The court has jurisdiction to assess the validity of the revocation of a member of the Management Board

It has been established in case-law that the office of a member of the Management Board is a position of trust and that a member of the Management Board who has been recalled cannot claim to be reinstated in that office against the will of the shareholders of the company. Such a finding may seem to lead to a conclusion that a member of the Management Board has no right to challenge the validity of his removal at all. In its judgment of 29 October 2019 in the case No. SKC-944/2019, the Senate held however that the court is obliged to examine the validity of the application of Article 306 of the Commercial Code. If, for example, the reputation of a member of the Management Board has been damaged as a result of the grounds contained in the revocation, the member of the Management Board may, pursuant to Article 1 of the Civil Procedure Law, bring an action to remedy the damage to his rights on the grounds that the circumstances underlying the revocation do not correspond to facts.

On rehearing, the Court of Appeal upheld the action brought by COBALT’s client for the annulment of the decision of the Supervisory Board of the company in so far as it stated the alleged improper performance of the duties of the member of the Management Board and damage to the interests of the company as the grounds for the removal.

Legal assistance to the client was provided by Specialist Counsel Mārtiņš Aljēns and Senior Associate Kristīne Patmalniece.