The Supreme Court of Cassation has set out important principles regarding the duties of chairs and deputy chairs of company boards of directors. In particularly, chairs' duties are of an organisational nature and must be fulfilled in a neutral way with the aim of coordinating the board as an impartial body. The court also ruled on directors' right to be indemnified in the event of their revocation without cause before the expiration of their appointment.
A recent Court of Cassation decision concerned the amendment of a company's articles of association to considerably increase the percentage of legal reserve and extraordinary statutory reserve before dividends were distributed in favour of shareholders. The question before the court was whether the amendment was grounds for a shareholders' withdrawal on the basis that it was an amendment of articles of association with regard to shareholders' voting rights or their participation.
Article 2497 of the Civil Code sets out that companies which provide direction to coordinate their subsidiaries are directly liable to the subsidiaries' minority shareholders for any damages caused to profitability and shareholding value by a violation of fair management principles. In this context, a recent Supreme Court of Cassation decision examined how to assess whether a corporate group exists and the scope of controlling entities' direction and coordination activities.
The Supreme Court of Cassation recently held that the postponement of loan reimbursements to company partners or shareholders applies not only in cases of court-assessed insolvency, but also if a company experiences temporary financial difficulties. The court also found that company management must refuse to reimburse loans to partners or shareholders if the company was experiencing financial difficulties when the loan was granted or the reimbursement was requested.
In a recent decision, the Supreme Court of Cassation stated that the revocation of members of a controlled company's board of directors due to the transfer of the majority shareholdings to a third party does not constitute just cause for a director's revocation. Consequently, a change in control of a holding company does not breach the duty of trust between the company and its board members.