Opinion of Mr Advocate General Tesauro
Mr President,
Members of the Court,
1. By order of 2 October 1989 the Court of First Instance, Athens, referred to the Court two questions on the interpretation of a number of provisions of Council Directive 77/91/EEC of 13 December 1976 on coordination of safeguards which, for the protection of the interests of members and others are required by Member States of companies within the meaning of the second paragraph of Article 58 of the Treaty, in respect of the formation of public limited liability companies and the maintenance and alteration of their capital, with a view to making such safeguards equivalent (hereinafter referred to as the Second Directive).
2. The plaintiffs in the main proceedings are shareholders of the company Elliniki Parketoviomikhania Adelfi Sotiropouli A. E. (hereinafter referred to as EPAS). They held 27799 shares in EPAS, which amounted to DR 297400000 divided into 29740 shares.
3. Let me point out that very similar questions, referred by the Greek State Council have already been answered in the recent judgment in Karella, where the Court, with reference to the same Greek legislation which is at issue in the present case, stated firstly that Article 25 of the Second Directive is formulated in clear and precise terms and establishes unconditionally the principle that it is the general meeting of shareholders that is competent to decide on increases in capital, so that the provision may be relied on by an individual against the public authorities before a national court. The Court held secondly that the combined provisions of Article 25 and Article 41(1) of the Second Directive must be interpreted as meaning that they preclude the application of national legislation which, in order to ensure the survival and continued operation of undertakings which are of particular importance to society as a whole from an economic and social point of view and which, because of their liabilities, are in an exceptional situation, permits a decision to increase the company capital to be made by administrative act, while retaining a preemptive right for existing shareholders.
4. With regard to the first point, namely the field of application of the Second Directive in relation to the special procedures for seizure by way of execution or for the rationalization of large undertakings in difficulties, let me recall that that problem has already been expressly dealt with in the abovementioned judgment in Karelia. In that judgment, the Court stated that the objective of ensuring a minimum level of protection for shareholders in all the Member States, pursued by the Second Directive, would be seriously compromised if the Member States were authorized to derogate from the provisions of the directive by maintaining in force provisions which, albeit described as special or exceptional, that permit the company capital to be increased by administrative decision, independently of a decision of the general meeting, in such a way that shareholders are forced to increase their contributions or to accept the admission of new members into the company.
5. That interpretation, with which I entirely agree, as, moreover, can be seen from my Opinion in the abovementioned case, is in my view entirely consistent with the previous case-law of the Court of Justice which, in the judgment in Abels, with reference to Council Directive 77/ 187/EEC of 14 February 1977 on the approximation of the laws of the Member States relating to the safeguarding of employees' rights in the event of transfers of undertakings, businesses or parts of businesses, held that that directive applied to a procedure such as that of surséance van betaling (suspension of payments) in the Netherlands even though it has certain features in common with liquidation proceedings. The Court held that the reasons for not applying the directive in the event of liquidation proceedings were not applicable when the proceedings in question comprised judicial supervision which was more limited than in liquidation proceedings and sought primarily to safeguard the assets of the insolvent undertaking and, where possible, to continue the business of the undertaking by means of a collective suspension of the payment of debts with a view to reaching a settlement which would ensure that the undertaking was able to continue operating in the future.
6. As for the argument that in the present case Article 25 of the Second Directive was not infringed since that provision does not specify how the general meeting is to decide on the increase in capital, and the shareholders, by requesting that the company be made subject to Law No 1386/1983, expressed their tacit consent to the full application of the legislation in question and to the consequent increase in capital provided for by administrative measure, in my view it is only too evident that that interpretation of the legislation at issue is not borne out by its wording and would be likely to compromise seriously the achievement of its objective, which is to guarantee a minimum level of protection for shareholders.
7. There also appears to be no basis to the argument that by Decision 88/167/EEC, which required the Greek Government to amend Law No 1386/1983 by 31 December 1987 so as to bring it into conformity with Articles 25, 26, 29 and 30 of the Second Directive, the Commission authorized the Greek authorities not to apply the provisions at issue until the aforementioned date.
8. With regard to the argument that the reliance on the provisions at issue by the plaintiff in the main proceedings is an abusive exercise of a right and that, consequently, Article 25(1) is not applicable in the present case, I would merely point out that at first sight the applicants, far from attempting to use the legislation abusively, have merely sought to enforce those rights that constitute the principal objective of the legislation, which is precisely to prevent increases in the capital without the express agreement of the general meeting. Secondly, the national court itself, which is exclusively competent to appraise the facts which gave rise to the dispute, did not consider it necessary to submit to the Court a question on that point.
9. In the present case the national court also submitted a question to the Court of Justice on the scope of Article 29 of the Second Directive, a problem which was not discussed in the earlier judgment in Karelia. Consequently, before a conclusion is reached, it is necessary to establish in particular whether, as was held by the Court in relation to Article 25 of the Second Directive, Article 29 is likewise free of conditions left to the discretion of the Member States and is sufficiently precise, so that it may be relied on by an individual against the administration before a national court to argue that provisions of a national law are incompatible with it.
10. In the light of the foregoing observations I therefore propose that the Court should reply to the questions referred by the Court of First Instance, Athens, as follows:
1 Original language: Italian.
2 OJ 1991 L 26, p. 1.
3 Greek Official Journal No 107 of 8 August 1983, p. 1926.
4 OJ 1987 L 76, p. 18.
5 Greek Official Journal No A 43 of 23 March 1990.
6 Judgment in Joined Cases C-19 and 20/90 Karella and Karellas [1991] ECR I 2691).
7 Under those provisions, which have not been referred to by the national court in the present case, the Member States may derogate in particular from Articles 25 and 29 to the extent that such derogations are necessary for the adoption or application of provisions designed to encourage the participation of employees, or other groups of persons defined by national law, in the capital of undertakings.
8 Case 135/83 Abels v Bedrijfsvereniging voor de Metaalindustrie en de Electrotecbnische Industrie [1985] ECR 469, paragraph 28.
9 OJ 1977 L 61, p. 26.
10 Judgment in Case C-362/89 d'Urso and Others v Ercole Marelli Elettromeccanica Generale SA and Others [1991] ECR I-4105, paragraphs 32 and 34.
11 Judgment in Case 299/84 Neumann v Balm [1985] ECR 3663, paragraph 12; judgment in Case 311/84 CBEM v CLT and IPB [1985] ECR 3261, paragraph 10.