Can a buyer eliminate the risk of a seller withdrawing from a share purchase agreement and once again becoming a shareholder by transforming the company? In a case concerning the conversion of a limited liability company into a joint-stock company, the Supreme Court gave a clear answer: NO.

In its decision ref. no. 27 Cdo 169/2025, the Supreme Court addressed an application by a buyer for a declaration of invalidity of a general meeting resolution. The company's defence was based on the argument that the shareholder was not entitled to seek such a declaration because the seller had withdrawn from the share purchase agreement due to the buyer's delay in paying the deferred portion of the purchase price, as a result of which the buyer had ceased to be a shareholder of the company. The lower courts nevertheless concluded that the transferred interest could no longer be returned, as it had ceased to exist as a result of the change of legal form into a joint-stock company.

However, the Supreme Court clarified in its decision that, despite the change of legal form, the same ownership interest continues to exist, although with a different set of rights attached to it. Therefore, nothing prevents the shares into which the original interest in the limited liability company had been transformed from reverting to the seller following the seller's withdrawal from the sharepurchase agreement.

Authors: Helena Hailichová, Filip Rebeka

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