Abuse Theory and the Limits of Shareholder Agreements Related to the Right to Vote in a Joint Stock Company
Dr. Khalil Victor Tadros
Professor of Commercial and Maritime Law
Faculty of Law, Cairo University
Abstract:
In this paper, we discuss the limits of shareholder agreements related to the right to vote in a joint stock company, in light of the theory of abuse of the right, where it is recognized that the right to vote is one of the most important rights that shareholders enjoy within a joint stock company. Accordingly, it is common practice for some shareholders, regardless of their number, to conclude an agreement on directed voting, for which a specific purpose or objective has been defined, whereby they have the right to form a majority for the purpose of voting in a specific manner, to ensure that their interests are protected. There is no room for denying that the source of these agreements is the principle of contractual freedom, but there has been a great debate about the validity of these agreements or not, especially since the Kuwaiti legislator did not expressly disclose the possibility of concluding them and their existence or not. This is what we are trying to establish by setting a governing framework for it, in terms of duration, and for it to be set for specific goals or linked to specific decisions, with limits to it that criminalize and prevent the trade of votes.
Also, on the other hand, we show that the approval of these agreements is only in the light of their legality and not clashing with the theory of abuse of the right, that the purpose of them is not to protect the personal interests of their parties, or to harm the interest of the company. Hence the importance of the study to achieve some balance between the legality of these agreements, and not to abuse the right to use them, to be a fundamental and critical study in the light of the Kuwaiti Companies Law and the French Judiciary, which laid down provisions that set the permissible framework for such agreements, with reference to the historical roots of the theory of arbitrariness under Islamic jurisprudence and positive law.
Keywords: shareholder agreements, multiple voting, non-abuse of rights, Kuwaiti Companies Law, Islamic jurisprudence.