March 2023

Decision of the Athens Court of First Instance on the rejection of the application for the suspension of the validity of the General Meeting's decision on the increase of the share capital

The decision No. 1499/2023 of the Athens Court of First Instance (interim measures procedure) was issued, which rejected the application of our opponent, a minority shareholder of our client, S.A., for the suspension of a series of decisions of the ordinary and extraordinary General Meeting, 1) approval of the annual financial statements for the past financial year, 2) distribution of profits, 3) approval of the compensation of members of the Board of Directors and 4) increase of the company's share capital by cash payment.

It should be noted that in order to obtain the protective measure of suspension of the execution of a General Meeting resolution, the general conditions of Art. 682 par. 1 of the Civil Code and in particular, among others, the existence of an urgent case or imminent danger. The facts on the basis of which the imminent danger or urgency is presumed must be set out in the introductory statement of the application in a clear, definite and concise manner (Articles 111, 118(4) and 688(1) of the CCP), otherwise the application is inadmissible for lack of precision. 

In that regard, the abovementioned judgment, upholding our objection in that regard that the opposing party's application was indefinite, held that the opposing party did not plead the existence of a risk or an urgent case at any point in its application in the present case, which would justify the suspension requested and, in particular, the suspension of the validity of the contested decisions of the General Court by means of interim measures. In particular, at no point in his application does he plead facts from which it can be inferred that the imminent implementation of the contested General Council decisions will cause specific damage to his interests. According to the operative part of the judgment, '[...] In the light of the foregoing, the present application [...] must be rejected as inadmissible on the ground that it is inadequate. That is because the application does not set out in its pleading the facts necessary under the law (682 CCC) to establish the urgency of suspending the enforcement of the contested decisions of the General Meeting of the defendant's shareholders, since the applicant does not specify the alleged risk of specific harm resulting from the enforcement of the allegedly invalid decisions of the contested General Meeting, but is content to refer to a general and vague allegation of damage to both the company's interests and, above all, its own shareholder rights as a result of the execution of the decision (see p. 35, "has negative consequences for the defendant and for me as a minority shareholder, because there is no specific interest of the company..." and p. 37 'to take interim measures to prevent the imminent risk of irreparable damage to my property as a minority shareholder of the defendant as a result of the abovementioned invalid and abusive decisions of the General Meeting of Shareholders [...] the validity of the contested decisions must be suspended until a final decision is given on my action'][...]'. 

Moreover, it is generally accepted that the suspension of decisions refers to enforceable decisions, i.e., decisions for the implementation of which a certain act or omission on the part of the Board is to take place, such as, the conclusion of a certain legal transaction on the basis of an invalid or challenged as null and void decision of the General Meeting and not to decisions of the General Meeting which are either not enforceable or have already been executed, in which case there is no scope for suspending their execution, with the result that the application for suspension is rejected as having been submitted without legal interest.

(for issues related to the annulment of the AGM decision on the share capital increase see here)