Facts: The plaintiff is a shareholder with less than 0,1 % of the shares in the defendant Austrian stock corporation. In the shareholders' meeting of 20 March 2015 of the defendant stock corporation, the plaintiff had protested against resolutions passed with a majority vote to the effect that only 10 % of the balance sheet profits of more than EUR 10 Mio would be paid out as dividend. The nominal difference for the plaintiff as shareholder would amount to EUR 7,42. The plaintiff filed suit requesting that the court declare the contested shareholders' resolution void and order that the entire balance sheet profits be paid out as dividend.
Court of First Instance: The State Court of Krems, as court of first instance, rejected the claim and held that it would be vexatious and an abuse of rights by the plaintiff to force the defendant to pay out an amount of more than EUR 10 Mio as dividend just for the plaintiff to receive EUR 7,42 as his pro rata dividend.
Court of Appeal: The Vienna Court of Appeal overruled the court of first instance and declared the shareholders' resolution to pay out only ten per cent of the balance sheet profit void. But the court rejected to actively order the company to pay out EUR 10 Mio as dividend.
Supreme Court: The Austrian Supreme Court on appeal by both parties rejected both appeals and held:
The articles of association of a corporation are to be constructed objectively and in line with sections 6 and 7 of the Austrian General Civil Code. The rule of objective construction of the articles of association also applies to corporations where about 95 % of the shares are held by two families only.
In the absence of a provision in the articles of association granting the shareholders' meeting the right to decide on whether or not to pay out dividends from balance sheet profits, the entire balance sheet profits are to be paid out by the corporation and the shareholders' meeting has no right to decide otherwise.
Each shareholder has the right to contest a shareholders' resolution, irrespective of his share in the company. A shareholder in a stock corporation has no duty to exercise his voting right primarily in the interest and to the benefit of the company. To the contrary, within the principles of bona fide and bonos mores, each shareholder may pursue his own interest. In general and in the absence of any limits laid down by the law, no shareholder is under an obligation to subordinate his interest in the pay out of dividends to the interest of the company to carry forward balance sheet profits.
There are no increased duties of loyalty among shareholders in family held corporations, at least not when shares may also be acquired by outsiders.
The fact that a shareholders' resolution is successfully overruled by the court does not by itself mean automatically that a shareholders' resolution to the contrary has been passed. In such cases, the court may not simply replace the resolution successfully contested by such other resolution requested by the contesting shareholder. Rather, the shareholders' meeting has to resolve again on the issue.