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Information Letter of the Presidium of the Supreme Commercial Court of 24 May 2012 № 151 “The Review of the Practice of Consideration by Commercial Courts of the Disputes Connected with the Exclusion of a Member from a Limited Liability Company”

In the opinion of the Presidium, a member may be excluded from a limited liability company only if he commits actions which knowingly inflict harm upon the company, thereby destroying trust among members and obstructing the continuation of normal activities of the company. In such circumstances it does not matter in which capacity he committed such actions – as a director general, manager-employee or as a person acting on the basis of a power of attorney issued by the company.  

Besides, the Presidium pointed out that:

  • a regular evasion without good reasons from participating in general meetings of members/shareholders, which deprives the company of an opportunity to adopt important business decisions may be a ground for excluding the member from the company if the impossibility to adopt such decisions causes a significant harm to the company and/or makes its activities impossible or essentially impedes them;
  • at the same time, the rules on exclusion of a member from the company may not be used for solving a conflict between the members of the company which results from their holding different views on the issues of company management, provided that the position of neither of them is knowingly unlawful. An unlawful behaviour which may serve as a ground for the exclusion of a member from the company shall take place only when the voting of the member in the meeting (equally for or against a decision) should knowingly entail significant unfavourable consequences for the company;
  • petitions of a member addressed to State bodies, including law-enforcement agencies or courts, in connection with actions (or failure to act) of the company, its management bodies or other members constitute lawful ways of protecting his property interests and therefore may not serve as a ground for his exclusion from the company even in cases when the facts set out in those petitions would not have subsequently found confirmation. An exception may be the case when the court would have found that the member did know or ought to know that he communicated unreliable information when applying to State bodies with respective demands and complaints;
  • incomplete paying up by a member of his share in charter capital of the company is not a ground for his exclusion from limited liability company, since in this case the law provides, as a special consequence of member’s failure to act, for the transfer of the unpaid part of his share to the company;

having due regard to a just balance of interests of the members, the exclusion from the company of a member possessing a share exceeding 50 per cent of charter capital, is admissible only in cases when the members of the company do not have, in accordance with its charter, the right of free exit from the company.

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