Violation of pre-emption: cancellation (art. 195 LGS)
A shareholder deprived of pre-emption may seek judicial cancellation of the subscriptions that should have been available to that shareholder or, where cancellation is impossible, joint and several damages from the company and directors.
What article 195
Article 195 governs the remedy available to a shareholder deprived of pre-emption rights.
A shareholder whom the company deprives of the preferential subscription right may judicially require cancellation of the subscriptions that would have corresponded to that shareholder. If cancellation is impossible because the shares have already been delivered, the injured shareholder is entitled to joint and several compensation from the company and the directors.
Source: Law 19,550, art. 195 — InfoLEG (updated official text)
Commentary
The primary remedy restores the shareholder’s position through cancellation; if the shares can no longer be cancelled, the remedy becomes damages, with joint and several liability of the company and directors.
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