Zneužití práva akcionářem při podání akcionářské žaloby a jeho předpoklady

Shareholder Derivative Action: Protection of the Company, or a Tool of Pressure?

However, this mechanism is prone to abuse. It can be used as a form of pressure, an attempt to damage competition, or as a tool to settle personal scores. The legal system therefore establishes two key boundaries to prevent such conduct: the principle of prohibition of abuse of rights and the duty of corporate loyalty.

Abuse of rights is defined in the Civil Code under Czech legislation, which stipulates that manifest abuse of a right does not enjoy legal protection (Section 8 of the Civil Code). This is a situation where someone formally acts in accordance with the law, but their real goal is not to achieve the purpose pursued by the law, but rather to harm someone else. Crucially, this abuse must be "manifest", i.e., provable and not just suspected.

Corporate loyalty is a fundamental duty of every shareholder. By becoming a member of the company, they undertake to act honorably and in its best interest (Section 212 of the Civil Code). Filing a vexatious lawsuit, the aim of which is not to protect the company but to harm it, is a direct breach of this duty.

At ARROWS, our Prague-based legal team helps clients set up internal rules and communication strategies that minimize the risk of these conflicts and strengthen healthy relationships between management and shareholders.

Significant Ruling of the Supreme Court: Failure of a Lawsuit Does Not Mean Harassment

A recent decision of the Czech Supreme Court (case file no. 27 Cdo 1753/2024) has fundamentally influenced the view on when a shareholder derivative action is considered an abuse of rights. This case illustrates how thin the line can be between legitimate concern and harassment, and how important correct legal interpretation is.

In this case, a qualified shareholder repeatedly questioned payments that the company sent to related parties. Because he was not satisfied with the explanation of the board of directors and the supervisory board, he filed a shareholder derivative action for damages on behalf of the company. This lawsuit was ultimately dismissed because it could not be proven that the company sustained any damage.

The company subsequently sued this shareholder for reimbursement of legal costs of over CZK 1.2 million, arguing that his lawsuit was vexatious. The lower courts agreed with the company. They concluded that the shareholder had acted prematurely and should have first used other, "less invasive" means, such as seeking the appointment of an expert to review the report on relations. Because the lawsuit failed, they labeled it "completely unnecessary" and therefore an abuse of rights.

However, the Supreme Court radically changed this view and overturned the decision. It established several key rules:

• The decisive factor is the intent at the time of filing the lawsuit, not the outcome. Abuse of rights cannot be assessed retrospectively ("ex post") solely on the basis that the lawsuit was unsuccessful. Failure in the dispute alone says nothing about the abuse of rights.

• A legitimate goal is key. The court must examine whether, by filing the lawsuit, the shareholder pursued the protection of the company's property interests (which is the purpose of a shareholder derivative action), or whether they pursued other, illegitimate goals (personal revenge, pressure to buy out shares, etc.).

• The shareholder does not have to exhaust other options. The Supreme Court explicitly rejected the notion that a shareholder must use other legal tools before filing a lawsuit. A request for information serves a different purpose than a lawsuit for damages and they cannot be interchanged.

This ruling strengthens legal certainty for both management and honest shareholders. Management cannot rely on defending against a lawsuit simply by claiming harassment after its dismissal. Shareholders, on the other hand, do not have to fear filing a well-founded lawsuit out of concern that if they fail, they will face a devastating claim for reimbursement of costs.

Answer: Bad faith may be indicated, for example, by an attempt to force the company to buy out shares at an inflated price, damage its reputation in a competitive struggle, or settle personal disputes. Do you need to analyze the motives of the opposing party? Contact us at consultation@arws.cz.

For Management: How to Defend and When Is a Lawsuit a Manifest Abuse of Rights?

The best defense against shareholder derivative actions is prevention and transparent corporate governance. However, if a threat of a lawsuit arises, it is crucial to act strategically and deliberately. Consistent documentation and proper communication are your first line of defense.

You should carefully document the business reasons for all key decisions, especially in transactions with related parties. Minutes of meetings of the board of directors and the supervisory board must be precise and clear. Take shareholder inquiries seriously and respond to them in a timely and comprehensive manner. Records of this communication can be key evidence of your good faith.

Although the failure of a lawsuit does not in itself constitute an abuse of rights, there are warning signs that may point to a shareholder's bad faith. These include, for example, situations where the shareholder's demands are completely detached from reality and potential harm, the lawsuit is timed to disrupt an important corporate transaction, or if the shareholder has a proven history of personal disputes with management.

Our Prague-based legal team at ARROWS will help you draft internal guidelines for communication with shareholders and for transactions with related parties. We also provide professional training for management and the board of directors focused on dispute prevention and duty of care (due managerial care). If you are already facing the threat of a lawsuit, we are ready to represent you effectively before courts and administrative authorities. For an immediate solution to your situation, write to us at consultation@arws.cz.

Risk Table: Threats to the Company in a Shareholder Derivative Action

For Shareholders: How to File a Lawsuit Legitimately and Avoid Accusations of Revenge?

If, as a shareholder, you have reasonable suspicion that management's actions are harming the company, you have the right and, in accordance with the duty of loyalty, also the duty to act. To avoid accusations of harassment, your approach must be methodical, transparent, and focused solely on the benefit of the company.

Before you decide to sue, build a solid factual basis. Gather all available documents and evidence. Carefully document all attempts to remedy the situation directly with the company. Always first inform the relevant corporate body, usually the supervisory board, of your intention to file a lawsuit. Your written communication and their responses (or lack thereof) are key evidence of your good faith.

Your lawsuit must clearly and comprehensibly formulate what damage the company sustained and what compensation you are demanding in its favor. Avoid any personal attacks or hints that you are pursuing your own goals. All your actions must be in accordance with the principle of corporate loyalty, which means, for example, that you must not use the threat of a lawsuit to pressure management in another matter.

ARROWS' Prague-based legal team will help you prepare the documents and documentation that will prove your legitimate interest and protect you from accusations of harassment. We will provide you with a legal opinion assessing the strength of your case and the chances of success before you embark on a costly dispute. At ARROWS, we have extensive experience representing shareholders in courts. Contact us at consultation@arws.cz to get a tailored legal solution.

Risk Table: Threats to Shareholders When Filing a Lawsuit

International Disputes and the Security of the ARROWS International Network

The principles of corporate loyalty and the prohibition of abuse of rights are universal, but their application in an international environment brings specific challenges. Whether it concerns foreign board members in a Czech company, disputes between shareholders from different countries, or a subsidiary of a foreign parent company, legal complexity increases.

Resolving such disputes requires not only knowledge of Czech law, but also a deep understanding of international legal standards, rules for determining court jurisdiction, and the coordination of legal steps across jurisdictions. This is precisely where the strength of our international presence comes into play.

Thanks to our ARROWS International network, built over ten years, we provide legal services even in cases with an international element, practically on a daily basis. We provide our clients with the certainty that their interests will be effectively protected regardless of borders. To consult your international case, contact us at consultation@arws.cz.

Conclusion: Legal Certainty in Corporate Relations

The Supreme Court's decision brings much-needed predictability to relations between companies and their shareholders. It clearly establishes that when assessing a shareholder derivative action, the legitimacy of intent is decisive, not mere success in the dispute. This is good news for everyone striving for a fair and transparent business environment.

Our experience from long-term cooperation with more than 150 joint-stock companies, 750 LLCs (s.r.o.), and 51 municipalities and regions confirms that the key to dispute prevention is a proactive approach, quality documentation, and open communication. We pride ourselves on the speed and high quality of our services. Furthermore, we believe that our role does not end with legal paragraphs – we like to connect our clients when we see interesting investment or business opportunities.

Whether you stand on the side of management facing a potential lawsuit, or you are a shareholder considering the protection of your investment, the key to success is the right strategy and a precise legal approach. At ARROWS, our Prague-based legal team is ready to provide you with comprehensive services, from legal analyses and opinions, through the preparation of contractual documentation, to rigorous representation in courts. Contact us at consultation@arws.cz and get a partner who understands your business.