The concept of “dispute” on the basis of Article 210 § 1 of the Commercial Companies Code

The Supreme Court confirmed in its decision of September 26, 2023, Case No. III UZ 10/23 that the meaning of “dispute” under Article 210 § 1 of the CCC should be understood not only in typical litigation proceedings in which one of the parties is a member of the management board and the other is the company, but also in non-litigation proceedings involving these entities as participants.

The above ruling was made in a case in which the Social Insurance Company ruled that the chairman of the board of directors of one of the limited liability companies, who is also a shareholder holding 90% of the company’s shares, performing work for the company on the basis of a mandate contract, was not subject to mandatory pension, disability, accident and voluntary sickness insurance. The decision issued in this regard was appealed by the chairman of the board of directors, but the pension authority dismissed the appeal. The court of first instance agreed with the Social Insurance Company’s position. At the appeal stage, the Court of Second Instance overturned the judgment of the Court of First Instance due to the invalidity of the proceedings. In the opinion of the Court of Appeals, a limited liability company represented by a proxy selected under Article 210 § 1 of the CCC should also participate in the proceedings in question.

The pension authority appealed the above ruling, claiming that the chairman of the board held as much as 90% of the company’s share capital, which de facto excluded the existence of a dispute between him and the company. However, the Supreme Court agreed with the position of the Court of Second Instance, pointing out that the Supreme Court’s jurisprudence has established the view that the concept of a dispute, within the meaning of Article 210 § 1 of the Companies Act, should also be applied to non-litigation proceedings. In the opinion of the Supreme Court, the Court of Appeals left no doubt that in the present case the limited liability company should be represented by an attorney appointed by a resolution of the shareholders’ meeting.