Limited Liability Company Agreements

What was the context of Judgement No. 762/2024 of May 29? 

The Supreme Court`s Judgement No. 762/2024 arises from a dispute regarding the approval of annual accounts, application of the results, and approval of the management of the administrative body in a limited liability company. The crux of the dispute was whether failing to deliver certain documentation to a partner holding 20% of the share capital constituted an infringement of their right to information. This case called into question the essentiality of specific documents, including employee payrolls and daily sales ratios by points of sale. 

What does the Supreme Court`s interpretation of Article 204.3.b) in the Capital Companies Law mean? 

Article 204.3.b) allows challenging company agreements if partners` essential right to information is breached. The Supreme Court clarified that not all informational violations justify a challenge; only those where the withheld information is crucial for partners to exercise their rights effectively. In this case, the Court ruled that missing payroll and sales information wasn`t essential since relevant data was available in other accounting documents.

What specific criteria did the Supreme Court use to assess the essentiality of information? 

1. Access to Equivalent Information: If partners have access to alternative or equivalent information that allows them to exercise their rights, the absence of the specific requested documents may not constitute a sufficient infringement.
2. Reasonable Excercise of Rights: The withheld information must be crucial for the partners to exercise their voting or participation rights effectively. In this case, the partner could derive necessary insights from the accounting record available at the registered office. 

What implications does this ruling have for companies and their legal advisors? 

• Transparent and diligent management of corporate information is crucial for companies
• The ruling discourages indiscriminate challenges to agreements, highlighting the importance of informed decision-making
• Alternative information can validate decisions made at general meetings, reinforcing their legitimacy
• Legal advisors and company executives must ensure that partners have access to essential information to facilitate informed decision-making

What is the broader significance of this Supreme Court ruling? 

This ruling sets a precedent that enhances transparency and efficiency in corporate governance. It ensures that challenges to agreements are well-substantiated, promoting, informed and fair decision-making within limited liability companies. Legal advisors and companies can use this judgment as a critical reference when evaluating corporate disclosures. 

If you need assistance with corporate governance or related legal matters, our team at Gentile Law is here to help. Contact us today for expert guidance.