New jurisprudence, filling in a legal void regarding the scope of the legal effect of expulsion of shareholder due to failure to perform the contribution obligation
The Supreme Court of Cassation of the Republic of Bulgaria issued a judgement in accordance with Art. 290 of Civil Proceedings Code on a claim brought by a client of the Partnership for protection of its membership rights in a joint stock company, thus ruling for the first time on the material substantive law issue whether in case of increase in the capital of a joint stock company, the consequences pursuant to para. 3 in connection with para. 2 of Art. 189 of Commercial Act (expelling of a shareholder due to failure to pay the due contribution into the capital, cancellation of its shares and loss of contributions made) extend to all shares, owned by the shareholder, or only to those, for which it is in default for the payment of the contributions due.
The necessity to admit this cassation was grounded by the attorneys representing the appellant – Boyko Bratanov (partner) and Kremena Yaneva (associate), with the existence of controversial opinions of the legal doctrine as well as with the lack of court authority on the issue
In its judgement, the Supreme Court of Cassation agreed with the opinion of the appellant and issued a binding jurisprudence that in case of increase in the capital of a joint stock company, the shareholder can be expelled only with regard to those shares for which it is in default for the payment of the contributions due, and not for the shares subscribed for and paid in full when the company was established.
With a view to the interpretation of the law, based in its foundations on the arguments stated by the appellant, the rights of the shareholder on the shares it subscribed for when the company was established and that the respondent had cancelled without good reason, were recognised and established with an effective judgement.
We are proud that we thus took part in the stabilisation of jurisprudence, strengthening of the legal security and improvement of guarantees for investment in the Republic of Bulgaria.