Commercial and Corporate Law

Every step taken in commercial life has a legal counterpart. The form chosen at incorporation, a single sentence in the articles of association, or a change that was never entered in the trade registry can sit at the centre of a dispute years later. Most problems grow out of a possibility that nobody discussed while the company was being set up.

Incorporation and structure Formation of joint stock and limited liability companies, drafting the articles of association, capital increases and reductions, conversion of company type, mergers and demergers. Articles of association are often copied from a ready-made template; yet if they say nothing about how shares are to be transferred, or what happens in a deadlock where the shareholders hold equal stakes, the general provisions of the Commercial Code step in instead.

Trade registry procedures Registration and announcement, correction of errors in registry records, objection to a registration, applications against decisions of the trade registry directorate. A change that has not been registered cannot be relied on against third parties: a protocol signed between shareholders but never reflected in the registry usually produces no effect on the outside.

Relations between shareholders Share transfers, withdrawal and exclusion from a company, annulment of general assembly and board resolutions, dissolution of a company for just cause. In a limited liability company a share transfer requires a transfer agreement certified by a notary, together with the approval of the general assembly, entry in the share ledger and registration with the trade registry. If any link in that chain is missing, the validity of the transfer becomes open to dispute.

Liability of the management body The liability of board members and of limited liability company managers towards the company, the shareholders and the creditors; the scope of resolutions granting discharge, defence in liability claims, and the risk of personal enforcement arising from public debts.

Commercial contracts, unfair competition and negotiable instruments Drafting dealership, distributorship, franchise, supply and agency agreements; equalisation claims when an agency ends; unfair competition allegations such as appropriating a customer base or disclosing trade secrets. Disputes arising from cheques, promissory notes and bills of exchange, enforcement proceedings specific to negotiable instruments, negative declaratory and restitution actions.

Frequently asked questions

How long is there to annul a general assembly resolution? An action to annul a resolution that breaches the law, the articles of association or the rule of good faith is brought within three months of the date of the resolution. That is a forfeiture period. By contrast, an assertion of nullity against resolutions that strip a shareholder of inalienable rights is not tied to any time limit.

How does a shareholder leave a limited liability company? If the articles of association grant a right of withdrawal, the procedure set out there applies. Where there is no such provision, a shareholder may ask the court to allow their withdrawal on the ground of just cause. The company, in turn, must apply to the court in order to exclude a shareholder. In either case a departure payment is made to the shareholder who leaves.

Is mediation compulsory before bringing a commercial debt claim? For claims for payment of a sum of money, whether by way of debt or compensation, mediation is a procedural precondition; a case filed without going through that stage is dismissed on procedural grounds. Requests for precautionary attachment and interim injunctions may still be made to the court independently of mediation.

What can be done about a dishonoured cheque? The cheque is presented to the drawee bank within the presentation period; if there are no funds, the bank records that fact. That record is the basis both for enforcement proceedings specific to negotiable instruments and for the complaint procedure under the Cheque Act. A complaint can lead to a judicial fine and to a ban on issuing cheques and opening cheque accounts.

My registration request was refused. Can I object? A refusal by the trade registry directorate may be challenged before the commercial court of first instance in the place where the registry is kept, within a short period from service. That period is easily missed in practice, so the date on which the refusal letter was served should be noted at once.

Time limits and procedures

• Annulment of a general assembly resolution: three months from the date of the resolution. An assertion of nullity is not tied to a time limit.
• Liability claims against members of the management body: two years from learning of it, and in any event five years; where the act constitutes an offence, the criminal limitation period applies.
• Unfair competition claims: one year from learning of it, and in any event three years.
• Negotiable instruments: claims based on cheques and promissory notes are subject to short limitation periods, which vary with the type of instrument and the capacity of the debtor.
• Competent court: the commercial court of first instance for commercial disputes.
• Court with jurisdiction: as a rule the domicile of the defendant, and for claims against a company its registered office. Where merchants have made a written jurisdiction agreement, the court named there has exclusive jurisdiction.

In commercial disputes the outcome takes shape according to the wording of the agreement, the commercial books and records, the correspondence between the parties and the expert examination. No undertaking as to result can be given at any stage.