The general meeting is an organ of a joint-stock company that has the power to take decisions concerning its operation and development. One such power is the ability to dismiss a member of the supervisory board, which is the controlling body of the company. However, what if the extraordinary general meeting dismisses a member of the supervisory board without stating a reason in a situation where the member was appointed a few minutes earlier by a separate group vote?

The supervisory board has the task of supervising the activities of the management board and representing the interests of the shareholders. Therefore, supervisory board members should be competent, reliable and independent. In the doctrine and case law against the background of Article 422 § 1 of the Companies Act, it is emphasised that in order for a resolution to be annulled, it is necessary for at least two grounds of defectiveness to occur in relation to it jointly, in one of the following configurations:

Contradiction with the articles of association and harm to the company’s interest;

Contradiction with the articles of association and the purpose of the resolution to harm the shareholder;

Contradiction with good morals and harm to the company’s interests;

Contradictory to the articles of association and the purpose of the resolution to harm the shareholder.

However, the right to dismiss a supervisory board member by the general meeting is not absolute and may not be used arbitrarily or unreasonably. As the Regional Court in Szczecin (ref. no.: VIII GC 129/22) ruled, the general meeting has the right to dismiss a supervisory board member at any time, but this applies to a situation where there are reasonable grounds for doing so, making it possible to determine that the supervisory board member is performing or will perform this function improperly. In the case before the Court, the newly appointed supervisory board member was dismissed without any justification, on the same day, at the same general meeting at which he was elected to the supervisory board by group voting. In the opinion of the the Regional Court in Szczecin, such behaviour grossly violates good morals and constitutes a disadvantage to the shareholders who decided to appoint such a member of the Supervisory Board.

This means that the general meeting must have specific and objective reasons for making such a decision and may not act for personal, political or other motives unrelated to the interests of the company. Dismissal of a supervisory board member without a reason or for an irrelevant or invalid reason may be considered a breach of the principle of equal treatment of shareholders and the principle of loyalty to the company and may therefore result in the resolution being declared invalid. Such a resolution may be challenged in court and result in the general meeting’s liability for damages against the dismissed supervisory board member.

Summarising the considerations, it should be unequivocally stated that the general meeting should carefully consider its power to remove a supervisory board member and use it only when justified and necessary to protect the interest of the company and its shareholders. Otherwise, there is a risk of being exposed to negative consequences.

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Our law firm is experienced in providing services to companies, including participation in complex transactions, and this experience stems, among other things, from holding managerial positions in companies in the Bank Zachodni WBK S.A. group. (currently Santander Bank Polska S.A.).