ordinary shareholders’ meeting is held to adopt resolutions related to the closing of the previous financial year. Article 231 of the Commercial Companies Code. § 2. indicates that the subject of the ordinary shareholders’ meeting should be:

1) consideration and approval of the management report on the company’s activities and financial statements for the previous financial year;

2) acknowledgement of the fulfilment of duties by members of the company’s bodies;

3) adoption of a resolution on the distribution of profit or coverage of loss, unless this competence has been excluded.

If the agenda does not include all the matters indicated in the aforementioned provision, the meeting cannot be considered ordinary. It should be noted, however, that shareholders at an ordinary meeting may also adopt other resolutions than those indicated in Article 231 §2 of the Polish Commercial Companies Code.

Extraordinary shareholders’ meeting

An extraordinary shareholders’ meeting is any meeting other than an ordinary meeting. It may be convened at any time, in cases provided for by law, indicated in the articles of association or on an ad hoc basis. An extraordinary shareholders’ meeting is a means to obtain a decision by the shareholders on matters that cannot be decided until the next ordinary shareholders’ meeting. The decision on the advisability of convening an extraordinary shareholders’ meeting is taken by the entity authorised to convene it. The decision in itself cannot constitute grounds for examining the validity of the resolutions. The subject of the extraordinary shareholders’ meeting may be any matter beyond the exclusive competence of the ordinary shareholders’ meeting. However, it should be noted that some representatives of the doctrine allow the extraordinary shareholders’ meeting to amend resolutions adopted at the ordinary shareholders’ meeting.

 

The information presented is only a small part of the necessary knowledge about this corporate body. We encourage you to read our further studies on this topic in future posts.

Monika Pawłowska-Bielas   |   02.22.2024

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Monika Pawłowska-Bielas

Monika Pawłowska-Bielas

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