Judgment of the Supreme Court of Justice of 29-10-2013

This judgment concerned a special action of judicial investigation to a company, brought by a partner to acquire information concerning the existence, ownership and values of possible shareholders’ loans made by the previous partner, his father, to whom he had succeeded.

In the case under consideration, the Supreme Court of Justice admitted that the judicial inquiry could be brought by the partner to use the information acquired for a purpose alien to the company, in particular in the inventory process brought by the same partner as a result of the death of his father and former partner, inasmuch as this purpose was not such that it could represent a damage for the company, in terms that could potentially harm its assets and its market credibility.

Moreover, the Supreme Court of Justice also ruled on the burden of proof in the special investigation of the company, considering that, if the application for a judicial investigation must be founded on facts concretely relied on by the plaintiff concerning the falseness or insufficiency of the information requested, as facts from which his right arises and of which it must provide evidence, conversely, the burden to prove the facts enabling to conclude or infer that the refusal is lawful, which translate into facts precluding the right of the applicant, lies with the respondent company.

Judgment of the Supreme Court of Justice of Oporto of 14-10-2013

The Court of Appeal of Oporto was requested to rule on the question of the fair dismissal of a director, in connection with a special action of investigation of a company brought by a partner. In this case, the partner claimed that there were irregularities in the accounts of the company to substantiate the dismissal of the manager of the company.

The court of appeal of Porto considered that the dismissal from the office of director depended on the occurrence of a fair cause, in accordance with article 257(4) of Código das Sociedades Comerciais (Companies Code).

Recognising the existence of certain irregularities in the accounts of the company, the Court of Appeal of Oporto considered, however, that those irregularities did not fall within the concept of fair cause. To that effect, it mentioned that there was no serious breach of duties that could undermine the partners’ trust in the manager and, even more significant, that these irregularities were already a distant practice of the company and that it had not been demonstrated that the same had caused damage to either the company or the partners.

Judgment of the Court of Appeal of Lisbon of 10-10-2013

With this judgment, the Court of Appeal of Lisbon ruled on the special right to management provided for in the Código das Sociedades Comercias (Company’s Code) and on its compatibility with the possibility to dismiss the managers, also set out in Código das Sociedades Comerciais.

Although it recognises that the special right to management does not preclude the dismissal of a manager, the court observed that such dismissal could only, in principle, take place with fair cause and in an action brought by the company for that purpose. In the case under appreciation, the court rejected the existence of a special right to management, clarifying that the simple appointment of a manager in the articles of association is not enough to conclude for the existence of such a right.