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Answer: Section 195 of Commercial law prescribes that a court may expel a shareholder from a company on the basis of an action by the company, if he or she has, without justifiable reason, failed to perform his or her obligations or have otherwise done substantial harm to the interests of the company or have not performed obligations or have not ceased to inflict harm after receiving a written warning from the company. Actions may be brought regarding the expulsion of a shareholder by shareholders who represent not less than one half of the equity capital of the company, if a larger number of votes is not specified in the articles of association.

What is considered harm and how to determine it? According to Section 1 of Commercial law, a merchant is a natural person (individual merchant) or a commercial company (partnership and capital company) registered with the Commercial Register. Commercial activity is an open economic activity, which is performed by merchants in their name for the purposes of gaining a profit. Therefore shareholder’s activities aimed against the purpose of the merchant, i.e. aimed at profit decrease or loss infliction, may be considered as inflicting harm to the interests of the company. Evaluating the activities of shareholder is within the exclusive competence of the court. The plaintiff however shall present incontestable evidence of harm infliction.

In the case of the expulsion of a shareholder, his or her shares shall be transferred to the company, which has the duty to pay out to the expelled shareholder his or her contribution, which shall be determined in conformity with the provisions of Section 156, Paragraph two of Commercial law.

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