Shareholder’s meetings and the conflicts that can arise from them.

It is not uncommon for a corporation to have differences of opinion among the shareholders. These conflicts have various particularities that derive directly from the context in which it occurs, that is a company, as opposed to conflicts between individuals, in these corporate disputes it is of vital importance to resolve conflicts between shareholders effectively to guarantee success of the company’s operation

In this regard, it is important to mention that shareholders have, as part of a commercial company, different types of rights, in general these are divided into economic and corporate, the latter being divided into rights of:

i) governance, which implies calling assemblies, voting, etc.,

ii) surveillance, which entails requesting information, reviewing company operations, approving financial statements, among others, and

iii) minority rights, which vary according to the type of company, but in a general they can oppose to the decisions made by the majority, claim responsibility of the administration, etc.

In addition to the rights that derive from the applicable legislation, there is also the possibility that the shareholders have signed an agreement that contains additional rules, rights, or obligations. The non-compliance or transgression of any of the rights mentioned above, as well as the shareholder agreement, will empower the shareholders to file a legal proceeding that ensures respect for their rights.

Some examples of the most common dispute resolution processes that shareholders of a corporation can initiate are detailed below.

Opposition to decisions made in a shareholders meeting.

The General Law of Mercantile Companies (LGSM) establishes that all the resolutions adopted in the shareholders’ meetings are binding for all the shareholders of the company. However, an exception to this rule is that shareholders representing at least 25%, or 20% in the case of SAPIs, of the shares have the right to file an opposition procedure against those decisions; only if, in addition to representing the indicated percentage, the following assumptions are met:

i) it must be filed no later than 15 days after the meeting,

ii) the shareholders who start the process have not attended the meeting or if attending, voted against the resolution and

iii) the opposition must be based on a breach of the bylaws or a violation of the law.

One of the most important particularities of this procedure is that it allows shareholders to stop the execution of the contested resolutions until the judicial procedure is finally resolved, considering that they must show bail to deal with possible damages suffered by the company derived from the suspension of the decisions made in Assembly.

Nullity of shareholder’s meetings.

This claim must be differentiated from the opposition indicated above in that this procedure has the objective of annulling a shareholders’ meeting due to defects in the formality of the same, in its case it is independent if in said Assembly a decision was made that, due to its merits, contravenes the bylaws or the law, but only if the formal requirements for its validity were not respected in its call or organization.

Some requirements that should be respected and to which attention should be paid in case a meeting annulment procedure is considered could be:

i) that the meeting is not held at the company’s domicile,

ii) the call does not was carried out in accordance with the bylaws and the LGSM,

iii) the call does not contain the agenda or is not carried out by the person empowered to call and

iv) there was not a sufficient number of shareholders to carry out the type of meeting that was summoned.


También puede disfrutar

Sports Law
Aldo Muñoz

Legal-Sports Advisory

In the world of professional sports, the role of the lawyer and the legal framework are crucial to ensuring that athletes receive adequate guidance in

Read More »