Lawsuit for dissolution of a limited liability company

Grounds of dissolution of a limited liability company in Poland

In accordance with the provisions of Polish law, the dissolution of a limited liability company cause in particular:

1) reasons provided for in the Articles of Association;

2) resolution of the shareholders to dissolve the company or to transfer the registered seat of the company abroad;

3) declaration of bankruptcy of the company;

4) other reasons provided for by law.

In the cases provided for by law, the company may also be dissolved on the basis of a court judgment.

Entities entitled to demand dissolution of a limited liability company by the court

Pursuant to the provisions of Polish law, the court may issue a judgment to dissolve the company at the request of a shareholder or member of the company’s governing body.

It is assumed in the jurisprudence that the loss of the status of a shareholder or member of the company’s body by a person filing a lawsuit for dissolution of a company in the course of the process will be taken into account by the court on the date of adjudication and shall result in dismissal of the claim.

The shareholder or member of the company’s body filing the lawsuit shall maintain its corporate status throughout the court proceedings in order to maintain legal standing. In view of the above, in the event of, for example, the sale or redemption of all shares, or dismissal or resignation from the function in the management board, the lawsuit may be dismissed, unless the above corporate status is restored as at the date of the court’s ruling.

Reasons for dissolving the limited liability company by the court

Pursuant to the provisions of Polish law, the court may order the dissolution of the company by judgment if it has become impossible to achieve the company’s goals or if there are other important reasons caused by the company’s relations.

In practice, the reason for the dissolution of the company may be a conflict between the shareholders.

However, it should be remembered that not every conflict within the company leads to the impossibility of achieving the company’s purpose. Temporary disputes or disturbances in the functioning of the company will not justify its dissolution by the court, if they are not of a permanent nature and can be resolved.

The court will also assess whether it is impossible to achieve all the company’s goals or only some of them. If the achievement of only some of the objectives is at stake, then the condition for winding up the company by the court is not met.

It is assumed in the jurisprudence that if there is a conflict between the shareholders, e.g. regarding the business strategy, but despite this, the company continues its business activity and generates income, there is no reason for the dissolution of the company. Differences in views between shareholders as to the strategy of the company’s operation do not constitute grounds for dissolving the company, if they do not result in long-term decision-making paralysis. A dissatisfied shareholder may take steps to withdraw from the company by, among others, sale or redemption of its shares.

The reason preventing the achievement of the company’s objective may also be:

1. loss of the concession, if the company was established to conduct licensed business activity,
2. insufficient amount of capital to conduct operating activities,
3. introduction of high duties on raw materials, resulting in unprofitability of the company’s production activities.

The catalogue of other important reasons justifying the dissolution of the company by the court includes:

1. no possibility of making decisions in the company by the statutory bodies,
2. lack of statutory bodies of the company and inability to appoint them,
3. abuse of the position of majority shareholder,
4. inability to exercise the rights by one of the shareholders, while there is no other possibility to leave the company,
5. lack of interest in the company’s affairs by the shareholders,
6. persistent conflicts between board members.

In the light of the above, it should be remembered that a lawsuit for the dissolution of the company by the court is the last legal remedy that can be applied only when the obstacles to the company’s operations cannot be resolved using other methods, ensuring the continued existence of the company. These obstacles must be permanent and objective.

The court may consider the dissolution of the company inadmissible if, prior to the filing of the lawsuit, no attempt has been made to resolve the dispute in any other way, for example by selling or redeeming shares, or excluding a shareholder from the company.

Securing the claim

Lawsuit for dissolution of a limited liability company may be secured for the duration of the process to protect the company from disposing of assets or entering into pointless transactions.

In particular, the court may issue a security order by:

1. prohibition on the sale by the company of certain assets,
2. a ban on the acquisition of assets by the company,
3. a prohibition on executing a resolution on dividend payment,
4. a ban on concluding specific or planned legal transactions.

If the company fails to achieve its goal, or in the event of other important reasons arising from corporate relations within the company, each of the company’s shareholders or members of its governing bodies may file a lawsuit for the dissolution of the company. The above legal instrument is final, and therefore the court may recognize the claim as justified only if the claimant proves that it is impossible to solve the company’s problems in any other way, e.g. through the sale or redemption of shares of the conflicting shareholder, or his individual exclusion while maintaining the existence of the company.