Interim Injunction in the event of a Threatened Breach of a Shareholders Agreement

Shareholders Agreement Interim Injunction Limited liability companies Voting Rights Shareholders Meeting Reorganisation Squeeze-out

6 Ob 211/22d

In its recently published decision 6 Ob 211/22d, the Supreme Court strengthened the relevance of an (omnilateral) syndicate agreement and made important statements on the protection against a threatened breach of the syndicate agreement.

In the underlying case, a Luxembourg company held 99.01%, and an Austrian company held 9.99% in an Austrian GmbH. In a syndicate agreement (Shareholders' Agreement, SHA for short), the two shareholders agreed, among other things, on approval obligations for structural changes and share transfers in favour of the minority shareholder. The majority shareholder subsequently convened an extraordinary general meeting to vote on the squeeze-out of the minority shareholder pursuant to section 1 of the Austrian Squeeze-out Act (GesAusG).

This intended squeeze-out was opposed by the minority shareholder's motion for a protective order, which was ultimately upheld by the Supreme Court:

According to the SHA, resolutions on restructuring or structural changes can only be passed with the consent of the minority shareholder. Merger, demerger and the sale of significant assets were cited as examples – but not exclusion under the GesAusG.  In legal practice, however, resolutions on the exclusion of a shareholder under the GesAusG are generally regarded as changing the structure of the company. In this respect, it did not hurt that the squeeze-out was not explicitly mentioned in the SHA, because the list was merely demonstrative. This was underpinned in the case at hand by the fact that it was clearly stated in the SHA that the minority shareholder was to become the majority shareholder with a shareholding of 50.01% in the company in the future through the acquisition of shares. Against this background, a profit distribution in equal shares was also stipulated in an addendum to the SHA. A squeeze-out of the minority shareholder would counteract this intention already stipulated in the SHA, so that the provision in the SHA can only be understood as meaning that the minority shareholder may not be squeezed out without its consent.

Hence, a resolution on exclusion under the GesAusG is one of the so-called "structure-changing" resolutions, so that there was indeed a threat of a breach of the syndicate agreement, which can be countered by means of preventive injunction suit. This injunction seat can be secured temporarily by an interim injunction.

A resolution on the squeeze-out was in fact passed in the general meeting, but subject to the condition precedent of the lifting of the interim injunction that had been issued in the meantime.

In conclusion, the Supreme Court thus strengthened the legal position of the syndicate agreement by once again ruling that legal assistance can be based on the syndicate agreement and that an interim injunction can be applied for by way of security for this purpose.