Inaction of the CEO and abuse of the right

Inaction of the General Director and abuse of the right. Arbitrage practice.

Article 10 of the Civil Code of the Russian Federation establishes a ban on the abuse of the right in any form. This ban is aimed at implementing the principle enshrined in Article 17 of the Constitution of the Russian Federation - the exercise of human and civil rights and freedoms should not violate the rights and freedoms of other persons. In the corporate dispute analyzed below on the issue of recognizing the decision of the meeting as invalid, the actions of the plaintiff were recognized as an abuse of the right.

Case plot:

Member of VIK AVTO LLC V.V. Makhanko acted as the general director of the LLC. One of the participants (P.S. Zverev) sent a request to V.V. Makhanko on convening an extraordinary general meeting of LLC participants. Having received no response after 5 days, P.S. Zverevo exercised the right to convene an extraordinary meeting in the absence of a response from the executive body (clause 4, article 35 of the LLC Law). At an extraordinary meeting of the participants of the LLC, it was decided, among other things, to file an application with the investigating authority to check the presence of corpus delicti in the actions of General Director V.V. Makhanko.

The plaintiff, demanding to recognize the decision of the meeting as invalid, substantiates his position as follows:

- the demand to him, as to the general director, to convene the meeting was sent with violations. It was necessary to send a letter not to the location of the LLC, but to the place of residence of V.V. Makhanko as a member of the society - an individual;

- at the meeting, a decision was made on an issue that was not included in the agenda. Due to the fact that he did not participate in the meeting, there was no quorum for making decisions on issues that were not on the agenda.

Judicial act: Resolution of the Fifteenth Arbitration Court of Appeal dated March 30, 2022 in case No. А53-30966/2021

Court position:

1. The procedure for making a decision by an extraordinary meeting is indeed violated. The decision of the meeting is void when it is adopted on an issue not included in the agenda, except for the case if all participants in the company took part in the meeting. One of the participants (the plaintiff) was absent, which is an obstacle to making a decision on an issue not included in the agenda. Article 181.5 of the Civil Code of the Russian Federation recognizes such a decision as void.

2. However, the plaintiff evaded participation in the meeting and prevented it from being held at all. A letter was sent to the location of the LLC (the location of the permanent executive body in accordance with paragraph 2 of Article 54 of the Civil Code of the Russian Federation) with a request to hold a meeting, but it was returned after the expiration of the storage period.

Thus, the impediment to the holding of the meeting is expressed by the inaction of V.V. Makhanko, who at that time acted as the General Director. The inaction consisted in ignoring the demand of the participants to convene an extraordinary meeting.

3. According to the court, it is obvious that Makhanko The.The. had no intention of attending the disputed meeting, and having come to it, he would have voted against filing an application with law enforcement agencies in order to check for signs of a crime against himself.

4. The court has the right to refuse to recognize the decision of the general meeting, which did not receive the required majority of votes, as invalid in the following cases: the participant, without whose votes the decision cannot be made, evaded participation in the meeting without good reason, evaded and prevented the participants from making significant decisions, the absence of which significantly complicates the activities of society. This position is reflected in paragraph 14 of the Review of Judicial Practice on Certain Issues of the Application of Legislation on Business Companies (approved by the Presidium of the Supreme Court of the Russian Federation on December 25, 2019).

It follows from the circumstances of the case that the inaction of the plaintiff, who evaded participation in the general meeting, entails a significant difficulty in the activities of the company, which cannot be considered conscientious behavior.

The court dismissed the appeal.

Comment:

1. The correctness of the court's conclusion about the abuse of rights by the Director General is confirmed by the practice of the highest courts of the Russian Federation. Thus, according to the position of the Supreme Arbitration Court of the Russian Federation, the requirement to invalidate a decision taken in violation of the charter is recognized as an abuse of the right if the violation is caused by the plaintiff's own bad faith actions (clause 1 of the Information Letter of the Presidium of the Supreme Arbitration Court of the Russian Federation of November 25, 2008 No. 127);

2. It is inappropriate for the plaintiff to send a letter with a request to convene a meeting to the address of the LLC, and not to the address of his place of residence of the LLC. In the considered case, the appeal was sent as to a person exercising the powers of a director, and not as a member of the company.

Please note that in 2020 the law firm Vetrov & Partners was marked by the industry rating of law firms Pravo.ru-300 in the nominations Arbitration Proceedings, Dispute Resolution in Courts of General Jurisdiction and is one of the regional companies throughout Russia in these nominations.

In the event that your litigation or other dispute, contractual work or any other form of activity concerns the issues discussed in this or our other material, we recommend that you check and make sure that your legal position complies with the latest changes in practice and legislation.

We will be happy to provide you with legal assistance regarding the minimization of legal risks and available opportunities. We will try to find a solution that is right for you.

Call +7 (383) 310-38-76 or write to info@vitvet.com.

Our law firm provides various legal services in different cities of Russia (including Novosibirsk, Tomsk, Omsk, Barnaul, Krasnoyarsk, Kemerovo, Novokuznetsk, Irkutsk, Chita, Vladivostok, Moscow, St. Petersburg, Yekaterinburg, Nizhny Novgorod, Kazan, Samara, Chelyabinsk, Rostov-on-Don, Ufa, Volgograd, Perm, Voronezh, Saratov, Krasnodar, Tolyatti, Sochi).

David Glikshtein, manager. I write articles, look for interesting information and suggest ways to use it in practice. I believe that thanks to high-quality legal analytics, clients come to a law firm, and not vice versa. Do you agree? Then let's be friends on Facebook.