When setting up a company, if no statute is submitted to the Office of the Register of Companies, one of the incorratory sections of Part I or II of Table A of the First Act on Companies will automatically constitute the statutes of the newly created company. In the case of a limited company, the relevant statutes are listed in Part II of Table A. These provide that the Part I statutes of Table A (which apply to state-owned enterprises), with certain exceptions, apply to private companies. I refer in this document to these articles of the standard form as an article in Table A. They will very often find in practice that the statutes consist of a document written by a corporate training agency, accountants or lawyers who adopt one or the other version of the articles in Table A with certain amendments/exclusions. The majority shareholders` decision may be overturned because of the non-agreement of minority shareholders. The classic example of this is in the case of a proposal to sell the business to a third party as a current company and the intended buyer wants total control of 100% over the company, but minority shareholders do not vote in favour of this transaction. Here, the entire transaction cannot be executed at all due to disagreements between minority shareholders. In the case of a limited company, if the terms of the shareholders` pact do not violate the provisions of the Companies Act and the statutes, it would apply to members. However, no obligation can be imposed on the legal powers of the company. I have also already mentioned that the Association Agreement and the Statutes should be developed to avoid inconsistencies. In order to deal with the possibility of inconsistencies between the two documents, it is normal to include in the shareholders` pact a “superiority clause” which provides that in the event of a conflict, the provisions of the shareholders` pact are given priority for the decision on the conflict.
It is extremely important that such a supremacy clause be developed with great care. Without going into technical details, if the statutes are amended, such an amendment must be submitted to the registry office within a prescribed period and, if the overspending clause in a shareholder contract is considered a de facto change in the statutes, there is an argument that the shareholders` pact must be filed in the register of companies at the same time as the statutes. Given that the shareholders` pact may contain sensitive information that the parties to the shareholders` pact might not want to make public, it would obviously be quite undesirable to be obliged to submit the shareholders` pact to the corporate registration body. To avoid this, it is generally recommended that the predominance clause be treated in such a way that the parties to the shareholders` pact agree among themselves as parties to the shareholders` pact and that they agree, in the event of a conflict between the shareholders` pact and the statutes, that they attach themselves to the interpretation of the shareholders` contract and that they use their voting rights as shareholders to amend the statutes.