Legal Updates

A shareholder may not file a claim on behalf of a company if the company has executed a settlement agreement regarding the same matter

January 5, 2023
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A shareholder sought to file a claim on behalf of the company against tenants regarding an urban renewal project due to a conspiracy to steal the project from the company. However, a settlement agreement was already executed between the company and the tenants which included the issues raised by the shareholder.

The Court did not approve the motion. When a settlement agreement is signed between the parties that received the validity of a Court holding, this may constitute a barrier to the submission of another claim regarding the same matter by virtue of estoppel. This includes filing a claim on behalf of a company by its shareholder. The only way to cancel such settlement agreement, is to file a motion for its annulment. Here, the settlement agreement that received a validity of a Court holding which was executed between the company and the tenants included stipulations regarding the conduct of the tenants within the project, which are binding on the company. Because the shareholder did not request to annul the settlement agreement, the motion on behalf of the company cannot be approved.