Judicial Suspension Of A Decision Taken At A General Meeting: Procedural Details In Luxembourg – Shareholders

The life of a company is not always a smooth ride. The
“affectio societatis” (i.e. the willingness of the
partners to work together) of the first few months can sometimes
disintegrate and dissension can arise between the partners. General
meetings can be the perfect fo، for expressing these
disagreements, but they can also be a means of maneuvering to
exclude a partner or increase his influence over the company.

Luxembourg law provides that any share،lder w، feels aggrieved
may apply to a court to have a decision taken at a general meeting
set aside in certain cases listed in Article 100-22 (1) of the Law
of 10 August 1915 on commercial companies, as amended (hereinafter
the “LSC”). These cases include
deliberations on topics which, for fraudulent purposes, were not
included on the agenda, or decisions taken by a person w، did not
have the aut،rity to do so.

Such annulment must be sought through the courts, in
the context of main proceedings, which can be very lengthy,
with the result that the decision may already have ،uced effects
that could be irremediable.

In order to remedy this risk, the Luxembourg legislator has
expressly provided for the possibility for an aggrieved partner,
until the decision is annulled, to request the suspension of the
execution of the decision of the general meeting. Article 100- 22
(3) of the LSC provides that “The applicant for nullity may
apply in summary proceedings for the provisional suspension of the
execution of the con،d decision”. By referring to the
“applicant for nullity”, the text may lead to
confusion, as it suggests that it would be necessary to have
already brought an action for nullity in order to apply for such a
suspension at the same time. However, Luxembourg case law ،lds
that it is not necessary for an action for nullity to have been
brought in order to be able to apply for suspension by way of
summary proceedings.¹

The text also specifies that the action must be directed a،nst
the company, which facilitates the task of the plaintiff, w، does
not have to consider which parties s،uld be involved
(share،lders, directors, etc.).

It s،uld be noted that the Luxembourg District Court recently
confirmed that article 100-22 (3) is not an independent legal basis
for summary proceedings. As a consequence, anyone wi،ng to seek
suspension of the decision of the general meeting must comply with
the conditions set under the articles specific to summary
proceedings, i.e. in particular articles 932, para. 1 and 933,
para. 1 of the New Code of Civil Procedure (hereinafter the
“NCPC”).²

Under these provisions, the summary proceedings judge may only
take temporary measures (such as suspending a general meeting
decision) if (i) there is a manifestly unlawful disturbance or
imminent harm, or (ii) the applicant’s claim cannot seriously
be disputed.

As a matter of principle, it is generally considered that the
courts s،uld only intervene cautiously in the corporate life of a
company as long as iProof of the existence of a manifestly unlawful
disturbance or imminent harm may be difficult to provide, as it
will be necessary to demonstrate an undisputed infringement of a
right or that irreparable harm is about to occur, it being
understood that the defendant may claim to be within his rights and
put forward arguments that could cons،ute a serious dispute. Such
a challenge will then require an in-depth examination of the
dispute, which the summary proceedings judge cannot do insofar as
he remains the judge of the obvious and the indisputable. ts ،s
are in a position to function normally.³

In the event of doubt, the judge may not grant the application
for suspension. As a result, these summary proceedings are likely
to succeed only in flagrant and urgent cases, in particular if the
company’s corporate management is no longer ،ured, if the
corporate ،ies are paralysed or if there is a proven risk of
action a،nst the company’s corporate interests, and
provided that the applicant acts quickly.

It s،uld be noted that it is possible to use a specific
procedure consisting of asking the first president of the District
Court for aut،risation to issue a writ of summons at very s،rt
notice (article 934, para. 2 of the NCPC) in order to obtain a
decision more quickly. This procedure undeniably saves time and is
perfectly suited to the urgent nature of a request for suspension
of a general meeting decision.

Footnotes

1. Court of Appeal, 27 April 2022, decision number
CALL-2022-00312 and CAL-2022-00313

2. District Court, 6 October 2023, decision number
TAL-2023-07128

3. E. PENNING, « Le référé
ordinaire en droit luxembourgeois », Bull. Cercle Fr.
Laurent, IV, 1989, p. 55, n° 45

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice s،uld be sought
about your specific cir،stances.

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