Non-Compliance of the Decisions of the Shareholders’ General Meeting of the Company with the Imperative Provisions of the Law and Incorporation Documents

Abstract

The object of this research is the institute of invalidation of decisions of the shareholders’ general meeting of the company. Challenge of decisions of the general meeting because of their non-compliance with the imperative statutory norms and incorporation documents is perhaps the basis that is the most frequently relied on for the nullity of decisions of the shareholders’ general meeting. Thus, it is important to correctly interpret and apply these grounds for nullity. The said issues have not attained proper focus of the Lithuanian legal theorists and no detailed analysis has been carried out in Lithuania in this field. This article firstly provides a legal analysis of those grounds.
The purpose of the research is to present a detailed analysis of interpretation and application in the Lithuanian case-law of the two grounds for invalidating decisions of the shareholders’ general meeting of the company: non-compliance with the imperative statutory norms and incorporation documents. Various scientific methods have been applied: linguistic, document (source content), logical, systematic, comparative, historical, critical analysis, etc. A study revealed that the decision of the shareholders’ general meeting of the company may be declared null and void, not only when its content is contrary to the imperative statutory norms, but also when the procedure for the adoption of the decision fails to meet the requirements of the said norms. In addition, the unlawfulness of the decision’s content may be determined on the basis of violation of procedural legal norms established in the Law of the Republic of Lithuania on Companies. A decision of the shareholders’ general meeting might also be declared null and void, if it violates the procedure for convening and conducting the general meeting and decision-making, as established in the company’s incorporation documents. Among other things, unlawfulness of the decision of a general meeting may be determined by reason of its failure to comply with the goals of the company’s activity established in its incorporating documents. This contradiction is usually associated with obvious economic uselessness of the transaction concluded or to be concluded on the basis of a specific decision.