The law defines it coherently: “A resolution is deemed to be abusively imposed when, without serving a reasonable corporate need, it is adopted by the majority for their own benefit and to the unjustified detriment of the other shareholders.” In other words, it is a resolution imposed by a majority that does not serve the interest of the company as a whole, lacks sufficient justification, and causes harm to minority shareholders. Such justification must be substantive, sufficient, and not merely cosmetic.
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If the benefit to the company’s interest is minimal or merely cosmetic compared to the benefit accruing to the majority, the resolution loses its justification.
Put differently: any resolution must be supported by an objective justification that outweighs the sacrifice imposed on the minority.
Abuse of rights arises when an ostensibly lawful action exceeds its legitimate bounds in a manner the law does not protect.
Case law identifies the following elements as necessary to establish abuse of rights:
- a) exercise of a right that is formally legal;
- b) harm to an interest not protected by a legal rule; and
- c) the immoral or antisocial nature of such harm, which may manifest either:
• subjectively (e.g., exercise of the right with the intention to cause harm or in the absence of a legitimate interest), or
• objectively (e.g., abnormal exercise of the right, contrary to its socio-economic purpose).
Two Examples of Abuse of Rights or Abuse of Power
Convening a General Meeting in a Legally Compliant but Uncustomary Manner (typical in closely held companies):
Even if a meeting is called in accordance with the formal legal provisions, a deviation from established internal practices—especially in small, closely held companies—may amount to abuse if the intent was to prevent certain shareholders (e.g., those holding half the capital) from attending and to push through resolutions beneficial to the convener (often a rival director).
Deliberate Structuring of Profit Allocation to Frustrate Minority Rights:
Abuse arises where the board of directors formulates the profit allocation proposal (i.e., dividend distribution) in such a precise manner that it narrowly avoids triggering minority shareholders’ right of withdrawal. Even when the resolution is formally correct, if it lacks reasonable necessity and disproportionately disadvantages the minority, it may be deemed abusive.
In such cases, the invalidity of the resolution stems not merely from the harm caused to the minority, but from the fact that the resolution itself constitutes a breach of law due to its abusive nature.
When Is a Resolution Considered Abusive?
Supreme Court Judgment 3/2023 explains that the reform introduced by Act 31/2014 broadened the interpretation of abusive resolutions. Previously, a resolution was deemed abusive only if it harmed the corporate interest for the benefit of one or more shareholders or third parties. Today, resolutions may be abusive even without harming the corporate assets, if they are imposed in an abusive manner.
A resolution is considered abusively imposed when:
- it does not serve a reasonable corporate need;
- it is adopted by the majority in their own interest; and
- it causes unjustified detriment to the other shareholders.
Some judges critique the term “reasonable need” as vague, since necessity is often a binary condition. Nonetheless, all three criteria must be met cumulatively for a resolution to be deemed abusive.
Can a Resolution Not to Distribute Profits Be Abusive If Justified by the Majority’s Concern Over the Financial Position of a Key Client?
As previously noted, the presence of abuse must be assessed case by case. If the concern about a key client’s solvency is substantiated (e.g., prolonged non-payment, signs of insolvency), it may constitute a reasonable necessity. But if such concerns are merely stated without factual support, the refusal to distribute dividends is likely to be considered abusive.
Is It Abusive for the Majority to Reject All Proposals Made by the Minority at a General Meeting Without Justification?
Jurisprudence is clear: resolutions that do not reasonably pursue the interest of the company or all shareholders and that prejudice the minority may be considered abusive and contrary to the corporate interest.
However, this does not mean that exercising political rights such as voting—whether or not accompanied by a rationale—must always be deemed abusive. The abuse must be proven with reference to the broader corporate context and the effects of the decision.
Is It Abusive for the Majority to Approve Disproportionate Remuneration for the Managing Director?
Courts have exercised scrutiny over resolutions passed by majority shareholders, particularly regarding the approval of directors’ remuneration—especially when the director is also the majority shareholder. Excessive remuneration may be used as a tool for de facto profit distribution favoring the majority. Nonetheless, courts are not empowered to set a “reasonable” salary; they may only assess whether the resolution is abusive or not.
Can the Remuneration of a Managing Director (Who Is Also a Majority Shareholder) Be Considered Abusive If It Substantially Exceeds That of the Company’s Employees?
There is no definitive answer. However, significant discrepancies between the remuneration of directors and employees are often taken into account by courts when assessing whether a resolution is abusive.
