Suspension of limitation and prescription periods: corporate resolutions

Manuel MagalhãesPartner, Sérvulo & Associados

On March 18, 2020, Law no. 1-A / 2020 (hereinafter, “Law”) was approved, establishing exceptional and temporary measures in response to the epidemiological situation caused by the coronavirus SARS-CoV-2 and the disease COVID -19.

Pursuant to the provisions of article 7, paragraph 3 of this Law, the “suspension of the limitation and prescription periods related to all types of processes and procedures” was determined, with this regime prevailing over any others that establish mandatory limitation and prescription periods.

Among these limitation and prescription periods, we may consider the deadlines for filing an action to challenge corporate shareholders’ resolutions, pursuant to article 59, no. 2 of the Portuguese Companies Code or the preliminary injunction for suspension the effects of corporate shareholders’ resolutions, which must be filed within 10 days, pursuant to art. 380, paragraph 3 of the Code of Civil Procedure, the latter being also a limitation period. Notwithstanding this suspension, which could be a protection for the rights holders in question, such protection is only apparent, since the general meetings are not “suspended” and the corporate shareholders’ resolutions may be implemented.

When the general meetings are held, either by telematic means or by other means permitted by law, the following question arises: how can shareholders affected by invalid corporate shareholders’ resolutions, which may be carried out by the company, react during this period?

In this regard, article 7 no. 5 of the Law, excludes from the aforementioned regime the practice of any procedural acts, within the scope of urgent procedures, the realization of which is technically feasible through means of distance communication, namely by teleconference or video call. This legal provision is, in a way, contradictory, giving rise to different interpretations, since the legislator stated that, even in urgent cases – as it is the case of a preliminary injunction – the procedural deadlines are also suspended (cf. art. 7, paragraph 5 of the Law), unless when fundamental rights are at stake.

However, one can argue that, under article 7 no. 5 it is possible to practice the procedural act of service of the company through postal mail or other appropriate means. Considering that the procedural act of service has the effect provided for in article 381, paragraph 3 of the Code of Civil Procedure (“from the service notice, and until the request for suspension is judged in the first instance, it is not lawful for the association or company to implement the challenged resolution”), it seems to be possible to challenge a corporate shareholders’  resolution, even during this emergency period, through a preliminary injunction aimed to suspend the effects of the same, with service notice of the company, even though subsequent procedural acts may be considered suspended.

Otherwise, the shareholders and / or the company may be damaged due to the implementation of an illegal shareholders’ resolution, able to cause serious damages (difficult to repair, not excepted by the Law) – therefore benefiting the “offender”, in this period of exception.

Teresa Anselmo Vaz | tav@servulo.com

Teresa Mira de Oliveira | tmo@servulo.com