On what grounds can a shareholder be excluded from an LLC?

Grounds for excluding a shareholder from an LLC

Art. 222 of Law no. 31/1990 provides the following grounds for exclusion:

• The shareholder fails to make the contribution to which they committed
• The shareholder is bankrupt or has become legally incapacitated
• The shareholder with unlimited liability interferes without right in the management or uses the company's funds and assets without the consent of the others
• The shareholder who is also a director commits fraud against the company or uses the company signature or share capital for their own benefit or for the benefit of others

An important aspect: a shareholder who is not a director cannot be excluded under the general category of fraud against the company. This ground is reserved exclusively for a shareholder who also holds the position of director.

HCCJ Decision no. 28/2021: the list is exhaustive

Published in the Official Gazette on 26 May 2021, HCCJ Decision no. 28 of 10 May 2021 established that the grounds for exclusion of a shareholder set out in art. 222 of Law no. 31/1990 are not supplemented by the provisions of art. 1,928 of the Civil Code regarding "well-founded reasons."

The HCCJ held that the drafting of the legal text leads to the conclusion that the list it contains is not illustrative, which implies, in the absence of any other indication to the contrary, the impossibility of exclusion in situations other than those regulated.

Thus, there are no scenarios left outside the scope of regulation in which the law would allow a shareholder to be excluded from a limited liability company. Therefore, it cannot be considered that the special rule would be supplemented by the general one.

Conventional exclusion clauses

Although the statutory grounds for exclusion are exhaustive, shareholders have the right to include additional exclusion clauses in the articles of association. This contractual freedom allows the exclusion mechanism to be adapted to the specifics of each company, provided that these clauses are included from the time of incorporation or subsequently adopted with the consent of all shareholders.

Consequently, the careful drafting of the articles of association becomes an essential tool for protecting shareholders — both those who wish to prevent deadlocks in the company and those who want to ensure they cannot be excluded on unregulated grounds.