A creditor, acting on behalf of a bankrupt company, sought to challenge shareholders' resolutions adopted many years earlier and claimed almost EUR 1.5 million in damages jointly and severally from five defendants — the former CEO and four shareholders, among them our client, who held a mere 5% of the shares. The claimant argued that the company had already been de facto insolvent in 2010, so the CEO and the shareholders had been obliged to initiate bankruptcy proceedings, and that the subsequent decisions on revaluing assets and issuing shares were unlawful.
In the course of the proceedings, the claimant waived the greater part of the claim but continued to seek more than EUR 400,000 jointly and severally — an amount that could in theory have been recovered from our client alone, despite his minimal shareholding. Moreover, after the hearing of the case on the merits had already begun, the claimant attempted to bring a new claim — to have the 838 shares allotted to the client declared invalid.
First, we proved that this "amended" claim in fact changed not only the amount but also the factual basis of the case and the parties — in other words, it was an attempt to bring a new claim after the proceedings had already begun. The Court of Appeal of Lithuania agreed with this position and confirmed that the claim had rightly not been accepted.
Next, using financial documents, we refuted the very fact of the company's insolvency: in 2010 its revenue grew almost 190-fold compared with the previous year, its assets tripled, and in 2011 its turnover continued to grow. The company became de facto insolvent only in 2012, when the composition of its management bodies and shareholders was already different. With insolvency in the stated period not proven, there was no basis to argue that a duty to initiate bankruptcy had arisen at that time — and thus no unlawful acts either.
We also showed that the claimant had not individualised the client's liability — it did not specify what specific acts had been performed by the person holding 5% of the shares in particular, or how they differed from the acts of the other defendants. Finally, we proved that the claims had been brought after the limitation periods had expired — the claimant could have known about the contested decisions as early as 2012, yet brought the indirect action only six years later.
The Court of Appeal of Lithuania dismissed the claim in full — not a single euro was awarded against the client, and he himself was awarded his litigation costs.
This case shows that even a minority shareholder cannot be made liable for decisions to which he did not actually contribute, and that limitation periods apply equally to everyone, regardless of the size of the amount claimed.
