Invalid or Void Decision of the General Meeting
A decision of the general meeting of shareholders may be either invalid or void. The difference is that an invalid decision shall be objected to within a certain period of time, whereas void decisions can be invoked without a time limit.
A shareholder may object to a resolution of the general meeting by bringing an action against the company where the procedural provisions of law or the rules and regulations of the articles of association have been breached and the breach may have had an effect on the contents of the resolution or otherwise on the rights of the shareholder. The same applies to resolutions which otherwise are contrary to the Limited Liability Companies Act or the articles of association. The action of objection shall be brought within three months of the decision. The action of objection shall be brought before the district court in the district where the registered place of business of the company is situated (forum domicilii) or before an arbitration tribunal in case the articles of association provide for arbitration proceedings. If no action has been brought in time, the resolution shall be deemed valid.
If the shareholder has participated in the resolution by voting for it a shareholder is normally considered to be prevented from bringing an action. If a resolution of the general meeting is erroneous, the board of directors should not execute it prior to the expiration of the time period within which an action must be brought. The judgment on an action of objection may render the resolution invalid or amend the resolution. At the same time the company may be prohibited from implementing the invalid resolution. The resolution may be amended only if it can be ascertained what the correct contents of the resolution should have been. A judgment rendering a resolution of the general meeting invalid or amending a resolution shall have an effect also in relation to shareholders who have not joined the action.
In certain situations the character of the incorrectness of a resolution is so grave that the grounds for invalidity cannot be required to be appealed to in time. A decision by the general meeting is null and void where:
no summons has been delivered to the general meeting or the provisions on the summons have been materially breached;
pursuant to the Limited Liability Companies Act or the articles of association the resolution requires the consent of a shareholder and such consent has not been obtained;
the resolution is clearly contrary to the principle of equal treatment of shareholders and a consent from the shareholder whom the decision violates has not been obtained;
the resolution could not have been legally made even with the consent of all shareholders of the company.
The aforementioned resolutions do not require an action to be brought within three months of the resolution. It also prohibited to execute them. It is nonetheless important to notice that even a void resolution may become valid if the person who has the right to appeal to it does not react within a reasonable period of time.