Tag: ανώνυμες εταιρείες

Σε προηγούμενή αρθρογραφία μας εξετάσαμε τους λόγους θεμελίωσης της ευθύνης των μελών του ΔΣ έναντι της ΑΕ, εξαιτίας πράξεων ή παραλείψεών τους, που συνιστούν παράβαση των καθηκόντων τους (102 §1 ν. 4548/2018). Διαπιστώσαμε εκεί πως ευθύνη δεν υφίσταται, εφόσον το μέλος ΔΣ «…αποδείξει ότι κατέβαλε κατά την άσκηση των καθηκόντων του την επιμέλεια του συνετού επιχειρηματία που δραστηριοποιείται σε παρόμοιες συνθήκες» (άρ. 102 §2). Θα μας απασχολήσουν, εδώ, οι συγκεκριμένοι λόγοι απαλλαγής των μελών του ΔΣ από την ευθύνη αυτή (άρ. 102 §4). Θα μας απασχολήσουν, επίσης, η δυνατότητα και προϋποθέσεις της ΑΕ να παραιτηθεί ή συμβιβαστεί, εφόσον θεμελιώνεται σχετική ευθύνη μέλους και γεννάται σχετική αξίωση της ΑΕ. Θα μας απασχολήσει, τέλος, η παραγραφή των συγκεκριμένων αξιώσεων.

 

Απαλλαγή Μελών ΔΣ

Ευθύνη μελών του ΔΣ δεν στοιχειοθετείται για πράξεις ή παραλείψεις που (α) στηρίζονται σε σύννομη απόφαση της ΓΣ ή (β) αφορούν εύλογη επιχειρηματική απόφαση (5626/2020 ΕφΑθ, ΤΝΠ ΝΟΜΟΣ). Εκτός από τους συγκεκριμένους λόγους, το δικαστήριο μπορεί να θεωρήσει ότι δεν υφίσταται ευθύνη στις περιπτώσεις πράξεων που έχει προηγηθεί σχετική εισήγηση ανεξάρτητου οργάνου ή επιτροπής που λειτουργεί στην εταιρεία σύμφωνα με το νόμο.

Οι Κατ’ Ιδίαν Λόγοι Απαλλαγής

Σύννομη Απόφαση Της ΓΣ

Απαλλαγή από την ευθύνη των μελών του ΔΣ παρέχεται, από το νόμο, όταν η επίμαχη πράξη ή παράλειψη του μέλους στηρίζεται σε απόφαση της ΓΣ. Η γενική πρόβλεψη του νόμου (κατ΄ αντιστοιχία του προϊσχύσαντος καθεστώτος–άρ. 22α α.ν. 2190/1920) οδηγεί σε δυνητική διεύρυνση των αρμοδιοτήτων της ΓΣ. Το ΔΣ, δεδομένης της σχετικής πρόβλεψης, ενδέχεται (και μάλλον μοιάζει αναγκαίο) να οδηγήσει σωρεία αποφάσεων ενώπιον της ΓΣ, προκειμένου να μην υπέχει την ευθύνη που, ενδεχομένως, του αναλογεί.

Σε κάθε περίπτωση, όμως, μια τέτοια απόφαση της ΓΣ πρέπει να είναι «σύννομη» (:νόμιμη). Ελαττωματική απόφαση της ΓΣ [άκυρη (εφόσον δεν έχει παρέλθει ο χρόνος προβολής της ακυρότητας), ακυρώσιμη (εφόσον έχει ακυρωθεί) ή ανυπόστατη] δε μπορεί να οδηγήσει σε απαλλαγή από την ευθύνη.

Περαιτέρω, η απόφαση θα πρέπει να έχει τα σχετικά, αναγκαία, τυπικά χαρακτηριστικά. Δεν αρκούν απλή οδηγία ή κατευθύνσεις της ΓΣ ή της πλειοψηφίας των μετόχων ή ακόμα και του μοναδικού μετόχου.

Μια τέτοια απόφαση της ΓΣ πρέπει να προηγείται, χρονικά, της επίμαχης πράξης ή παράλειψης του μέλους του ΔΣ, που διαφορετικά θα οδηγούσε σε ευθύνη του. Το αντικείμενο της απόφασης και η έκταση της δοθείσας έγκρισης θα πρέπει να προκύπτουν από την απόφαση της ΓΣ.

Μια σύννομη, πάντως, απόφαση της ΓΣ, οδηγεί σε απαλλαγή μόνο εφόσον δεν προβάλλεται κακόπιστα. Δεν μπορεί, λ.χ., το μέλος του ΔΣ να επικαλεστεί την απόφαση της ΓΣ εφόσον έχουν αλλάξει ουσιωδώς οι συνθήκες από τη λήψη της.

Εύλογη Επιχειρηματική Απόφαση (Business Judgement Rule)

Ο συγκεκριμένος λόγος απαλλαγής αποσκοπεί στην αποτροπή τυχόν αδρανούς στάσης από τα μέλη του ΔΣ και της μη λήψης εκ μέρους τους επιχειρηματικών πρωτοβουλιών, υπό τον φόβο της προσωπικής τους ευθύνης.

Τούτο το ενδεχόμενο είχε εντοπιστεί, ήδη, υπό το προϊσχύσαν καθεστώς, οπότε και  αναγνωριζόταν ένα περιθώριο διακριτικής ευχέρειας στα μέλη του ΔΣ. Μάλιστα, ζημία προκληθείσα από λήψη επιχειρηματικής απόφασης εντασσόταν, νομολογιακά, στους επιχειρηματικούς κινδύνους που δέχεται και αναλαμβάνει η διοίκηση μίας εταιρείας (419/2005 ΠρωτΠρωτΑθ, 1698/2013 ΑΠ, αμφότερες σε ΤΝΠ ΝΟΜΟΣ).

Υπό το ισχύον καθεστώς, προβλέπεται, ρητά, ότι η εν λόγω ευθύνη των μελών ΔΣ δεν υφίσταται, εφόσον οι πράξεις ή παραλείψεις τους αφορούν εύλογη επιχειρηματική απόφαση, η οποία ελήφθη: (α) με καλή πίστη, (β) με βάση επαρκή, για τις συγκεκριμένες συνθήκες, πληροφόρηση και (γ) με αποκλειστικό κριτήριο την εξυπηρέτηση του εταιρικού συμφέροντος.

Προκειμένου, επομένως, να γίνει αποδεκτό το εύλογο της επιχειρηματικής απόφασης, θα πρέπει να συντρέχουν (σωρευτικά) συγκεκριμένες προϋποθέσεις:

(α) Εύλογη Επιχειρηματική Απόφαση

Προϋποτίθεται η ύπαρξη επιχειρηματικής απόφασης του ΔΣ (λ.χ. επί ζητημάτων χρηματοδότησης ή επενδύσεων). Συμπεριλαμβάνονται τόσο οι πράξεις όσο και οι (τυχόν) παραλείψεις του ΔΣ. Την εν λόγω προϋπόθεση (:της επιχειρηματικής απόφασης) δεν πληρούν αποφάσεις του ΔΣ που ελήφθησαν στο πλαίσιο καταστατικών ή νομικών τους υποχρεώσεων-χωρίς οποιοδήποτε περιθώριο απόκλισης.

Επιπρόσθετα: η επιχειρηματική απόφαση απαιτείται να είναι εύλογη. Θα πρέπει, δηλ., να  μπορεί να δικαιολογηθεί με βάση αντικειμενικά κριτήρια. Θα πρέπει, επιπρόσθετα, να μη θέτει σε αδικαιολόγητα υψηλό κίνδυνο την ΑΕ.

(β) Καλή Πίστη

Προϋποτίθεται, επίσης, η λήψη της εύλογης επιχειρηματικής απόφασης με καλή πίστη. Έννοια που διατρέχει το σύνολο του εθνικού μας δικαίου. Το μέλος του ΔΣ οφείλει να δρα (αντικειμενικά και υποκειμενικά) καλόπιστα. Κατά τη λήψη της απόφασης δεν θα πρέπει να συντρέχει περίπτωση σύγκρουσης συμφερόντων (:αντικειμενικό κριτήριο). Ταυτόχρονα, όμως, το εκάστοτε μέλος του ΔΣ οφείλει να μην δρα δόλια ή χωρίς να πιστεύει στην ορθότητα της εκάστοτε επιχειρηματικής απόφασης (:υποκειμενικό κριτήριο).

(γ) Επαρκής Πληροφόρηση

Τα μέλη του ΔΣ είναι αναγκαίο να ενημερώνονται «επαρκώς» πριν τη λήψη της εκάστοτε επιχειρηματικής απόφασης. Τούτο δεν σημαίνει ότι είναι αναγκαίο να εξαντληθεί κάθε πηγή πληροφόρησης (και πώς θα ήταν, άλλωστε, δυνατό;). Αντίθετα, η ίδια η διοίκηση της εταιρείας θα κρίνει πότε και υπό ποιες συνθήκες έχει ενημερωθεί αρκετά, ώστε να προβεί στη λήψη απόφασης.

Η επαρκής πληροφόρηση του ΔΣ κρίνεται ad hoc. Λαμβάνονται υπόψη κριτήρια όπως: η σημασία της συγκεκριμένης απόφασης για την εταιρεία, το μέγεθος της επιχείρησης, η δραστηριότητά της, ο  διαθέσιμος χρόνος για τη συλλογή πληροφοριών κ.ο.κ.

(δ) Εξυπηρέτηση Αποκλειστικά Εταιρικού Συμφέροντος

Η απόφαση θα πρέπει, ακόμη, να αποσκοπεί, αποκλειστικά, στην εξυπηρέτηση του εταιρικού συμφέροντος. Τούτο σημαίνει ότι το μέλος του ΔΣ που λαμβάνει την επιχειρηματική απόφαση δεν πρέπει να τελεί σε κατάσταση σύγκρουσης συμφερόντων. Η εξυπηρέτηση του εταιρικού συμφέροντος (γίνεται δεκτό ότι) επιτυγχάνεται με την επαύξηση της μακροχρόνιας αξίας της εταιρείας και τη μεγιστοποίηση του κέρδους των μετόχων (όπως έχει κατοχυρωθεί και για τις εισηγμένες ΑΕ, άρ. 2 §1 ν. 3016/2002).

Εισήγηση/Γνώμη Ανεξάρτητου Οργάνου Ή Επιτροπής

Όπως, ήδη, επισημάνθηκε, ο ν. 4548/2018 αναγνωρίζει διακριτική ευχέρεια στον δικαστή να αποφασίσει πως δεν συντρέχει ευθύνη μελών ΔΣ, προκειμένου για πράξεις ή παραλείψεις που στηρίζονται σε εισήγηση ή γνώμη ανεξάρτητου οργάνου ή επιτροπής, που λειτουργεί στην εταιρεία, σύμφωνα με το νόμο (102 §4 in fine). Πρόκειται για πρόβλεψη που συναντάται, για πρώτη φορά, το πρώτον στον ν. 4548/2018.

Η πρόβλεψη αυτή δεν εισάγει νέο λόγο απαλλαγής από την ευθύνη του άρθρου 102. Αντίθετα, κατά το γράμμα του νόμου, πρόκειται για δυνατότητα του δικαστηρίου να αποφασίσει ότι δεν συντρέχει ευθύνη των μελών.

Για την εφαρμογή της συγκεκριμένης ρύθμισης, εύλογα αναρωτιέται κανείς ποιος εμπίπτει στην έννοια του οργάνου ή της επιτροπής. Η εφαρμογή της φαίνεται να έχει περιορισμένο πεδίο εφαρμογής. Τέτοιου είδους όργανο λ.χ. συνιστά το Συμβούλιο Εμπειρογνωμόνων που προβλέπει ο ν. 3986/2011 για το ΤΑΙΠΕΔ Α.Ε (άρ. 4). Σε κάθε περίπτωση, η εφαρμογή της πρέπει να αναζητηθεί ακόμη και σε υποκατάστατα, όπως γίνεται δεκτό, όργανα ή σε επιτροπές που προβλέπονται στο νόμο περί ΑΕ ή σε ειδικό νόμο ή δημιουργούνται δυνάμει καταστατικής διάταξης.

Βάρος Απόδειξης – Κρίσιμος Χρόνος

Το βάρος απόδειξης της συνδρομής των προϋποθέσεων της απαλλαγής (:άρ. 102 §4) φέρουν τα μέλη του ΔΣ. Κρίσιμος χρόνος για την εκτίμηση της συνδρομής τους είναι αυτός της λήψης της συγκεκριμένης απόφασης-υπό το πρίσμα των συνθηκών που τότε συνέτρεχαν (βλ. Αιτιολογική Έκθεση ν. 4548/2018 επί του άρ. 102). Πρόκειται, συγκεκριμένα, για ένσταση, την οποία υποχρεούνται να προβάλλουν και αποδείξουν τα μέλη ΔΣ.

 

Παραίτηση Της Εταιρείας Από Αξιώσεις – Συμβιβασμός

Δεν είναι δυνατή, χωρίς τήρηση συγκεκριμένης διαδικασίας και πλήρωση συγκεκριμένων προϋποθέσεων, παραίτηση ή συμβιβασμός της ΑΕ με υπεύθυνο μέλος ΔΣ (άρ. 102 §7). Τούτο μοιάζει απολύτως εύλογο καθώς είναι αναγκαίο να αποτραπούν δόλιοι συμβιβασμοί/παραιτήσεις σε βάρος της εταιρείας (και μειοψηφούντων μετόχων). Απαιτείται, ως εκ τούτου, συγκατάθεση της ΓΣ στην οποία, όμως, μπορεί να προβληθεί veto της μειοψηφίας. Συγκεκριμένα θα πρέπει:

(α) Η παραίτηση ή ο συμβιβασμός να έχουν συγκεκριμένες μορφές (πλήρης ή μερική άφεση χρέους, αρνητική αναγνωριστική σύμβαση, σύμβαση συμβιβασμού).

(β) Να έχει παρέλθει διετία από την γέννηση της αξίωσης, προκειμένου η ΑΕ να αποφασίσει (:όχι βεβιασμένα) την όποια παραίτηση από τυχόν δικαστική επιδίωξη των αξιώσεών της. Πριν τη συμπλήρωση της διετίας, σχετικές ενέργειες είναι άκυρες. Στην περίπτωση, όμως, που ασκηθεί εταιρική αγωγή, η ΑΕ έχει τη δυνατότητα να παραιτηθεί από τυχόν αξιώσεις της ή να συμβιβαστεί οποτεδήποτε.

(γ) Να ληφθεί σχετική απόφαση (συγκατάθεση) της ΓΣ. Στη σχετική συνεδρίαση, μετά την άσκηση εταιρικής αγωγής, καλείται να παραστεί και ο ειδικός εκπρόσωπος που τυχόν έχει ορισθεί. Τέλος,

(δ) Να μην έχει αντιταχθεί κατά της ανωτέρω απόφασης το 1/10 του εκπροσωπούμενου εταιρικού κεφαλαίου (αν δεν έχει προηγηθεί εταιρική αγωγή) και το 1/20 (στην περίπτωση που έχει ήδη ασκηθεί αγωγή).

 

Παραγραφή

Οι αξιώσεις της εταιρείας για αποζημίωση, κατ’ άρθρο 102, παραγράφονται με την πάροδο τριετίας. Η προθεσμία παραγραφής αρχίζει με την τέλεση της πράξης ή της παράλειψης που οδήγησε στη ζημία της εταιρείας. Δεν συνιστά, αντίθετα, έναρξη της παραγραφής η γνώση του ζημιογόνου γεγονότος από την εταιρεία ούτε και η εμφάνιση των αποτελεσμάτων του (1483/2010 ΑΠ, 131/2022 ΑΠ, ΤΝΠ ΝΟΜΟΣ).

Η παραγραφή αναστέλλεται για το διάστημα που ο υπεύθυνος παραμένει μέλος του ΔΣ (είναι υποκατάστατο όργανο, εκκαθαριστής κλπ.) Ομοίως, αναστολή χωρεί και στην περίπτωση υποβολής της αίτησης της μειοψηφίας προς το ΔΣ για την έγερση των αξιώσεων της ΑΕ (κατ΄ άρ. 104 §1, η οποία σε επόμενη αρθρογραφία θα μας απασχολήσει). Σε κάθε περίπτωση, οι αξιώσεις παραγράφονται μετά από δέκα έτη από την τέλεση της πράξης ή την τυχόν παράλειψη.

Αν η ζημία της εταιρείας προκλήθηκε από παράβαση της απαγόρευσης ανταγωνισμού, προβλέπεται συντομότερη παραγραφή (άρ. 98 §3). Συγκεκριμένα, οι σχετικές αξιώσεις παραγράφονται μετά από ένα έτος και σε κάθε περίπτωση, μετά από πέντε.

 

Όπως επανειλημμένα έχουμε διατυπώσει, η συμμετοχή σε ΔΣ Ανώνυμης Εταιρείας δεν είναι χωρίς ευθύνες. Τυχόν ζημιογόνες αποφάσεις, πράξεις ή παραλείψεις μελών του ΔΣ είναι δυνατό να τεκμηριώσουν, υπό προϋποθέσεις, προσωπική τους ευθύνη. Για την τυχόν απαλλαγή τους από την ΑΕ, παραίτηση από αξιώσεις ή συμβιβασμό της ΑΕ θα πρέπει να συντρέχουν συγκεκριμένες προϋποθέσεις. Σημαντικό ζητούμενο: η διασφάλιση των συμφερόντων της ΑΕ και των μετόχων μειοψηφίας. Το ΔΣ, εξάλλου, υποχρεούται σε έγκαιρη, πλήρη και επιμελή άσκηση των σχετικών αξιώσεων. Περί αυτών, όμως, σε επόμενη αρθρογραφία μας.-

Σταύρος Κουμεντάκης
Managing Partner

 

Υ.Γ. Συνοπτική έκδοση του άρθρου δημοσιεύτηκε στην Εφημερίδα ΜΑΚΕΔΟΝΙΑ, στις 21 Απριλίου 2023.

 

Η πληροφόρηση που εμπεριέχεται στο παρόν άρθρο δεν συνιστά (ούτε και έχει σκοπό να αποτελέσει) νομική συμβουλή. Μια τέτοια νομική συμβουλή είναι δυνατό να παρασχεθεί μόνον από αρμόδιο δικηγόρο ο οποίος θα λάβει υπόψη του το σύνολο των δεδομένων που θα του εκθέσετε για την υπόθεσή σας. Αναλυτικά.

In our previous article, we dealt with the powers of the Board of Directors. However, its members as well as the substitute bodies (art. 87-collectively: “the members of the Board of Directors”) cannot exercise them outside of specific limits. The relevant discussion seems completely technocratic, theoretical and, ultimately, boring; however, it has an absolutely tangible, as well as important result: potential liability of the members of the Board of Directors for exceeding the limits in question, will activate the relevant provisions and the possibility of attribution to the offenders. The present article regards the obligation on their part to observe legality.

 

Obligations of Board Members

The main obligations of the members of the Board of Directors are: (a) the duty of care (art. 96) and (b) the fiduciary duty (art. 97).

Under the previous regime, there was only one legislative basis for the first of them (duty of care). On the contrary, the fiduciary duty was recognized in theory and jurisprudence. The law on SAs provides a more complete regulation of the two, specific, pillars of responsibility.

 

Duty of Care

Content

The members of the Board of Directors must, while performing their duties, comply with the law, the statutes and the legal decisions of the Board of Directors (art. 96§1). They must also manage corporate affairs in order to promote the corporate interests, supervise the execution of the decisions of the Board of Directors and the General Assembly and inform the other members of the Board of Directors about corporate affairs.

Such are reflected in the law as “the generally applicable provisions regarding the obligation to diligently perform the duties of the members of the Board of Directors” (see in this regard, Memorandum to the law 4548/2018 on art. 96). The members of the Board of Directors must, among other things, pay, during the exercise of their duties, the diligence of a prudent entrepreneur, who operates in similar circumstances (art. 102 §2). Otherwise, they are liable against the company (despite any exceptions – ind.: the rule of business judgment).

Subcategories

The content of the duty of care of the board members is broken down into three sub-categories:

(a) the obligation to comply with legality (art. 96 §1 sub. a)

(b) to the duty of due diligence in the narrow sense, which concerns their management duties in accordance with the due diligence set forth under the law (art. 96 §1 sub. b’ & 102§2) and

(c) in the obligation to supervise and control the organization and operation of the SA (art. 96 §1 para. b’).

In the present article we will look into, in particular, as mentioned in the introduction, the obligation to legality. Specifically:

 

Obligation to Legality

Concept – Content

The obligation of the Board Members to observe legality (in other words: the obligation to ensure the legal operation of the company), is established, as already pointed out, in the law on SAs (art. 96 §1, section a’ and, and regarding listed SAs, art. 4 §2, c. e’ of Law 4706/2020). This is a basic and completely self-explanatory obligation that binds the members of the Board of Directors (see related, Memorandum of law 4548/2018 on art. 96) to:

Comply with the law: The members of the Board of Directors are obliged, as a matter of course, to comply with the law. In this context, their compliance with the relevant provisions of the law on SAs (internal obligations) is mandatory. Among them and their obligation to refrain from taking decisions that fall within the responsibilities that (even by custom) belong to the authority of the company’s General Assembly. Any violation of this obligation gives rise to their liability towards the SA.

Obligations of the members of the Board of Directors are also found in other provisions, apart from the law on SAs. These are legislative obligations of the SA itself (incl.: obligations to comply with the rules of competition law, environmental law, capital market, personal data, civil, tax, bankruptcy law, labor and social security legislation, etc.). The necessity of aligning the members of the Board of Directors with the aforementioned obligations seems self-evident. Possible illegality on the part of the SA (violation, e.g. of its tax obligations, detection of the violation by the tax authority and imposition of fines) will, as a rule, be associated with a violation of the obligations of the members of the Board of Directors. It will possibly trigger their own (:internal) liability.

The prohibition of deviating from the principle of legality continues to exist even if the deviating results in a beneficial outcome for the SA (e.g. the conclusion of contracts following bribes).

Board members should observe (and comply with) business ethics. Any deviation may tarnish the image and prestige of the SA. A related obligation, by law, does not exist due to the non-existence of related-specific legislative regulations (apart from the general clauses: 178, 179 and 288 of the Civil Code).

(b) Comply with the statute: The members of the Board must, in addition, comply with its statute. They must, in this context, move within the logical limits set for the persuit of the corporate objectives (art. 86). They are obliged, therefore, to perform acts which are under it or promote its fulfillment. They are also obliged to comply with other requirements of the statute such as, for example, when the consent of the General Assembly is required for the conclusion of a contract by the Board.

(c) Compliance with decisions of the General Assembly: The members of the Board of Directors must, finally, comply with the (legal) decisions of the General Assembly of the shareholders of the SA. Regarding, in particular, the “…legality of the decisions of the General Assembly should either have been judged by the courts or not have been validly disputed” (: Memorandum of law 4548/2018 on article 96).

Special Obligations

Coexisting with the general obligations of the members of the Board of Directors, other more specific ones are also found (no. 96 §2).

They are obliged to (legally) observe the -according to the law (law. 4308/2014 on Accounting Standards)- books, files and other data of the company (art. 96 §2 para. a’). They have the collective duty to comply with the formalities related to the drafting and publication (art. 96 §2 para. b) of the annual financial statements (art. 147) and the annual management report (art. 150), the corporate governance statement (the listed companies – art. 152), the consolidated (for a group of companies) financial statements, the management reports and corporate governance statement, the remuneration report (art. 112).

The members of the Board of Directors are charged with the specific (special) obligations collectively. Accordingly, their liability is collective and joint and several (in deviation from the apportionment rule – art. 102 §3).

 

Special Legality Obligation Issues

Situation of Legal Uncertainty/ Ambiguity

The path to aligning board members with legality (and fulfilling their related obligation) is not always clearly delineated. More alternatives are often presented, created due to legal gaps, different legal opinions, reversals of jurisprudence. In this case, it is the duty of the members of the Board of Directors to seek appropriate legal advice and the appropriate, given the circumstances, legal control. If doubts remain after such an audit, the Board should, at its discretion, carry out a risk-benefit assessment.

Such actions by the members of the Board of Directors seem necessary to defend the interests of the SA. The most important thing: for the removal (or mitigation, at least) of their personal responsibility towards the SA – in case of a negative outcome of their choices.

Compliance with Contractual Obligations

We should distinguish the observance of the SA’s contractual commitments vis-à-vis third parties from the obligation to observe legality. The SA is obliged to align with them, but this is not always possible (in cases, e.g., of financial hardship). Sometimes, possibly not even advisable. The responsibility of the members of the Board of Directors does not arise, in principle, towards the SA for the (non)fulfillment of the contractual obligations it has undertaken. Issues of liability of the members of the Board of Directors will arise, possibly, if any unnecessary violation of contractual obligations will result in increased financial loss of the SA.

“Profitable Violations of Legal Regulations”

The members of the Board of Directors are prohibited, as we found above, to take illegal actions in order to satisfy corporate interests. Any “beneficial violations of the rules of law” (as they are usually called) constitute unacceptable behavior. In addition, they represent an unfair way of exercising administration, and absolutely incompatible with the obligation to observe legality.

Adherence to the principle of legality obviously takes precedence over the corporate interest. Moreover, the purpose of the SA cannot be illegal; much more so, the way of pursuing it. Possible illegal behavior of members of the Board of Directors gives rise to their obligation to compensate the SA. However, any profit earned by the SA due to their illegal conduct should be taken into account.

 

The obligation to observe legality (obeying the law, the statute and the decisions of the Board of Directors) on the part of the members of the Board of Directors, is not a wish list or a statement without meaning. It constitutes the members’ clear obligation. A possible violation of this obligation damages the SA and activates the relevant provisions on the responsibilities of the violators. Invoking arguments of the kind “the end justifies the means” cannot, under any circumstances, be tolerated. However, the obligations of the members of the Board of Directors and its substitute bodies do not end here. About the other duties of care, see our next article.-

Stavros Koumentakis
Managing Partner

 

P.S. A brief version of this article has been published in MAKEDONIA Newspaper (March 5th, 2023).

Disclaimer: the information provided in this article is not (and is not intended to) constitute legal advice. Legal advice can only be offered by a competent attorney and after the latter takes into consideration all the relevant to your case data that you will provide them with. See here for more details.

In a previous article we dealt with the defective and non-existent decisions of the Board. But what are the conditions of invalidity? In the present article we will look into the relevant procedural conditions.

 

Standing to Bring an Action: The Claimants

Those who are entitled to rely on defects of the decisions of the Board of Directors are many. We will refer to the two important categories: (a) decisions with substantive defects (art. 95 §1) and procedural defects (art. 95 §2) as well as (b) those that resemble decisions of the shareholders’ General Assembly (art. 95 §4). For the first category, special arrangements are provided (art. 95 §3). For the second, the corresponding provisions for the decisions of the General Assembly (art. 137 and 138) apply by analogy. In more detail:

Who can Invoke Invalidity of Decisions With Substantive & Procedural Defects

With regard to the specific defective decisions of the Board of Directors, the persons entitled to invoke their nullity are:

(a) The members of the Board individually

The power of the members of the Board of Directors to invoke the invalidity of its decisions seems both reasonable and obvious. The members of the Board of Directors are responsible for what the body has decided and, therefore, they have every reason to want to maintain the legality of the Board and to avoid all liabilities. In fact, their right to challenge the decisions in question exists whether or not they participated in the (defective) decision (see related Memorandum to law 4548/2018 on art. 95). Those who voted against the problematic decision are entitled, in any case, to invoke any invalidity. However, those who voted in favor can do so as long as they do not operate in a contradictory and abusive manner (281 CC).

The Board of Directors, however, is not entitled to invoke, collectively as a body, potential invalidity.

(b) Third parties (shareholders or non-shareholders)

Third parties (shareholders or not) may retain the right to invoke any invalidity. Under the condition, however, that they justify a personal and special legal interest (art. 95 §3 section a) and, in this context, damage to their personal interests.

Moreover: “… (as is also the case in the case of direct damage) the shareholder or the third party has an individual right of protection and will have a legitimate interest to invoke the nullity of the decision… but not with reference to the corporate interest and the expediency of the management judgment of the Board of Directors ” (therefore the control of the decisions takes place in the light of other provisions, i.e. 102) “…but with reference to the harm that they personally and directly suffer” (: Petition Ex. Law 4548/2018, on the article 95). Correspondingly, that is, to their standing to bring an action in order to claim the direct damage they suffer from acts of the Board of Directors (1214/2021 Supreme Court, 1298/2006 Supreme Court, NOMOS Legal Database), likewise, they can invoke the invalidity of a decision of the Board “…which damages them personally and directly (e.g. the Board of Directors decides not to pay a dividend, which was legally decided by the General Assembly to be paid)”.

Beneficiaries of Invoking of Decisions Simulating General Assembly Decisions as Null/Invalid

For the restrictively mentioned, in the law, decisions that are similar to decisions of the General Assembly (art. 95 §4), the provisions on defective decisions of the General Assembly (art. 137 and 138) shall apply by analogy. In this context, the annulment of the decision of the Board of Directors (art. 137) can be invoked by a shareholder representing at least 2% of the capital. And so can each member of the Board of Directors, individually. On the contrary, any person, shareholder or third party who has a relevant legal interest to invoke nullity (art. 138).

In this case the invocation (and proof) of the shareholder status is enough. Proof of personal, special, legitimate interest is not required, as is required in decisions of the Board of Directors with defects of substance or procedure.

Ex officio Audit

Lastly, any invalidity of a Board decision can be taken into account ex officio by the court. Provided that it is a continuous violation of legal provisions of a mandatory nature. In this case, the illegality of the decision can also be invoked by the shareholders, regardless of whether they are personally and directly harmed (art. 95 §3 in fine). A justifiable reason is the fact that it is intolerable for the shareholders to perpetuate an illegal situation in the SA and for them to be unable to react (see Memorandum of Law 4548/2018 on Art. 95).

 

Invocation Deadline

The Rule

The possibility of invoking the invalidity (or annulment) of a Board decision cannot exist in perpetuity. The relevant deadlines vary.

(a) Regarding decisions with a defect in substance (95 §1) or procedure (95 §2): The relevant appeal can take place within six months from the entry of the contested decision in the SA minutes book (according to art. 93). If, however, it is a decision to be published, the six-month long deadline starts from its registration in the Business Registry (according to art. 12).

(b) Regarding decisions that are similar to decisions of the General Assembly (95 §4): The deadlines applicable to defective decisions of the General Assembly shall apply proportionally. In particular, with regard to annullable decisions (137), any action to annul them is required to be brought within a four-month period. Whereas, as regards the invalid ones (138), the invocation of the invalidity is subject to a short period of time. The deadlines, in both cases, start from the taking of the relevant decision of the Board of Directors. In other cases, from the moment it is published to the Business Registry – as long as it is a decision to be published.

The Exception

In the event that the decision of the Board of Directors results in a continuous violation of provisions of mandatory law, the invocation of any invalidity is not subject to a time limit (art. 95 §3 section b and 138 §4).

 

Competent court

The competent court (in terms of matter and place) for adjudicating cases concerning defective decisions of the Board of Directors is the Single-Member Court of First Instance of the company’s registered office. This is provided by a special regulation (95 §4) for the case of decisions that resemble decisions of the General Assembly (95 §4) and the legal consequence of their defect is annulment (137). We should, however, accept a corresponding competence (according to the correct point of view, see art. 3 §1) for all other relevant cases as well.

If, moreover, different competences were accepted (Multi-member and Single-member Court of First Instance of the company’s headquarters), we would be led to a division of competences. Specifically, lawsuits against decisions of the Board of Directors, the reality of which would probably be reviewed both in the light of annulment and invalidity, should be brought to the Single-Member and Multi-Member Court of First Instance respectively. Which is illogical.

 

Interim Measures

With regard to the decisions of the Board of Directors that are similar to those of the General Assembly, there is no doubt as to the possibility of recourse to interim measures (art. 95 §4, 137§11 & 138§7). The same goes, in the opinion we adopt, also in the cases of decisions with defects of substance (art. 95 §1) or procedure (art. 95 §2).

 

Disclosure Requirements

The court decision, which recognizes any invalidity of the decision of the Board of Directors, should be published in the Business Registry, since the said decision is subject to publicity (art. 95 §5). This regulation follows the spirit of the articles on defective decisions of the General Assembly (art. 137 §12 and 138 §8).

Third Party Protection

On defective decisions of the Board of Directors (it should be accepted that) protection is provided for bona fide third parties (no. 95 §6 and 86 §§2 and 3) with regard to all defective decisions (as it is argued: even the non-existent ones). Provided that they have been published and rights have been created in favor of third parties.

Consequently, the flaw in the decisions of the Board of Directors cannot be suggested against third parties in order to avoid, e.g., contractual obligations on the part of the company.

 

The members of the Board of Directors of the SA must operate within the framework of what the law, the statutes and the decisions of the General Assembly define (a topic that will concern us in our next article). Reasonably, according to a logical sequence, decisions of the Board of Directors that go beyond the specific limits can be challenged by its members and third parties-shareholders or not). The relevant conditions and deadlines derive or are inferred from the law. However, the legal decision-making and their wording in a way that guarantees the rights of the SAs, the shareholders and, of course, the members of the Board of Directors themselves, is of priority.

Stavros Koumentakis
Managing Partner

 

P.S. A brief version of this article has been published in MAKEDONIA Newspaper (February 26th, 2023).

Disclaimer: the information provided in this article is not (and is not intended to) constitute legal advice. Legal advice can only be offered by a competent attorney and after the latter takes into consideration all the relevant to your case data that you will provide them with. See here for more details.

In our previous article, we explored issues related to the conditions for valid decision-making by the Board of Directors. Possible violation of procedural conditions and/or substantive provisions leads to defective decisions. This article is about them.

 

Necessity of Special Provisions

Under the previous regime, the legislator did not provide for dealing with the relevant cases. However, with Law 4548/2018, firstly, a special legislative provision was established regarding defective decisions of the Board of Directors (no. 95).

The provisions for defective decisions of the Board of Directors are not the same as those for the General Assembly. This is clearly due to the different nature of the decisions of the two bodies and in particular (as also pointed out in the Memorandum of Law 4548/2018 on Article 95):

(a) The decisions of the Board of Directors mainly concern management issues. Therefore, it would be imprudent to subject administrative decisions to judicial review. Given the – mentioned below – rule of business judgment.

(b) The decisions of the Board of Directors are taken by a body that is liable towards the SA. On the contrary, shareholders are, in principle, under no liability. The relative liability of the Board, therefore, can be considered as a safety net, which will adequately deal (even ex post) with the issues arising from any illegal decisions of the Board.

(c) The decisions of the Board of Directors, once made, are executed. Therefore, it may be meaningless to consider whether or not decisions were valid. Still, even if they have been executed, the liability of the members of the Board of Directors is still in place.

Given the above and for reasons of legal certainty on the one hand and unsafe conclusions of jurisprudence on the other, special regulation was deemed necessary to deal with the defective decisions of the Board of Directors.

The law, in particular, distinguishes, with regard to defective decisions of the Board of Directors, between: (a) decisions with substantive defects (art. 95 §1), (b) decisions with procedural defects (art. 95 §2) and (c) decisions which resemble decisions of the General Assembly of Shareholders (art. 95 §4).

 

Decisions With Substantive Defects

Any decision of the Board of Directors, the content of which contradicts the law or the statutes of the SA, is invalid (art. 95 §1).

The concept of law includes the prohibitive provisions of compulsory law. Not provisions of injunctive law, from which deviation is allowed.

In this sense, any decision of the Board of Directors that contradicts prohibitory provisions of the Civil Code is invalid. E.g.: decisions that are contrary to accepted principles of morality (Civil Code 178, 179), decisions taken by abuse of right (:281Civil Code-subject to the consequence of the violation of 281Civil Code in the enumerated decisions of §4 of art. 95).

The same applies to any decision that violates the provisions on the exclusive competence of the General Assembly. As expressly provided, the General Assembly is the only one competent to decide – among other things – on amendments to the articles of association, the election of Board members and auditors, the approval of the overall management and the annual financial statements, the allocation of annual profits. Therefore, decisions of the Board of Directors on these issues or others listed in the law are null and void (117 §1).

Also invalid are the decisions of the Board of Directors, the content of which conflicts with (valid) statutory provisions or (legal) decision of the General Assembly.

However, a decision contrary to an extra-corporate (extra-statutory) agreement is not invalid. Even if all shareholders have agreed to its conclusion.

 

Decisions With Procedural Defects

The Rule

The legislator chose the rule of nullity whether it is decisions with defects in substance or defects in the process of making them. Similarly, therefore, decisions of the Board of Directors that were taken in a way that is not in accordance with the law or the statutes are invalid (art. 95 §2). Decisions, i.e., for which a procedural error occurred when they were taken.

Such defects refer to decisions taken in violation of the:

(a) legal composition of the Board of Directors: e.g., in violation of the provisions on quorum and majority (see Memorandum of law 4548/2018 on article 95). In this context, a decision taken with the presence of a smaller number of Board members than that provided for in the articles of association or in the decision of the General Assembly has been deemed invalid (8064/2017 Multimember Court of First Instance of Thessaloniki, NOMOS Legal Database, 2070/2011 Court of Appeal of Athens, “Dikaio Epixiriseon kai Etairion” 2011). Also, and only indicatively, a case of illegal composition of the Board of Directors is the non-representation or presence of more than half of the members of the Board of Directors. Also, the non-compliance with the minimum number of three (present or represented) members, provided for in the law (art. 92 §1).

(b) legal convening of the Board of Directors: Such a case occurs when, e.g., the invitation was not communicated to all members of the Board of Directors. Or this was not notified within the deadline provided by the law or the statute.

The Exemption of the Unanimous Decision of the Board of Directors

An exception is, however, introduced to the rule of invalidity in respect of procedural violations. In particular, when a decision was taken unanimously – by all the members of the Board of Directors (present or legally represented), any invalidity is not justified (see Memorandum of law 4548/2018 on article 95). On this specific regulation, serious reservations are expressed (and rightly so). And this is because from the letter of the law, it appears that this regulation covers all procedural errors. Whether they concern the legal convocation or the legal composition.

Such an admission, however, would constitute a deviation from more specific provisions for the Board of Directors. Those concerning the validity of off-site meetings (90 §3) or the non-listing (clearly) of the items on the agenda (91 §2 section b) – as long as all the members of the Board are present (or represented) and no one objects.

Also, this admission is inconsistent with the provisions on quorum and majority. The violation of these, in particular, excludes the achievement of unanimity.

Given the above, the interpretation (according to others, in particular and, according to us, more correctly: the teleological contraction) of the said provision on the exception is proposed.

First of all, it should be accepted that this exception excludes errors concerning the legal composition of the Board of Directors. Secondly, the justification of the non-nullity of the defective decision should not be sought in its unanimous adoption. On the contrary, in the presence (and/or representation) of all the members of the Board of Directors and in the non-formulation of objection to the taking of this decision.

 

Application by Analogy of the Relevant Provisions for the General Assembly

Specially Regulated Decisions of the Board of Directors

In addition to the above decisions of the Board of Directors, for certain others it is reserved (art. 95 §4), in case of their defect, application by analogy of corresponding regulations for the General Assembly (art. 137 and 138).

In particular, these regard the following decisions of the Board of Directors, limited to those mentioned in the law:

(a) The decision taken by a majority of 2/3 of the members of the Board of Directors, on the limitation of or deviation from the right of preference (art. 27 §4).

It must be accepted, reasonably (given also the subordination of the case of art. 117 §2 para. a’ to the mentioned decisions of the Board of Directors), that articles 137 and 138 are applied by analogy to the previous (main) decision of the Board of Directors for an extraordinary capital increase due to the principal-subsidiary relationship that connects them.

(b) The decision concerning the issuance of warrants (art. 56 §2).

(c) The decision regarding the issuance of a bond loan with convertible bonds (art. 71 §1 para. b΄).

(d) Decisions regarding capital increases or capital readjustment operations, the amendment or adjustment of provisions of the articles of association and the merger (art. 117 §2 par. a’, b’, e’).

By taking the above decisions, the Board of Directors functions, in essence, like the General Assembly. For this reason (and with the aim of uniform treatment of decisions with a similar subject matter, regardless of the body that issues them), the legislator opts for the solution of the proportional application of the provisions for defective decisions of the General Assembly.

Therefore, any defective relevant decisions become voidable, since procedural rules have been violated when they were taken by the Board. Otherwise they are invalid, as long as their content is contrary to the law or the statute (according to the provisions of articles 137, 138).

The Special Case of Abuse of the Power of the Majority

From the application by analogy to the defective decisions of the Board of Directors of the provisions for the corresponding (: defective decisions) of the General Assembly (art. 137 and 138) the case of annulment of a decision by the General Assembly which was taken by abuse of the power of the majority (art. 137 §) is expressly excluded 2, c. b’). The provision in question provides for annulment (281 Civil Code – even though it is a defect of substance).

The legal theory is devided regarding how these decisions will be dealt with. That is, whether they will become invalid or voidable and based on which provision. The answer to the relevant question is the subject of extensive legal debate and even the contra legem interpretation is proposed.

In any case, however, this exception would not justify any position regarding non-control of abuse of said decisions (this was also accepted under the previous law, 1408/2010 Supreme Court, NOMOS Legal Database, 8064/2017 Multimember Court of First Instance of Thess, NOMOS Legal Database). Otherwise, an impermissible gap would be created in the protection of any minority shareholders from abusive decisions of the Board of Directors.

Nonexistent Decision

Contrary to the legislative provisions for defective decisions of the Board of Directors, the law (no. 95) does not deal with the case of any non-existent decisions of the Board of Directors. The application of the appropriate provisions, as the case may be, is left to the court to decide.

These are, however, completely exceptional cases: Non-existent is (among others) the decision in which only non-members of the Board participated. Correspondingly, when a decision of the Board of Directors is taken by minutes with signatures only, and the signatures of all its members are absent (547/2019 Supreme Court, NOMOS Legal Database, also see Memorandum of law 4548/2018 on art. 95).

 

Particular Issues Regarding the Decisions of the Board of Directors

Mismanagement by the Board

It is accepted (and rightly so) that possible mismanagement on the part of the Board of Directors does not affect the validity of its decisions. Otherwise, the control of the decisions of the body in question would end up being a control of expediency and not only of legality. Such would be incompatible with the rule of board autonomy and business freedom (as it is founded on the basis of the rule of business judgment).

After all, issues related to management by the Board of Directors are dealt with by more specific provisions and, specifically, by the provisions on the liability of the members of the Board of Directors (art. 102 and 107).

Defects of Individual Votes

As explicitly stated in the Memorandum of Law 4548/2018 on Article 95: “it is understood that defects in individual votes cast by members of the Board of Directors (e.g. a consultant with a conflict of interest votes) will affect the validity of the decision only if without this vote a majority would not have been formed.”

This assumption stems from the theory of relevancy (found in German law). The content of this theory is explicitly reflected in the legislative regulation for the decisions of the General Assembly (art. 137 §5). However, its application is, reasonably, accepted -by analogy- also in the defective decisions of the Board of Directors.

Validation of Defective Decision

The application by analogy of §6 c’ of article 137 on the validation of a defective decision of the General Assembly to the decisions of the Board of Directors is also accepted.

According to the opinion held in theory and jurisprudence, the Board of Directors is required to take a “newer decision”, freed, this time, from any defect (876/2010 Supreme Court, 2182/2013 Supreme Court, NOMOS Legal Database). Reasonably, confirming the previous one, without the defect. Otherwise, it would be a new decision, which would render the possibility of validation irrelevant.

This validating decision – with regard to the invalid and voidable decisions that have been judicially annulled – does not have retroactive effect. As it is accepted that the private will cannot cure any invalidity (2182/2013 Supreme Court, NOMOS Legal Database). Whereas, in a different case, the purpose of the invalidity would be defeated (907/2000 Court of Appeal of Piraeus, 134/2014 Single Membered Court of Appeal of Thrace, NOMOS Legal Database).

The Board of Directors that made the defective decision becomes the competent body for issuing the validating decision.

 

The signatory has repeatedly expressed the opinion that the Board of Directors is, for many reasons, the most important (although not the hierarchically superior) body of the SA. Its decisions are therefore of particular importance and value both for the SA itself and for its members. Therefore, it became necessary to establish a special regulation to deal with its defective decisions. However, more important than the subsequent management of any related problems is their avoidance and prevention. Otherwise, we get involved in legal actions, but more on those, in our next article.-

Stavros Koumentakis
Managing Partner

 

P.S. A brief version of this article has been published in MAKEDONIA Newspaper (February 19th, 2023).

Disclaimer: the information provided in this article is not (and is not intended to) constitute legal advice. Legal advice can only be offered by a competent attorney and after the latter takes into consideration all the relevant to your case data that you will provide them with. See here for more details.

One of the most important bodies of the SA is its Board of Directors. It is the body through which exercises the management and representation of the SA; through which the SA expresses its will and manifests its action both internally and to the outside world. The important role of the Board of Directors, as well as issues regarding its members and their term of office will be the approached in the present article.

 

The Role of the Board of Directors – The Management Task

As expressly provided for in the law on SAs (law. 4548/2018), the company is managed by the BoD (art. 77 §1, section a’, law 4548/2018). The administration of the SA includes: (a) management and (b) its judicial and extrajudicial representation (art. 77 §1 sec. b’).

The law, therefore, generates a range of powers (and responsibility) of the BoD, which are distinguished from the corresponding ones of the General Assembly. The latter, moreover, is the one that decides on structural changes concerning the SA.

The SA acts through its BoD. Its existence therefore becomes mandatory. This obligation does not mean, however, that in case the Board of Directors disappears (e.g. due to the resignation of its members) the SA ceases to exist. Its existence, in this case, is not disputed. It is necessary, however, to ensure its operation through the election of a new Board of Directors by the General Assembly or the judicial appointment of its temporary administration (69 Civil Code).

The obligation of the BoD for exercising management is not limited to the management and representation of the SA. It generally includes all actions of administration. In this context: the determination-coordination of the business policy and strategy and ensuring its compliance. Although the law on SAs adheres to the traditional way of governing the SA through the Board of Directors, it also provides for its (potential) substitute: the “executive committee” (art. 87 §4). The latter, once its appointment is chosen, can make decisions for the daily administration of the SA; the rest of the Board of Directors will, in this case, exercise supervisory duties (see Explanatory Report of law 4548/2018 on the 6th section).

A question arises regarding the content of the corporate interest at the promotion of which the Board of Directors should aim, while exercising the duty of administration. In one view, the corporate interest of the SA is identified with the aspirations of its shareholders for the long-term profitability of the SA and, by extension, an increase in the shareholding value (: monist theory). On the other hand, not only the interests of the shareholders should be taken into account, but also those of e.g. the SA workers and even the environment (: pluralist theory). In any case, however, and through the serving of such interests by the Board of Directors, for example of the interests of the employees, the interests of the shareholders are served in the end.

 

Legal Relationship Between Board Members & SA

The members of the Board of Directors are linked by a legal relationship (: organic) with the SA. This legal relationship may or may not be in exchange for a numeration.

It is possible that a member of the Board of Directors provides the SA, in addition, with services that go beyond the narrow limits of its administration. These services are provided in the context of a “special relationship” (art. 109 §3). The specific, special, relationship can include, indicatively, the type of employment contract, project, independent services or mandate (e.g. a member of the Board of Directors provides, at the same time, legal or accounting services to the SA).

 

Principle Of Autonomy

The members of the Board act independently. Therefore, they are not subject to instructions and orders, e.g. of the General Assembly or the majority shareholder of the SA. The only obligation of the members of the Board of Directors towards the shareholders (in the context, mainly, of the General Assembly) is the obligation of provision of information (: art. 141).

The members of the BoD have (against the SA – only) an obligation of loyalty and diligence when fulfilling their duties – in the context of the organic relationship between them (and this regardless of any underlying relationship – e.g., contract of mandate or of independent services).

Except in the case where the BoD itself requests it, no consent/approval of the GA is required in the making of management decisions by the BoD. Statutory clauses for approval of the decisions of the Board by the General Assembly will therefore be void. However, the possibility of the latter to elect, at any time, a new Board of Directors, undoubtedly works in the direction of the compliance of its members with the directions (formal or informal, explicit or implicit) of the majority shareholders.

Finally, it should be noted that, even more so, not even the Board of Directors of a subsidiary company is obliged to carry out the orders of the parent company (regardless, of course, that in practice it will be aligned with its orders).

 

Management Authority: Content, Scope & Responsibility

Content

The Board of Directors is competent to decide on every act concerning the administration of the SA, the management of its property and, in general, the pursuit of its corporate objectives (art. 86).

Extent

The Authority of the Board of Directors is limited: the Board of Directors does not have the right to carry out actions in excess of the corporate objectives as well as actions that are prohibited by the articles of association or contrary to decisions of the General Assembly. It is, however, possible to further limit its authority by the statute or by decisions of the General Assembly.

Responsibility

Any actions in excess of the management authority of a member of the Board of Directors gives rise to an obligation to compensate. However, the relevant act is evaluated as valid and carries legal consequences, as long as the potential third party is in good faith.

 

Representation: Content, Scope & Liabilities

Content

The Board of Directors, as a collective body of the SA, represents the latter judicially and extrajudicially. Exceptions are found in special cases – e.g.: (a) at the stage of establishment of the SA (: when neither a legal entity exists nor, much less, a BoD), (b) at the stage of liquidation (: when representatives are the liquidators), (c) at the stage of bankruptcy (when the liquidator acts as a representative).

In the context of the out-of-court representation of the SA by the BoD fall the execution of legal transactions and the conclusion of contracts with third parties. Also, the acts of a corporate nature towards the shareholders (e.g. the approval of the transfer of reserved shares).

In the context of legal representation, the Board of Directors represents the SA legally, as the SA, as a legal entity, has the capacity to be a party and appear before any court.

Scope

The scope of the board’s representation authority is unlimited: the SA is bound to bona fide third parties (who did not know or could not have known of the relevant excess of exercise of power) – even if the board acts beyond the corporate objectives.

The extent of the power of representation of the Board of Directors is (also) unlimited: Any limitations of it by the statute or the General Assembly cannot be opposed against third parties (art. 86 §3). Even if these have been made public.

Limitations, however, on the Authority of the Board of Directors may be set by law. Such cases constitute the transactions of the SA with members of the Board of Directors (art. 99 et seq.). Also, the cases in which the function of representation is exercised by the Board of Directors, but the consent of the General Assembly is required (e.g. transactions with related parties – art. 100 §3).

Liabilities

The consequences and actions of the members of the Board of Directors are attributed to the SA itself. Liability, therefore, arises at the expense of the latter for (unjust, mainly) actions or omissions of the members of the Board of Directors (art. 71 CC). It gives rise, however, at the same time, on the joint responsibility of the guilty persons.

 

Principle Of Collective Action

The Board of Directors when exercising its powers but taking its decisions (art. 92 par. 2) acts, in principle, collectively (art. 77 §2 sub. b’). It is therefore important that the members of the Board of Directors participate in the collective proceedings. On the contrary, it is not required that all members participate in every act of representation.

Permissible, however, are specific statutory deviations, such as e.g. the assignment of representation for one or more issues to specific, only, members or member of the Board of Directors. Also, the sovereignty of the president’s vote in the event of a tie (art. 92 par. 2 sec. b’). As well as the appointment of a substitute body, which acts in parallel with the Board of Directors (art. 87).

 

The Members of the Board of Directors; In particular

Election & Possibility of Re-election

The methods of electing the members (shareholders or non-shareholders) of the BoD are expressly provided for in the law (art. 77 §2 section a’, with reference to art. 78-80). Specifically, these methods include: (a) election by the General Assembly (art. 78), (b) direct appointment by a shareholder (art. 79) and (c) election based on lists (art. 80).

The members of the Board of Directors remain, at all times, eligible for re-election (even before the expiry of their term – article 77, §2, section b’). In this way, the need – often – for unity and continuity in the administration of the SA is met. Any statutory clause prohibiting re-election will be considered invalid (art. 77 §2 section b’).

The Free Revocation

The members of the Board of Directors can be revoked freely – at any time (art. 77 §2 sec. b’). Their tenure, therefore, is always subject to their recall.

Revocation takes place, basically, by decision of the General Assembly (by simple quorum and majority). If, however, a member was appointed by direct appointment, by the shareholder who appointed them (or they were appointed judicially, if 1/10 of the paid-up share capital made such a request and there is a great reason).

The revocation of the members of the Board of Directors-consultants usually expresses the lack of confidence in them or, in general, the disapproval of the management they exercise. Statutory clauses that remove or limit the right of revocation are void.

The act of revocation is subject to (declarative) publicity.

Number

The number of members of the Board of Directors is determined by the articles of association. Alternatively by the General Assembly, within the limits provided by the articles of association. However, it cannot (art. 77 §3) be less than three (3) or exceed fifteen (15) members. Failure to comply with these limits renders the composition of the Board of Directors illegal.

A Legal Entity as a Board Member

As long as there is an express statutory provision, it is possible for any legal entity to become a member of a Board of Directors. (art. 77 §4).

The legal entity-member is obliged, within 15 days from its designation as a member of the Board, to indicate, a natural person as its representative. The latter will exercise all the responsibilities with which the member of the Board of Directors is charged. The natural person in question is revoked/replaced at any time by the legal person-member. However both the legal entity and its representative have full liability vis-à-vis SA in terms of corporate management operations.

The Tenure

The status of a member of the Board is related to the duration its his term – unless the member resigns (expressly or implicitly) before its expiration. The term of office is determined, in particular, by the statute and cannot, in any case, exceed six years. In the event that the election or appointment is made for a longer period, then they apply for a maximum of six years (art. 85 §1 sec. a’ & b’). A minimum term, however, is not foreseen – it is not common, however, for it to fall short of a year.

It is within the competence of the General Assembly to specify the term of office, since the statutes simply set its limits (e.g. “between one and five years”). As an exception, in fact, it can elect a Board of Directors with a shorter (statutory) term. However, if both the statute and the General Assembly do not address its duration, it is assumed that the term of office of the members is six years.

A legal extension of the term of office of the BoD – the duration of which has expired – is provided for, until a decision is taken to elect a new one in the context of the regular General Assembly of Art. 119 (art. 85 §1 ed. c΄). In this way, phenomena of the SA’s lack of governance are avoided.

It is, however, possible that there is a provision for extending the term of office of the Board either in the statute or in the decision of the General Assembly for the election of the Board. Implied extension is not accepted.

Finally, it is allowed, by law, to make a decision – optional or statutory mandatory – on behalf of the General Assembly for partial renewal of the members of the Board of Directors. Also, the provision of differentiated, among the members, expiry times of their term of office (: staggered BoD) – under the terms of the law (art. 85 §2).

 

The SA’s Board of Directors is not its most powerful body (the power of the General Assembly always prevails), but it is the most important one. And this is because the Board of Directors is responsible for the internal management and external bounding and representation of the SA. It is the one to which every failure will be attributed (but also every success will be credited) in the effort to fulfill the corporate objectives and serve the interest of the shareholders. The BoD is a collective body (and is treated as such by the law and the statutes of the SA), but in practice one or, at best, only a few of its members are responsible for the day-to-day management of the SA. In this context (according to Thucydides, Historiai, 2.65.9): “Thus the state was ostensibly a democracy, while in reality it was ruled by one citizen”. And so happens in the SA. And rightly so. The rules, however, are there. Their compliance is supervised and their circumvention (even if it is deliberate) is controlled. And rightly so.

However, the interesting issues of the election of the members of the Board of Directors will concern us in our next article.-

Stavros Koumentakis
Managing Partner

 

P.S. A brief version of this article has been published in MAKEDONIA Newspaper (December 4th, 2022).

 

Disclaimer: the information provided in this article is not (and is not intended to) constitute legal advice. Legal advice can only be offered by a competent attorney and after the latter takes into consideration all the relevant to your case data that you will provide them with. See here for more details.