European Business Law, the fourth volume in our series, shows how the European authorities simultaneously abolish all restrictions on access to and exercise of economic activities and support the growth of domestic markets, through the harmonization the internal legislation or the enactment of genuinely unified regulations.

European Business Law

In order to take account of the various amendments to the Second Companies Directive No 77/91 , which with a view to coordinating national provisions governing the formation of public limited liability companies, aimed at ensuring equivalent protection for both shareholders, particularly minority shareholders , and creditors of the company, by setting forth minimum requirements relating to equity  …

Absolute discretionary power of the general meeting

In order to take account of the various amendments to the Second Companies Directive No 77/91 , which with a view to coordinating national provisions governing the formation of public limited liability companies, aimed at ensuring equivalent protection for both shareholders, particularly minority shareholders , and creditors of the company, by setting forth minimum requirements relating to equity capital, distributions to shareholders, increases and decreases of capital, the Commission recast the directive and adopted Directive No 2012/30 , which has itself since been replaced by Directive No 2017/1132 . 

Within the territory of the EU, the statutes or the instrument of incorporation of a public limited liability company must enable any interested party to know the essential characteristics of that company and in particular what its capital is actually comprised of. Therefore, they must contain the mandatory indications (Articles 3 and 4) , and their publication must be carried out according to the terms and conditions contained in the First Directive. Article 45 fixes the minimum capital of a public limited liability company at EUR 25,000 , which may be formed only of assets capable of economic assessment (Article 46). The capital issued for a consideration must be paid up at no less than 25% at the time the company is incorporated while shares issued for a consideration other than in cash must be transferred in full within five years of the incorporation (Article 48). Moreover, the directive, which intends to maintain the share capital that constitutes the creditors' security, in particular prohibits any reduction thereof by distribution to shareholders where it would make the net assets become lower than the amount of the subscribed capital (Article 56 and 57) or by imposing limits on the company's right to acquire its own shares (Articles 59 et seq.) . 

In the case of a serious loss of the subscribed capital, the general meeting of shareholders must consider whether the company should be wound up or any other measures taken, such as an increase in capital (Article 58). Pursuant to Article 68 of the directive, it is also for the general meeting to decide on the increase in capital. Such a measure cannot be decided by the public authorities without the general meeting intervening, even if that measure is aimed at ensuring the survival and continuation of the activity of an undertaking which, as a result of its burden of debt, is in an exceptional circumstance . Without abusing any right, a shareholder may contest the decision, even if he acts in his own benefit to the detriment of the undertaking's viability  . Abuse is characterized only where, of the remedies available, the shareholder has chosen a remedy that will cause such serious damage to the legitimate interest of others that it appears manifestly disproportionate .

Whenever the capital is increased by consideration in cash, a right of subscription on a pre-emptive basis inures to the benefit of shareholders in proportion to the capital represented by their shares (Article 72). Such a right may be extended by Member States to consideration in kind . An offer of subscription on a pre-emptive basis and the period of time during which this right is to be exercised, must be published in a national gazette, unless all the shares in the company are registered shares, since in this case all the shareholders must be informed in writing . The right of pre-emption may be restricted or withdrawn only by decision of the general meeting, following a written report by the administrative or management body indicating the reasons for restriction or withdrawal of the right of pre-emption, and justifying the proposed issue price (Article 72(4)).

Like increases, reductions in capital fall within the decision-making powers of the general meeting (Article 34). However, such a decision must not undermine the interests of the company's creditors (Article 75), unless its purpose is to offset losses incurred or to include sums of money in a reserve. The amount of such reserve cannot however be more than 10% of the reduced subscribed capital (Article 76). In all events, the subscribed capital may not be reduced to an amount less than the minimum capital laid down in accordance with Article 45 (Article 77).

Where companies are authorized to issue redeemable shares, certain conditions are imposed (Article 82). Redemption must be authorized by the company's statutes or instrument of incorporation before the redeemable shares are subscribed for and the shares must be fully paid up. Notifications of redemption, like increases or decreases, are published. 

Directive No 77/91/EEC of 13 December 1976 on coordination of safeguards which, for the protection of members and others, are required by Member States of companies within the meaning of the second paragraph of Article 58 of the Treaty, in respect of the formation of public limited liability companies and the maintenance and alteration of their capital, with a view to making such safeguards equivalent, OJ L 26 of 31.1.1977, 1.

See Case C-101/08 Audiolux and others [2009] ECR I-9823, LawLex201100000631JBJ, indicating, however, that there is not general principle of EU law establishing equality between shareholders and underlining that the provisions relating to equality in Directive No 77/91/EEC are strictly limited to cases specifically referred to in Articles 20 and 42.

Case C-42/95  Siemens v Nold, Judgment of 19 November 1996, LawLex200900000782JBJ.

Case C-441/93 Pafitis and others [1996] ECR I-1347, LawLex200900000833JBJ: publication of an offer of subscription in daily newspapers does not meet that condition.

Directive No 2012/30/EU of 25 October 2012 on coordination of safeguards which, for the protection of the interests of members and others, are required by Member States of companies within the meaning of the second paragraph of Article 54 of the Treaty on the Functioning of the European Union, in respect of the formation of public limited liability companies and the maintenance and alteration of their capital, with a view to making such safeguards equivalent. OJ 14 Nov. 2012, 74.

Directive No 2017/1132 of 14 June 2017 relating to certain aspects of company law, OJ L 169 of 30 June 2017.

List of information regarding the company (type and name of the company, objects, etc.) which must appear in the statutes or the instrument of incorporation of the company, as well as information subject to the principle of required publication (registered office, form of the shares, amount of the subscribed capital, etc.).

The amount will be revised if necessary every five years by the European Parliament and the Council, acting on a proposal from the Commission, in the light of economic and monetary trends in the Union and of the tendency to allow only large and medium-sized undertakings to opt for the types of company listed in Annex I.

In order to avoid diversions of that rule, Directive No 92/101/EEC of 23 November 1992 (OJ L 347 of 28 November 1992, 64) extends its application to all capital companies concerned by Directive No 68/151/EEC in which the company indirectly holds a majority of the voting rights or on which it can directly or indirectly exercise a dominant influence, even if that other company is governed by the law of a non-member country, provided that it has a comparable legal form.

Case C-441/93 Pafitis and others [1996] ECR I-1347, LawLex200900000833JBJ; C-367/96 Kefalas and others v. Elliniko Dimosio and Organismos Oikonomikis Anasygkrotisis Epicheiriseon [1998] ECR I-2843, LawLex200900000543JBJ; C-19/90 Karella and others v Ypourgio viomichanias, energeias & technologias and others [1991] ECR I-2691, LawLex200900000768JBJ: the fact that the undertaking in question has a particular economic and social importance for society is irrelevant; C-381/89 Syndesmos Melon tis Eleftheras Evangelikis Ekklisias v Greek State and others [1992] ECR I-2111, LawLex200900000597JBJ; C-134/91 Kerafina-Keramische v Greece [1992] ECR I-5699, LawLex200900000527JBJ.

Case C-367/96 Kefalas and others v. Elliniko Dimosio and Organismos Oikonomikis Anasygkrotisis Epicheiriseon [1998] ECR I-2843, LawLex200900000543JBJ: even if the shareholder has not exercised his preferential right on the new shares issued on this occasion.

Case C-373/97 Diamantis [2000] ECR I-1705, LawLex200900000580JBJ.

European Business Law

201. Absolute discretionary power of the general meeting

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201. Absolute discretionary power of the general meeting

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Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

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