The Kuwaiti Companies Law considered the founders and shareholders of the joint-stock company to be members of it, and granted them equal rights and subjected them to one obligation, taking into account the law. One of the most important of these rights was the right to resort to the competent court to challenge the decisions of the extraordinary general assembly of the joint-stock company, and to request a judgment for compensation if necessary.
When do shareholders have the right to appeal the decisions of the extraordinary general assembly of a joint stock company?
Article 220 of the Kuwaiti Companies Law grants every shareholder the right to file a lawsuit to nullify any decision issued by the extraordinary general assembly of the joint-stock company in violation of the law, the general order, the memorandum of association or the articles of association of the company. or it was intended to harm the interests of the company, as it gave them the right to claim compensation when necessary, and the lawsuit for invalidating the decision of the extraordinary general assembly shall lapse after two months from the date of the issuance of the assembly’s decision.
Appealing decisions that harm minority rights
Decisions of the extraordinary general assembly that harm the rights of the minority may be appealed. The appeal is made by a number of the company’s shareholders who own 15% of the company’s issued capital, and the law stipulated that they should not be among those who approved those decisions.
This lawsuit shall lapse after two months from the date of the issuance of the assembly’s decisions. In this case, the court may support, amend, cancel the decisions or postpone their implementation until the appropriate settlement is made to purchase the shares of the objectors, provided that these shares are not purchased from the company’s capital.
The effects of the judgment invalidating the decision issued by the extraordinary general assembly of the joint-stock company
The rulings of the Kuwaiti judiciary have established that the nullity ruling entails considering the decision as if it were not for all shareholders, except that this leads to the decision being objected to be null or voidable.
However, if the decision was non-existent, as it was issued by a non-competent and outside the scope of his competence in violation of the law and the articles of association of the company, and the effect of the ruling in its absence dates back to the date of its establishment, then it is not subject to the provision contained in Article No. 220 of the aforementioned Kuwaiti Companies Law, and the opposing shareholders are not restricted. within the prescribed two months, these decisions are not considered effective against them, and the objection period is open to them from the time of their issuance.
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