CABO VERDE Trends and Developments Contributed by: Nelson Raposo Bernardo, Joana Andrade Correia, Manuel Esteves de Albuquerque and Júlio Martins Júnior, Raposo Bernardo & Associados
manifest excess of the limits imposed by good faith or by the economic purpose of the voting right. The rule constitutes a general clause for the protec - tion of minorities and allows the court to review situ - ations in which a resolution, although formally valid, is substantially unfair. The legislator goes even further by establishing that the shareholders who formed the abusive majority are jointly and severally liable for the damages caused to the company or to the other shareholders. Ultimately, the regime of the abuse of the majority rep - resents a mechanism of balance between two funda - mental values of corporate law: the decision-making efficiency inherent to the majority principle and the protection of the legitimate interests of minorities. The Code recognises that the majority must govern the company, but rejects the idea that it can do so without limits. In this sense, the concept of abuse by the majority plays a central role in the architecture of Cabo Verdean corporate governance, functioning as a guarantee that controlling power will be exercised in a responsible, transparent manner compatible with the interests of the company and all of its shareholders. The right to challenge corporate resolutions The protection of minorities also requires the possibil - ity of judicially contesting illegal decisions. The Code provides for a complete regime of nullity and void - ability of corporate resolutions. Article 65 identifies the situations of nullity, including resolutions whose content violates mandatory rules or that were adopted in irregularly convened meetings. In turn, Article 68 grants standing to challenge void - able resolutions to any shareholder who did not vote in favour of the decision in question. This possibility represents an essential guarantee of judicial supervision over the exercise of majority power. The liability of directors as an instrument for protecting minorities In commercial companies, directors occupy a cen - tral position in the corporate governance structure. Although they are frequently elected with the support
of majority partners or shareholders, their function does not consist of representing private interests, but rather of ensuring the pursuit of the company’s inter - est, acting with independence, diligence and loyalty. Article 77 of the Commercial Companies Code estab - lishes that directors must perform their duties with the diligence of a prudent and orderly manager and with loyalty to the company, taking into account the interests of the company itself, the shareholders and the employees. These duties constitute true legal standards of conduct intended to guide the exercise of management power and to prevent situations of abuse, undue favouring, or private appropriation of corporate opportunities. The duty of loyalty assumes particular relevance, as it requires directors to place the interests of the com - pany above their personal interests and the interests of the shareholders who nominated them for the posi - tion. Consequently, directors must avoid conflicts of interest and refrain from using inside information for their own benefit, and cannot divert business oppor - tunities belonging to the company nor favour certain shareholders to the detriment of the rest. From this perspective, the liability of directors consti - tutes a central element of the corporate governance architecture adopted by the Cabo Verdean Commer - cial Companies Code. The derivative action (ação social ut singuli) One of the most relevant innovations of the Code is the strengthening of the so-called derivative action ( ação social ut singuli ). Under the terms of Article 83, shareholders holding at least 5% of the share capital can directly bring a liability action against directors for the benefit of the company itself, when the company fails to do so. In listed companies, this threshold is reduced to just 2% of the share capital. By granting procedural standing to minority share - holders to act in defence of the corporate interest, the legislator recognises that the supervision of man - agement should not be a monopoly of the majority. On the contrary, all shareholders must be able to con -
144 CHAMBERS.COM
Powered by FlippingBook