Keywords
Summary

Keywords

1 Community law - Abusive exercise of a right arising from a provision of Community law - National rule prohibiting the abuse of rights - Application by national courts

2 Freedom of movement for persons - Freedom of establishment - Companies - Directive 77/91 - Alteration of the capital of a public limited liability company - National rules providing for an increase by administrative decision of the capital of a public limited liability company in financial difficulties - Frustration of the exercise of rights arising from the directive by recourse to a national rule prohibiting the abuse of rights

(Council Directive 77/91, Arts 25(1) and 29(1))

Summary

1 Community law cannot be relied on for abusive or fraudulent ends. Consequently, Community law does not preclude the application by national courts of a provision of national law in order to assess whether a right arising from a provision of Community law is being exercised abusively. However, the application of such a national rule must not prejudice the full effect and uniform application of Community law in the Member States. In particular, it is not open to national courts, when assessing the exercise of a right arising from a provision of Community law, to alter the scope of that provision or to compromise the objectives pursued by it.

2 A shareholder relying on Article 25(1) of the Second Directive 77/91 on company law cannot be deemed to be abusing the right conferred on him by that provision merely because the increase in capital by administrative decision which he contests resolved the financial difficulties threatening the existence of the company concerned and clearly enured to his economic benefit, or because he did not exercise his preferential right under Article 29(1) of that directive to acquire new shares issued on the increase of capital at issue.

First, the decision-making power of the general meeting provided for in Article 25(1) applies even where the company is experiencing serious financial difficulties. Second, by exercising his preferential right, the shareholder would have shown his willingness to assist in the implementation of the decision to increase the capital without the approval of the general meeting, whereas he is in fact contesting that very decision on the basis of Article 25(1) of the Second Directive.