The Director's Conflict and the Related-Party Sale
Sociedade Comercial Kilamba, Lda. is a private limited company with three quotaholders: Senhor Dias (45%), Senhora Rosa (35%), and Senhor Tavares (20%). Dias is the sole manager (gerente). In June, without calling a general meeting, Dias sold a company-owned warehouse to a company owned by his brother-in-law for 40,000,000 Kz, when an independent valuation placed the market value at 65,000,000 Kz. The sale was signed by Dias on behalf of Kilamba and by his brother-in-law on behalf of the buyer. Rosa only learned of the sale in September, when the company's bank balance dropped. The company's articles require quotaholder approval for disposals of immovable property above 20,000,000 Kz. Tavares is undecided and has not taken a position.
1. Analyse the validity of the sale and the liability of Dias, identifying the corporate-law rules engaged.
Read the worked answer
Conflict of interest and self-dealing. Dias contracted on both sides of a transaction with a close relative, a classic conflict-of-interest scenario. Under company law, a manager must act in the company's interest and disclose conflicts; transactions with related parties require heightened scrutiny and, where the articles so provide, prior authorisation.
Breach of the articles. The articles require quotaholder approval for disposals above 20,000,000 Kz. The sale at 40,000,000 Kz without a general meeting breaches this internal rule. A transaction concluded in breach of the articles and without the required corporate authorisation is challengeable (voidable/annullable), and the manager exceeded his powers.
Price discrepancy. The 25,000,000 Kz shortfall against valuation evidences harm to the company and supports an action for liability of the manager (responsabilidade do gerente) for damages.
Conclusion. The sale is at least voidable, Dias is personally liable for the loss, and the transaction may be set aside. The buyer's bad faith (family link, below-market price) weakens any claim of good-faith third-party protection.
2. Rosa wants to act but Tavares is undecided. What procedural avenues does Rosa have, and how should she frame the claim?
Read the worked answer
Procedural avenues for Rosa (35%):
- Request a general meeting - she can formally requisition a meeting to resolve on challenging the sale and on Dias's liability. If the manager refuses, she may seek judicial authorisation to convene it.
- Derivative / social action - where the company does not act against the manager, a quotaholder may bring an action in the company's interest to hold the manager liable and to recover the shortfall.
- Challenge the transaction - seek annulment/ineffectiveness of the sale given breach of the articles and conflict of interest.
Framing the claim:
- Identify the company as the injured party and, where required, the proper procedural position.
- Plead: breach of articles, conflict of interest, below-market price, harm quantified at 25,000,000 Kz plus consequential loss.
- Request: annulment of the sale (or damages if third-party rights intervene), liability of Dias, and costs.
On Tavares: Rosa does not need Tavares's vote to requisition a meeting or to pursue the social action; his indecision does not block her. She should nonetheless document her requisition to show diligence and preserve her position.