Abstract

Redemption of a share consists in it’s legal annihilation, i.e. expiration of the shareholding right under corporate legal act or upon occurrence of an event envisaged in the articles of association. Redemption of shares is sometimes practised as an organisational sanction towards a shareholder of a limited liability company. This kind of forced redemption is referred to as „punitive” redemption. In practice, the grounds for forced redemption of shares are sometimes identified with „valid reasons” for exclusion of the shareholder from the company. This may result from the erroneous understanding of the rationale of both institutions. It is, therefore, worth considering whether „punitive” redemption of shares is a permissible or prohibited practice for the shareholders of the limited liability company.

Key words:

redemption of shares, shareholder, „punitive” redemption of shares, grounds for redemption of shares, exclusion of a shareholder