Our Dispute Resolution team represents an aircraft company’s shareholder who owns 60% company‘s shares in the shareholders’ dispute. A shareholder challenged the general meeting of shareholders of the company which took place in 2017 and requested the decisions made during the meeting, including the decision on the election of a new board, to be declared invalid.
One of the claimant‘s main arguments was that there was no quorum at the meeting as the meeting was not attended by the claimant‘s representative. It was argued that in 2017 the claimant signed an agreement of transfer of voting rights, by which all 60% of the claimant’s votes were transferred to the representative.
An essential moment in this case was the fact that by an earlier agreement concluded in 2012 the claimant had transferred 35% of the votes to another shareholder, who as a result was eligible to vote a total of 75% of the votes. The plaintiff argued that after the conclusion of a new agreement in 2017 by which the votes were transferred to another person, the previous agreement expired.
The Supreme Court of Lithuania noted that the transfer of voting rights is possible only by concluding a contract, therefore it can be terminated unilaterally only if the other party fails to perform or improperly fulfills the obligations under the contract and it is a material breach of the contract. The Supreme Court of Lithuania agreed with our arguments that a later agreement on the transfer of voting rights does not mean that the previous agreement is no longer valid without the consent of the other party. The Supreme Court of Lithuania stated that the agreement on the transfer of voting rights of 2012 was in force during the General Meeting of Shareholders, therefore the other shareholder had 75% of the votes.
The importance of this victory is marked by the fact that after a 3-year long dispute, the client managed to prove the legitimacy of the decisions that were extremely important for the company’s activities. Furthermore, the Supreme Court’s conclusion regarding the validity of the earlier agreement on the transfer of voting rights will be particularly significant in other cases initiated by the same shareholder.