Majority Power and Minority Rights in Corporate Law
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Themes
Majority power, social interest, abuse of majority, fraud on minority rights, corporate law, capital reduction, capital increase, general meeting, minority shareholder rights, fraudulent intention, coup d'accordéon, eviction of minority shareholders, social decision validity, collective decision-making, business law, company capital restructuring, shareholder rights protection, abuse of majority power, fraudulent maneuvers, intentional eviction, social justification, Commercial Chamber, cassation appeal, court decision annulment.
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Abstract
The Court rules on the annulment of a capital reduction and increase operation due to fraud against minority rights, highlighting the importance of social interest and intentional eviction.
Extract
[...] Fraud, on the other hand, can be the result of an accumulation of indices that translate a will dissimulateof eviction. ? This autonomy of the foundation of fraud will allow for a more flexible and adapted control to situations of procedural manipulation.permanent. II) The recognition of a fraud characterized by a cluster ofindices The Court then had to determine whether the contested decision indeed constituted a fraud, relying on a method based on a cluster of converging indices and verifying the existence of a deliberate intention to exclude minorities The use of a cluster of indices to characterize a fraudulent maneuver ? [...]
[...] La jurisprudence admits the legitimacy of such operations if they are necessary for the survival of society, but imposes in this case a concrete justificationiste. ? In the espaceisthis, the absence of imminent danger, the creation of wealth, and a real economic objective weakens the legitimacy of the operation. The distinction between abuse of majority and fraud on the rights of minorities ? The Court makes an important reminder: fraud can justify the annulment of a social decision on its own, regardless of an abuse of majority in the strict sense. ? [...]
[...] The Commercial Chamber responds affirmatively and rejects the appeal, confirming that the elements identified by the Court of Appeal were sufficient to characterize a fraud. It therefore admits that a socially legitimate operation can bethree annulwas when it concealed a fraudulent intention to exclude certain associates, in the absence of justification by social interest. To appreciate the conditions under which such an operation can bethree annulwhen, the Court first recalls the requirements that frame the majority power in the general meeting before specifying the criteriameans allowing to qualify a fraud of the rights of minorities (II). [...]
[...] The intention of eviction as a criterioniscentral to the sanctioned fraud ? The intentional element remains essential: it is not enough that a decision is disadvantageous, it must have been adopted with the intention to harm or to ewin. ? In the esisthis, the structure of the operation reveèin fact a exclusive will of theassociis the majority to take total control of the society, without sufficient social justification. ? The Court therefore sanctions the diverted use of corporate law for personal purposes, to the detriment of equality. between associates. [...]
[...] Court of Cassation, Commercial Chamber, January No. 14-27.052 - Can a reduction and then an increase in the company's capital be annulled on the basis of fraud against minority rights, independently of the demonstration of an abuse of majority? Cass. com Jan n° 14-27.052 In corporate law, the exercise of majority power must be reconciled with the protection of minority rights, particularly when certain maneuvers such as the "coup de" are used"accordéon », may lead to their eviction. In the espaceisthis, a simplified joint-stock company going through a financial situationishas decided to convene an extraordinary general meeting in the middle of summer. [...]
