Defective General Meeting Resolutions – Void and Voidable Decisions
The annulment of resolutions of the General Meeting of a Greek société anonyme (S.A. / public limited company) is a critical aspect of corporate governance. The General Meeting of shareholders is the supreme decision-making body of an S.A. Its resolutions produce binding legal effects and determine essential issues, ranging from the approval of financial statements to major corporate transactions.
Under Law 4548/2018 (the Greek Companies Act), the annulment mechanism serves as a safeguard of legality and corporate transparency.
Voidable Resolutions
A resolution of the General Meeting may be annulled (voidable) if it was adopted:
- in violation of the law or the company’s articles of association (e.g., improper convocation),
- without providing requested information to shareholders, or
- through an abuse of majority power, contrary to the principle of proportionality (Article 281 of the Greek Civil Code).
Abuse of majority power occurs when the majority acts solely in its own interest, causing harm to the minority or disregarding proportionality. By contrast, if a resolution also benefits the company, it is less likely to be considered abusive.
Void Resolutions
A resolution is deemed void when it has illegal content or when no valid convocation of the General Meeting has taken place. Voidness applies automatically (ipso jure) and may be raised even by third parties, within one year.
Case Example
In a recent case, the court examined the validity of a General Meeting resolution authorizing the sale of a company property to a related party (the Chair of the Board of Directors and majority shareholder). Such transactions fall under the related-party rules of Law 4548/2018.
Since the Board of Directors was conflicted, the matter was referred to the General Meeting. The court assessed, among others:
- Improper convocation of the General Meeting constitutes grounds for annulment; complete absence of convocation renders the resolution void.
- Failure to provide legally requested information to shareholders may lead to annulment.
- Abuse of majority power requires that the decision serve only the majority’s interests, to the detriment of the minority, without corporate benefit. If the company itself gains a proportional benefit, the claim of abuse is weaker.
- The restriction on the participation of related shareholders in the vote does not apply to non-listed companies.
- The transaction must be filed with the General Commercial Registry (G.E.MI.) before completion.
The court ultimately rejected the annulment request. It held that the sale had taken place at a fair price, supported by independent valuations, serving the company’s liquidity needs, and did not constitute an abuse of majority power.
Who May Challenge a Resolution?
Only shareholders meeting specific thresholds may bring an annulment action:
- at least 2% of the share capital (or 5% / 1/20 in special cases such as failure to provide information),
- provided they did not attend the meeting or expressly objected to the resolution,
- and they act within four months from the adoption or publication of the resolution.
Conclusion
The annulment of General Meeting resolutions is a vital tool for protecting shareholders and ensuring legality and transparency in Greek S.A.s. Active shareholder participation, continuous access to information, and judicial remedies against abusive practices are cornerstones of sound corporate governance. Law 4548/2018 provides the legal framework, but its effectiveness depends on the vigilance of all stakeholders.