Secured creditor’s standing to challenge shareholders’ resolution


A creditor who attaches shares in a limited-liability company through execution may apply to set aside a resolution by the shareholders’ meeting.

Under Art. 252 §1 of Poland’s Commercial Companies Code, if a shareholders’ resolution is contrary to law, an action may be filed seeking a declaration that the resolution is invalid.

The persons with standing to assert such a claim are indicated in Art. 250 of the code. This provision gives standing to the corporate authorities of the company, the members of the corporate authorities, and, in strictly defined instances, shareholders. But appearances to the contrary notwithstanding, this is not an exhaustive list.

Purpose and effect of creditor’s attachment of shares

Attachment of shares in a company by a creditor of the shareholder occurs by way of execution. Through attachment, the creditor seeks to satisfy its claims out of the income which the shares may generate, or by selling the shares. It is therefore in the creditor’s interest to assure that the company is in good condition and achieves the best possible results.

The debtor who is a shareholder in the company and whose shares have been attached loses the right to dispose of the rights to the shares or encumber the shares, or to receive benefits attributable to the shares.

Under Art. 9102 §1 of the Civil Procedure Code, a creditor may exercise all of the debtor’s property rights arising out of attached rights which are necessary to obtain satisfaction by way of execution. The creditor is also authorised to take any actions necessary to maintain the attached rights (preservative measures).

Supreme Court ruling

In a recent ruling (judgment of 19 December 2013, Case No. II CSK 150/13), the Supreme Court of Poland considered the issue of the scope of preservative measures which may be taken by a creditor who has attached shares in a limited-liability company.

In that case, the shareholders’ meeting of a limited-liability company had elected members of the management board. In the opinion of the petitioner (a creditor), the resolution was adopted without complying with the requirement for secret balloting as provided in Commercial Companies Code Art. 247 §2. The creditor also alleged that a person was elected to the board whose professional qualifications were questionable, which according to the creditor had a negative impact on the value of the attached shares.

The debtor, who participated in the election of the management board, alleged in turn that the creditor had no standing to assert such a claim, in light of the corporate nature of the right to vote in an election of management board members. The debtor also alleged that the composition of the management board did not affect the value of the shares.

Considering this issue, the Supreme Court pointed out that the function of attachment of shares is to allow the creditor to obtain satisfaction from the attached shares to the greatest extent possible. This purpose justifies the creditor’s taking preservative measures in any situation where there is a concern that the attached rights will terminate or decline in value to an extent preventing the creditor from obtaining satisfaction of its claims.

This means that it is possible to seek to set aside any resolution which in the view of the executing creditor negatively impacts on the ability to satisfy the creditor’s claims. Under this view, this applies as well to a resolution changing the composition of the management board (reading Civil Procedure Code Art. 9102 §1 as a specific regulation in relation to Commercial Companies Code Art. 252 §1).

Moreover, the court reasoned, the value of shares in a company would be greater when it is managed by professionals than when it is managed by persons lacking the appropriate experience and qualifications.

Consequently, according to the court, it could not be excluded that a shareholders’ resolution on changes in the membership of a corporate authority could threaten a creditor’s ability to obtain satisfaction out of attached shares.

However, in any specific case, in order for the creditor to effectively challenge a resolution which is alleged to be contrary to law, the creditor would have to prove a causal relationship between the disputed resolution and a reduced ability to satisfy the creditor’s claims.

Maciej Szewczyk, Mergers & Acquisitions Practice, Wardyński & Partners