Contributions to the Nomos Handbook on a very little-regulated area of the law
In the first half of 2024 the handbook, ‘Gesellschaftsrechtliche Nebenvereinbarungen in Europa’ (‘Company Law Side Agreements in Europe’), was published by Nomos Verlag.
Three attorneys from our law firm bnt attorneys in CEE, Aet Bergmann, Yvonne Goldammer, and Dr Jörn Brockhuis, contributed to the publication as authors with country contributions covering Estonia, Lithuania, and Poland.
Contracts and agreements between shareholders are quite common in Estonia, especially in start-ups and companies which have foreign participation. However, there exists neither relevant legal standards nor established case law. Through practice and in the course of cross-border co-operation, contract models have emerged which are now considered as being standard by leading Estonian law firms.
These agreements benefit from the broad freedom of form and contract. On the other hand, however, they are not legally protected against a breach of contract. Voting clauses, for example, cannot legally be enforced other than through high contractual penalties, nor can the obligation to sell or buy shares be enforced.
Lawyers are often in favour of such agreements because the legally precise recording of general and optimistic rules of cooperation shows whether the parties actually agree upon these rules even before they sign such an agreement. This can only benefit legal certainty.
For Lithuania the article is one of the first major international publications to deal solely with the topic of shareholder agreements. Apart from the voting rights agreement and the agreement on the transfer of voting rights, shareholder agreements are not separately regulated in Lithuania.
For this reason many questions often arise regarding the possible content of such an agreement, as well as in regard to potential involved parties. Other important points are the protection and enforcement of agreements and claims which may arise from shareholder agreements. This applies all the more if shareholder agreements are used to secure returns on investments.
Shareholder agreements in Poland are not regulated by legal acts and are subject to full contractual freedom. As a rule they have a supplementary function to the partnership agreement, especially as, unlike articles of association, they neither require the form of a notarised deed nor are they subject to disclosure in the files of the National Court Register.
Due to the latter characteristic, they are often used to establish rules that the shareholders prefer to keep secret due to their nature. In most cases such agreements define the rules for voting at the shareholder meeting in order to conceal the actual level of influence upon the company of certain shareholders.
The extensive freedom which is allowed in drafting the agreements raises questions about their limits. In particular, there are voices in the doctrine which question the possibility of regulating such shareholder rights and obligations by means of an agreement which may contradict with applicable regulations.
In all three countries the agreements have no effect vis-à-vis third parties or the company unless it is a party to the agreement. A breach of their provisions therefore only leads to liability ex contractu.