Shareholders of a company are sometimes unsatisfied with the way a company is run by its management.
We have seen in a previous article that, in such case, the company has a liability claim against the director(s) or manager(s) of the company.
The law of 10 August 2016 (the “Law of 2016”) modifying the law of 10 August 1915 on commercial companies (the “Law of 1915”) however also introduced a separate liability claim for minority shareholders.
The conditions to raise such a claim have been clarified by Case Law.
- General conditions
The conditions for the minority shareholder to file such a claim are the following:
- Ownership of shares representing at least 10% of the share capital
- To be considered as a “minority” shareholder
- The shareholder shall not have granted a liability discharge to the management during the annual general meeting (For the period in which the liability is sought)
- To bring the action before the end of the 5 years limitation period foreseen by article 1100-8 of the Law of 1915.
2) The qualification of minority shareholder
The legal provision of the Law of 10 August 1915 on commercial companies foresees that the shareholder must hold at least 10% of the share capital, but does not mention any maximum amount of share capital held to file this claim.
In a Judgement of 13 June 2019, a shareholder owning 50% of the share capital filed a liability claim against the directors of the company. The shareholder requested compensation as he claimed that the management was using the company’s assets for their own personal interest.
The Court ruled that a shareholder owning 50% of the shares cannot be qualified as a minority shareholder. The fact that the shareholder is not a majority shareholder does not mean he is a minority shareholder. According to the Court, the admission of a minority shareholder to make the minority action would lead to introduce a new action that is not provided by the Law.
3) The discharge granted to the directors
In a Judgement of 25 April 2018, the Court ruled over a case where a minority shareholder filed a liability claim, arguing that the directors used the company’s credit card for their personal interest.
The Court reminded that the minority shareholder can file a claim only if he voted against the discharge of liability of the director. The Court also reminded that if the general meeting of shareholders gave a discharge to the directors, the minority shareholder can no longer file a claim himself, even if such shareholder voted against the discharge.
Nevertheless, if a discharge is given, the Court reminded that, according to the law, the shareholder could still file a claim thereafter if:
- the balance sheet contains omissions or false indications hiding therefore the actual financial situation of the company,
- and the general meeting of shareholders have not been informed about those omissions or false indications
in this case, the Court decided that the claim was inadmissible, as the general meeting of shareholders had given the discharge to the directors, being fully informed of the financial situation of the company and the remuneration received by said directors.
4) Since when does the new regime apply?
The Law of 2016 entered into force in August 2016. The main issue was to know in which case the new Law of 2016 is applicable in absence of legal answer.
The Judgement of 25 April 2018, referring ton the Belgian legal doctrine, concluded that there is no legal obstacle to file the minority action for facts prior the entry in force of the new Law of 2016, provided the general meeting of shareholders did not grant a valid liability discharge to the directors for the related period.
To this end, Judges initially are going to verify if a liability discharge was given for the related period. If this is the case, the Court will stilly verify whether the discharge was validly given based on the above-mentioned conditions.
