The process of registration of a shareholders’ resolution in a limited liability company can be suspended by obtaining an interim injunction before the court where the invalidation claim is to be filed, according to the Supreme Court.

Shareholders’ resolutions generally take effect as soon as they are adopted. Changes resulting from the resolutions are then entered into the national court register by proceedings in the registration court.

Third parties usually only discover the terms of a resolution once it is entered in the national court register. This makes the registration process particularly important in the case of resolutions to appoint or dismiss members of the management board or supervisory board, where there may be disputes about whether an individual is authorised to act on a company’s behalf.

Under the Commercial Companies Code, a company’s bodies and shareholders may use court proceedings to invalidate a shareholder’s resolution that is contrary to law, but an order to suspend the registration process may only be granted by the registration court after a full trial.

The Supreme Court ruling means that third parties or company bodies wanting to invalidate a shareholders’ resolution can get an interim injunction suspending registration until its validity or otherwise has been established at trial.

It also means the injunction application can be made without the other party (in this case the company) being present; the element of surprise is often important to ensure the challenge is effective.

Another effect is that the issue will effectively be decided by the court hearing the injunction application, and not the registration court. It may be made before a statement of claim is filed, and, if granted, will require the statement of claim to be filed within two weeks at the latest.

By suspending the registration of a resolution, the previous entries in the register will continue to be binding on third parties. If, say, the resolution is to appoint or dismiss a member of the management board, the individuals authorised to act on behalf of the company would continue to be those comprising the management board before the resolution was passed.