When will the registration court refuse an entry? Check what to watch out for when submitting changes to the National Court Register (KRS)

The district court is fully authorised to examine whether the shareholders’ meeting, when adopting a resolution intended as the basis for an entry, was convened correctly by the persons authorised to do so. This is the ruling of the Regional Court in Łódź dated 4 February 2022, case no. XIII Ga 1228/20.

Factual background

By the registry court’s decision dated 12 December 2019 in case XX Ns-Rej.KRS, shareholder K.K. was authorised to convene a shareholders’ meeting of the company, the agenda of which included, among other items, the adoption of a resolution concerning the dismissal of the president of the management board and the appointment of a new president. The shareholders’ meeting took place on 19 February 2020 and resolutions were adopted in accordance with the agenda, i.e. the dismissal of T.P. from the position of president of the management board and the appointment of M.Z. as the new president. Subsequently, the following day – 20 February 2020 – another shareholders’ meeting was held, at which a resolution was adopted dismissing M.Z. from the position of president and appointing T.P. in his place.

On 10 March 2020, the company, represented by T.P., submitted an application regarding the change of a management board member. The court clerk, and after the filing of an appeal also the district court, refused the company’s application by decision. According to the court, the minutes of the extraordinary shareholders’ meeting of 20 February 2020 did not correspond to the truth in the part indicating that the meeting had been convened on 5 February 2020.

As noted by the registry court, T.P. could only have learned about the meeting convened by K.K. for 19 February 2020 upon receiving the notification on 10 February 2020, which contained the agenda including his dismissal. From the minutes of the shareholders’ meeting of 20 February 2020 convened by T.P., it follows that it was convened by a management board resolution dated 5 February 2020, and the agenda of that meeting indicates that a resolution was adopted dismissing the newly appointed president and reinstating T.P. to the position. Therefore, it must be firmly stated that such an agenda for the shareholders’ meeting on 20 February 2020 could not have been set on 5 February 2020, as T.P.’s dismissal occurred by resolution of the shareholders’ meeting on 19 February 2020.

Furthermore, the court drew attention to the defective convening of the shareholders’ meeting – the application for registration of the change did not include proof of sending notification to shareholder K.K. about the meeting, and simultaneously, he was not present at the meeting on 20 February 2020.

The company appealed against the above decision.

Position of the appellate court

By the decision of 28 February 2022, the appellate court dismissed the company’s appeal. It found that the registry court’s jurisdiction encompasses not only the examination of the form and content of documents attached to the registration application but also the procedure by which the documents forming the basis of the application were created. It cannot be accepted that under the model of the active role of the registry court, whose statutory task is to oversee not only the completeness but also the truthfulness of the data entered in the court register, the court would accept any acts performed “on behalf” of the company or its bodies regardless of the degree of defectiveness of those acts and their impact on the validity or effectiveness of the acts.

The regional court emphasised that the main reason for refusal of registration was the defective convening of the shareholders’ meeting by T.P. As stated in the reasoning of the contested decision, no proof of notification being sent to shareholder K.K. about the meeting was attached to the registration application, and simultaneously, K.K. was not present at the meeting on 20 February 2020, which was admitted by the company’s representative.

Moreover, the court found that the shareholders’ meeting took place on 19 February 2020 and resolutions were adopted in accordance with the agenda – dismissing T.P. from the position of president of the management board and appointing M.Z. as the new president. Therefore, the subsequent shareholders’ meeting held the next day, i.e. on 20 February 2020, at which a resolution was adopted dismissing M.Z. and appointing T.P. in his place, fully justified doubts as to whether the data submitted in the application corresponded to the actual state.

Substantive control by the registry court

To support its arguments in this case, the appellate court referred to the Supreme Court resolution of 20 January 2010, case no. III CZP 122/09. The court stated therein that pursuant to Article 23(1) of the Act on the National Court Register, the registry court is entitled to examine the impact of procedural violations in adopting resolutions by the general meeting of shareholders of a joint-stock company on their content. As evidenced by this case and the established case law, shareholders should exercise due diligence both within the procedures specified in the Commercial Companies Code and in the order of the resolutions adopted.