Appointment of the auditor of special cases - non-contentious proceedings after the filing of a complaint against the decision of the court registrar

In a current report, the public company announced - citing Article 17 MAR as the basis - that: “the court upholding the decision of the court registrar to dismiss the application for the appointment of an auditor for special cases”.

I provide a link to this report below:

https://www.bankier.pl/wiadomosc/NEXTBIKE-POLSKA-S-A-Powziecie-informacji-o-podtrzymaniu-przez-sad-decyzji-referendarza-sadowego-o-oddaleniu-wniosku-o-wyznaczenie-rewidenta-do-spraw-szczegolnych-8535894.html.

The aforementioned report, concerning the failure to appoint an auditor for special cases (the “Auditor”), is questionable for two reasons.

Firstly, what is controversial in my view is the element of price sensitivity in the event of the dismissal of the application for the appointment of the Auditor. Meanwhile, according to Article 7(1) of MAR, the criterion: “inside information” refers to information, defined in a precise manner, which has not been made public, concerning, directly or indirectly, one or more issuers or one or more financial instruments, and which, if it were made public, would be likely to have a significant effect on the prices of those financial instruments or on the prices of related derivative financial instruments.

Secondly, it is, in my opinion, incorrect to refer to “the court upholding the decision of the court registrar to dismiss the application for the appointment of a special purpose auditor”.

In the case of a complaint against the decision of the court registrar dismissing the application for the appointment of an Auditor, Article 398²² § 3 of the Code of Civil Procedure applies. Pursuant to its content, in the case of filing a complaint, the ruling of the court registrar becomes invalid. Therefore, the complaint in this case has an annulling character, which means that the ruling should be treated as null and void (devoid of legal effects). As a consequence of the above, the registration court hearing the appeal against the ruling of the court registrar considers the case as a court of first instance, so to speak, from the beginning. Therefore, the registration court cannot uphold the “decision of the court registrar to reject the application for the appointment of an auditor for special cases”, because it is no longer in legal force (there is no substrate to uphold it). Moreover, the registration court may order the dismissal of the application for the appointment of an Auditor for reasons other than the court registrar.

In the practice of such proceedings, the admissibility of a subject matter modification of a request for the appointment of an Auditor and its scope is a contentious issue.

The possibility of such modification is supported by the necessity for the registration court to apply the provisions of the first-instance proceedings, including those concerning the amendment of the request (Article 193 in connection with Article 13 § 2 of the Code of Civil Procedure). Such a position was expressed by the Supreme Court in its decision of 4 March 2011 (I CSK 455/10, Legalis).

In my opinion, the provisions of Article 193 in conjunction with Article 13 § 2 of the Code of Civil Procedure are of a general nature and apply (lege non distinguente) also to proceedings initiated by an application for the appointment of an Auditor in a public company. With respect to these regulations, the legislator has not provided for any exception.

The regulations on the appointment of the Auditor statute an additional minority right for the shareholders of public companies, which is of a controlling nature. No exclusion of one of the basic procedural principles, i.e. the principle of disposition, arises from the content of these regulations. Consequently, the main actor, as regards the formulation of the demand and its possible modification or abolition, is the applicant, as the initiator of the non-proceedings.

A break with the principal principle of disposition cannot be seen in the necessity of an initial consideration of the request for the appointment of an Auditor by the general meeting of a public company.

The obligation to submit the request for the appointment of the Auditor to the forum of the constituent body derives from the constitutional foundations adopted in a market economy, including respect for private property and subsidiarity in the operation of state institutions. Namely, the entities entitled to decide on the internal affairs of capital companies are the corporations concerned, functioning through their bodies. Nevertheless, in order to ensure the effectiveness of control mechanisms, which can be used especially by a minority, the legislator has provided for appropriate guarantee instruments, including those involving state authority.