A good member agreement can mitigate risks
A good member agreement can mitigate risks
The purpose of the shareholders' agreement is to determine in detail the mutual rights and obligations of the company's shareholders in connection with their participation in the capital company. However, in practice, the question often arises whether a breach of the shareholders' agreement can suspend the decision of the shareholders' meeting or render the vote invalid. Latvian court practice provides a fairly clear answer - such a breach usually gives rise to civil law consequences, for example, an obligation to compensate for losses, but does not affect the validity of the decision itself.
The membership agreement is not the statutes.
One of the most common misunderstandings is the assumption that the members' agreement operates similarly to the company's articles of association, namely that it is binding on all members and the company as a whole. The Senate already stated in 2014 in case SKC-2950/2014 that the members' agreement is binding only on those who concluded it, and not on the company itself or those members who have not signed the agreement. In contrast, the company's articles of association are binding on everyone - both existing and new members, as well as on the company itself.
Imagine a situation: three partners conclude a members' agreement in which they agree on a certain voting procedure, but the fourth member has not joined this agreement. If the dispute concerns the company or this fourth member, the members' agreement cannot in any way affect his decisions at the meeting of members. A claim against a member who is not bound by the agreement is impossible.
Read the full article on the iFinanses portal here
The membership agreement is not the statutes.
One of the most common misunderstandings is the assumption that the members' agreement operates similarly to the company's articles of association, namely that it is binding on all members and the company as a whole. The Senate already stated in 2014 in case SKC-2950/2014 that the members' agreement is binding only on those who concluded it, and not on the company itself or those members who have not signed the agreement. In contrast, the company's articles of association are binding on everyone - both existing and new members, as well as on the company itself.
Imagine a situation: three partners conclude a members' agreement in which they agree on a certain voting procedure, but the fourth member has not joined this agreement. If the dispute concerns the company or this fourth member, the members' agreement cannot in any way affect his decisions at the meeting of members. A claim against a member who is not bound by the agreement is impossible.
Read the full article on the iFinanses portal here