Convening of company meetings: abuse of rights and good faith according to the Supreme Court

The recent Ruling of the Supreme Court (SC) of 6 February 2025, no. 190/2025 dealt with a case in which a call for a meeting, despite formally complying with legal and statutory requirements, was declared null and void on the grounds that it violated the principle of good faith and constituted an abuse of rights.

In a limited company with three partners, two owned 40% of the share capital each and the third 20%. As long as there was an atmosphere of cooperation, meetings were held on a universal basis without formal notice, given that all the partners attended by tacit agreement. However, when disagreements arose, two opposing blocs were formed: on the one hand, a 40% partner allied with the 20% owner, and on the other, the remaining 40% partner.

In this context, the sole administrator — linked to the majority block — called a meeting through the Official Gazette of the Mercantile Registry and a press announcement, following the statutory procedure. At this meeting, a capital increase was approved that led to the dilution of the dissenting partner’s shareholding, which went from 40% to 13.79%. As he was unaware of the call, this partner could not attend or subscribe to the increase.

The courts, at various levels, ruled in favour of the aggrieved partner, and the Supreme Court upheld this conclusion on the basis of Article 7 of the Civil Code, which prohibits the abuse of rights (art. 7.2 CC) and requires acting in good faith (art. 7.1 CC).

The Supreme Court based its decision on its own case law, citing the STS of 20 September 2017, no. 510/2017. In it, it was established that a call for a meeting can be null and void if it is proven that the person calling the meeting intended for the announcement to go unnoticed, which can be inferred if there is a break with the previous custom of calling meetings in a more personalised way.

Applying this doctrine, the High Court concluded that the way in which the meeting was called was intended to exclude the minority shareholder from the meeting, altering the usual method of communication without prior notice. As he had not been informed of this change, his absence was forced, which allowed his dilution in the capital increase.

Likewise, the Supreme Court rejects the idea that the minority partner should have foreseen the administrator’s manoeuvre. It emphasises that, up to that point, there had been a fluid relationship between the partners and that there had been no indications to make him suspect that the form of the meeting would change abruptly.

To reinforce its argument, the court distinguishes this case from the STS of 9 December 1999, no. 1039/1999 where formal convocation was allowed without additional requirements due to the evident situation of conflict between the partners. In the present case, on the other hand, the alteration of the convocation procedure was not foreseeable for the affected partner.