Challenging a resolution on the transformation of a company

Pursuant to Article 567 of the Commercial Companies Code, regardless of the type of company, the provisions of Articles 422–427 of the Commercial Companies Code apply to actions for repeal and for declaring invalid a resolution on the transformation of a company. It should be noted that this is a deliberate measure by the legislator, aimed at unifying the procedure for challenging a resolution on transformation, irrespective of the legal form of the transformed company.

The right to bring an action for repeal of a resolution on transformation is vested in:

• the management board, the supervisory board, and the individual members of these bodies;
• a shareholder who voted against the resolution and, after it was adopted, demanded that an objection be recorded in the minutes; this voting requirement does not apply to a holder of non-voting shares;
• a shareholder who was unjustifiably prevented from participating in the general meeting / shareholders’ meeting;
• a shareholder who was not present at the general meeting or shareholders’ meeting, solely in the event of defective convening of the meeting or adoption of a resolution on a matter not included in the agenda.

A resolution on transformation, pursuant to Article 422 § 1 of the Commercial Companies Code, must be contrary to the articles of association / statute or to good practices and detrimental to the company’s interests, or aimed at prejudicing a shareholder, in order to be challenged by means of an action brought against the company for repeal of the resolution.

An action for declaring invalidity or for repeal of a resolution is brought against the transforming company if it is filed before the date of transformation, whereas after the date of transformation the transformed company should be named as the defendant.

Importantly, challenging a resolution on transformation does not stay the registration proceedings. However, the registration court may suspend the proceedings after holding an open hearing. An action for repeal of a resolution of the general meeting must be filed within one month from the date on which the claimant learned of the resolution, but no later than six months from the date the resolution was adopted. These time limits are preclusive, and their ineffective expiry results in the lapse of the claim (A. Szajkowski, in: Sołtysiński, Szajkowski, Szumański, Szwaja, Commentary on the Commercial Companies Code, vol. IV, Warsaw 2012, p. 1201).

It should be noted that one of the grounds for challenging a resolution is, among others, a breach of “good customs,” which is an indeterminate concept. As indicated by the Court of Appeal in Wrocław, 1st Civil Division, in its judgment of 18 September 2015, case file no. I ACa 948/15, the notion of good customs should be understood as a general evaluative clause deriving from the principles of common morality, treated in abstracto. Good customs should be understood as such conduct that has a positive impact on the functioning of the company. It is decent conduct that properly takes into account the various interests of all those involved in the company. When examining whether a resolution complies with good customs, it should be assessed against ethical and moral criteria applicable to business activity. The concept of good customs refers not only to commercial honesty directed outward toward third parties, but also to the internal relations within the company, aimed at ensuring its smooth operation and respect for the interests of shareholders. Therefore, good customs are approved, and consequently required, standards of conduct that should be observed.

In light of the above, the legislator has undoubtedly granted shareholders the right to challenge a resolution on transformation by seeking its repeal or a declaration of invalidity. A resolution on transformation must be lawful and remain within the limits of the law.