Reverse squeeze-out in a limited liability company? New bill on amending the Code of Commercial Companies
According to media reports, the Ministry of Justice is preparing a bill to amend the Code of Commercial Companies, which is intended to introduce the ‘reverse squeeze-out’ instrument, i.e. the possibility to request buy-out of shares held by minority shareholders in a limited liability company.
The need for changes in this respect remains the pivot of dispute in the legal community. Those in favor of introducing the possibility for minority shareholders to demand redemption of their shares in a limited liability company argue that due to the lack of such a solution in the Code of Commercial Companies, and specific circumstances provided for in the articles of association or shareholders agreement, minority shareholders are prevented from disposing of their shares, and as a result they “remain” in the company with no benefits (e.g. dividends) associated with being a shareholder in the company.
Opponents, on the other hand, argue that the Code of Commercial Companies provides for the possibility to remove a shareholder from the company (exercised by way of a lawsuit) as well as for compulsory redemption of shares.
The views of both sides on the introduction of the reverse squeeze-out to a limited liability company are rational and justified. Therefore, based on the current legal situation, it is important to adequately secure the interest of minority shareholders in the articles of association or shareholders agreement with the assistance of a legal advisor.
Andersen in Poland will further monitor the legislative process related to the reverse squeeze-out procedure in a limited liability company.
Should you have any questions regarding the reverse squeeze-out or the possibility to contractually safeguard the rights of shareholders in a limited liability company, Andersen’s lawyers and tax advisers in Poland are available to assist you.
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