Specifically, the Duomatic case concerned the validity of certain payments to directors, even though the directors did not have a contract with the company and no decision had ever been made authorizing them to receive such payments. The court ruled that the payments should be considered duly approved because they were made with full knowledge of the facts and with the consent of all shareholders. Therefore, there must be two conditions for the Duomatic principle to apply. First, shareholder approval must be unanimous, and second, shareholders must be fully aware of what they agree with. However, a simple internal decision of the shareholders is not enough. As Newey J. pointed out in Rolfe v. Rolfe, “a simple internal decision not accompanied by an external demonstration or acquiescence would, it seems, be sufficient to lead to unacceptable uncertainty and potentially offer opportunities for abuse”, which would constitute a motivation for a possible violation of the AoA and, consequently, of the applicable law. In addition, articles 158 and 159 of the Cyprus Companies Act allow, inter alia, to apply to the Council of Ministers for the appointment of an inspector to investigate the affairs of the company if the shareholders have good reason to believe that (i) the company`s activities are carried out with the intention of defrauding its creditors, or for fraudulent or illegal purposes or in any way: which is deleted by one of its members or that it has been established for fraudulent or illegal purposes, or (ii) that the persons involved in its formation or the management of its affairs are guilty of fraud, misconduct or other fault towards it or its members in this context, or (iii) its members have not received all information relating to their affairs; what they could reasonably expect. The responsibility for determining the details of the conduct of these virtual meetings generally rests with the directors, if the articles of the corporation permit. Alternatively, resolutions can generally be passed by written resolutions signed by shareholders, especially at general meetings.
It is important to note that a shareholder who wishes to make a derivative claim under this exception is essentially making a claim on behalf of the corporation. Therefore, as the recent judgments of the Supreme Court of Cyprus have emphasized, all damages should be claimed in the name and benefit of the company and not the minority shareholders themselves. If a lawsuit is filed for an alleged violation of a shareholder`s personal rights, shareholders may be awarded damages. In general, a shareholders` agreement and/or the articles of association of the company may contain provisions that require a certain percentage of shareholder votes in order to adopt and implement certain company agreements. That percentage of shareholders` votes shall be at least equal to or greater than the shares with compulsory minimum voting rights referred to in point 1.8 referred to in point 1.8, with the exception of the dismissal of a director who may not require a percentage higher than the mandatory requirement of more than 50 % of the shareholders who are entitled to participate and vote. Shareholders` rights may be modified by a shareholders` agreement, but such changes may not be binding on all shareholders or the Corporation (only those who are parties to the shareholders` agreement). It is therefore advisable that such a discrepancy be reflected in the statutes. III.
SHAREHOLDERS` rights may be modified by amending the company`s articles of association, such amendment requiring the adoption of a special resolution by a majority of 75%. Such amendments to the articles of association, once duly adopted, are binding on all shareholders and the Company itself and constitute a public announcement of the operation of the company to third parties. Where a company has issued different types of shares, its articles of association may provide for the modification of the rights in shares by providing that the rights attached to each class of shares may be modified either by: the written consent of 75 % of the holders of the issued shares of that particular class; is adopted at a separate general meeting of shareholders. Shareholders` rights may be modified by a shareholders` agreement, but such changes may not be binding on all shareholders or the Corporation (only those who are parties to the shareholders` agreement). It is therefore advisable that such a discrepancy be reflected in the statutes. Regardless of the provisions of a company`s articles of association, shareholders who hold at least 10% of the paid-up capital of the company have the right to oblige the managing directors to convene an extraordinary general meeting. This right may not be waived or modified by the statutes. Similarly, a shareholder cannot be prevented from requesting the dissolution of a company for so-called “just and just” reasons (abuse of minority rights). In general, when convening a general meeting, the place, date, time and proposed agenda of the general meeting must be indicated in order to give a shareholder the opportunity to decide whether it is in his interest to attend and vote at the general meeting concerned. Therefore, it is not possible for shareholders to address matters that are not on the agenda unless all shareholders of the Company (not just those attending the Annual General Meeting) consent. This share is also open to minority shareholders, (i) in the case of a company with share capital at the request of at least two hundred partners holding at least one tenth of the shares issued, or (ii) in the case of a company that has no share capital, at the request of at least one fifth of the persons registered on the list of shareholders of the company. In russel v.
Northern Bank Development Corporation, the company has entered into a SHA with its four shareholders. The terms of the sha included that “no further share capital will be created or the rights attached to the existing shares will be modified without the consent of each party to the agreement, so that the Company may not increase its share capital or modify the rights attached to the shares without the unanimous consent of its shareholders […].
