Background
On 24 May 2022, the Court of Appeal (the “Court”) rendered judgment No. 99/22 (the “Judgment”) relating to the autonomy of a compartment of an umbrella investment company with variable capital (Société d’Investissement à Capital Variable) (the “SICAV”) subject to the Law of 13 February 2007 relating to specialised investment funds (the “SIF Law”) and constituted as a limited partnership with shares (“SCA”).
In this case, the sole limited partner (the “Sole Limited Partner”) held 100% of the assets of a compartment of the SICAV. The general partner of this SICAV (the “General Partner”) was asked by the Sole Limited Partner to convene a general meeting of the sub-fund (the “Sub-Fund”) to discuss the liquidation of the latter. The General Partner refused to call such meeting. Therefore, the Sole Limited Partner submitted an application to the Court for the appointment of an ad hoc representative for the convening of the general meeting of the compartment, in application of Article 450-8 of the law of 10 August 1915 on commercial companies, as amended (the “1915 Law”).
The district court (tribunal d’arrondissement) agreed with the Sole Limited Partner and appointed the representative. The SCA appealed this decision to the Court, which confirmed the judgment of the district court (Tribunal d’arrondissement).
Grounds for Appeal
The SCA argued, inter alia, that the Sole Limited Partner did not have the right to request the convening of a general meeting at the level of the sub-fund.
Article 450-8 of the 1915 Law states that the board of directors, the management board, as the case may be, as well as the supervisory board and the auditors are entitled to convene the general meeting. They are obliged to convene it in such a way that it is held within a period of one month, if shareholders representing one tenth of the share capital so request in writing, indicating the agenda. If such general meeting is not held within the prescribed period, the meeting may be convened by a proxy appointed by the president of the district court at the request of one or more shareholders representing the same percentage of the share capital.
The appellant stated that Article 450-8 of the 1915 Law was not applicable in this case.
The SCA recalled that this article is included in the 1915 Law under the title relating to public limited companies and that even if, in accordance with Article 600-2 of the 1915 Law, "the provisions relating to public limited companies are applicable to partnerships limited by shares, except for the modifications indicated in this title", it would be inapplicable by virtue of Article 600-9 of the 1915 Law which requires, except in the event of a provision to the contrary in the articles of association, the agreement of the General Partner in order to convene the general meeting.
The SCA further claimed that this article is applicable only to the SCA as a whole and not, in the absence of legal personality, to each of the compartments in isolation. The Sole Limited Partner did not have 10% of the entire capital of the SCA and therefore did not meet the conditions of Article 450-8.
Analysis by the Court
The Court limited itself to examining if the request of the Sole Limited Partner met the conditions of Article 450-8. The only matter contested in this regard was whether the Sole Limited Partner met the 10% requirement.
The Court noted that Article 71(1) of the SIF law which provides that unless derogated therefrom in the articles of the relevant SIF, each compartment was to be treated as a distinct pool of assets and that the rights of investors and creditors in a compartment are limited to the assets of that compartment. In relations between investors each compartment is to be treated as a separate entity unless the articles of incorporation provide otherwise.
While it was noted that the articles of incorporation of the SCA did not have specific provisions dealing with the rights of shareholders of a compartment to request the convening of a meeting at the level of the compartment, the articles did not derogate from Article 71(1). The articles provided that general meetings of shareholders of sub-funds could be held. Further, any decisions taken at shareholder meetings at fund level that impacted on specific compartments required the vote of shareholders of that compartment. Such provisions confirmed the existence of a certain autonomy of each compartment.
The Court therefore concluded that the shareholders of a compartment holding one tenth of the share capital could validly request the convening of a general meeting relating to that compartment. The one tenth should be calculated on the basis of the capital of that compartment and not the capital of the fund as a whole.
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