Lisa Wins Annulment of Shareholder Exclusion by Compañía Alimenticia de Centroamérica

I. Summary Opposition to Shareholder Exclusion

Order

The Second Pluripersonal Civil Court of First Instance of Guatemala, in a ruling dated May 19, 2023, granted Lisa, S.A.'s opposition and annulled the shareholder exclusion agreement adopted by the Ordinary General Shareholders' Assembly of Compañía Alimenticia de Centroamérica, S.A. (now Avícola Las Margaritas, S.A. by merger) on April 5, 2011. Lisa was notified of its exclusion on May 3, 2011 and filed opposition in summary proceedings under Article 227 of the Commercial Code. The proceeding spanned more than twelve years.

Lisa grounded its opposition on three bases: (1) the resolution required an Extraordinary Assembly under Article 135 of the Commercial Code; (2) the company failed to demonstrate sufficient accumulated earnings and capital reserves to repurchase the excluded shareholder's shares, as required by Article 111; and (3) the three-month statutory limitation period under Article 230 had been exceeded, given that the defendant had knowledge of the invoked facts since at least 2007 and 2008. Lisa maintained that the true motivation behind the exclusion was its reporting of fraud committed by the Avícola Group, supported by the judgment of the Supreme Court of Bermuda.

The defendant invoked in general terms the commission of fraudulent acts by Lisa and based its position on a lawsuit filed by Margarita Castillo in Ontario, Canada (Case No. CV-11-9062-00CL). The court determined that this document, spanning over 1,000 pages, contained no direct allegation against Lisa, S.A. and that the parties to the Canadian lawsuit were third parties with no procedural connection to this case.

The court concluded that the three-month limitation period had been exceeded by a wide margin: the defendant itself acknowledged judicial disputes dating back to 2007 and 2008, including proceedings in the United States and the Bermuda judgment. The exclusion agreement, adopted only on April 5, 2011, was declared void and without legal effect, with costs imposed on the defendant.

The exclusion of Lisa constitutes a mechanism to strip Lisa of its corporate rights, including its entitlement to dividends. The exclusion was adopted simultaneously by multiple Avícola Group entities, evidencing coordinated action against a single minority shareholder.

II. Appeal

Appeal

Lisa, S.A. filed its appellate brief before the Fifth Civil and Commercial Court of Appeals, opposing the appeal lodged by Avícola Las Margaritas, S.A. against the first-instance ruling. The brief dismantled each of the appellant's grievances. Lisa identified a preliminary factual error: the appellant referenced an assembly held on "April 14, 2011" when the assembly took place on April 5, 2011. Lisa conducted a comprehensive analysis of the Canadian lawsuit, demonstrating that none of its parties, sworn declarations, financial statements, email communications, or criminal complaints involved Lisa, S.A. in any capacity. Lisa argued that the trial judge had properly evaluated the evidence and requested full confirmation of the ruling.

Appeal Ruling

The Fifth Appeals Chamber of the Civil and Commercial Court of Appeals denied the appeal and confirmed the first-instance ruling. The Chamber focused its analysis on the caducidad period under Article 230 of the Commercial Code and found that the appellant itself acknowledged in its appeal brief that the alleged fraudulent acts "continued to be carried out" and "kept being performed," confirming that knowledge of these acts predated the three-month window. The court distinguished between the date of knowledge and the continuation of the acts, holding that Article 230 refers to the date on which knowledge is obtained, not to the continuation of the harmful conduct. Avícola Las Margaritas failed to demonstrate that the resolution was adopted within the statutory period.

The appellate confirmation reinforced Lisa's position and maintained its shareholder rights in Compañía Alimenticia de Centroamérica intact.

III. Cassation

Cassation Appeal

Lisa, S.A. filed its opposition to the cassation appeal lodged by Avícola Las Margaritas, S.A. before the Civil Chamber of the Supreme Court of Justice. The brief requested dismissal in limine based on three fatal technical defects: (1) the appellant repeated the same arguments raised on appeal, seeking to convert cassation into a third instance of review; (2) it misidentified the proceeding as an "ordinary action" when it is a summary proceeding, which alters the applicable grounds and technical framework; and (3) it invoked Article 621 of the Code of Civil and Commercial Procedure, applicable to ordinary proceedings, when cassation standing in mercantile summary proceedings is governed by Article 1039 of the Commercial Code.

Alternatively, Lisa demonstrated the groundlessness of both cassation motions. On the alleged error of fact in evidence appreciation, Lisa established that the Court of Appeals did analyze the Canadian lawsuit and that the document lacks relevance: it was filed by a third party against Canadian entities with no procedural connection to Lisa. On the alleged improper application of Article 230 of the Commercial Code, Lisa noted that the appellant itself admitted knowledge of judicial proceedings since 2007 and 2008, confirming that the three-month period had long expired by the time the exclusion resolution was adopted in April 2011.

The cassation appeal, riddled with technical defects and based on arguments already rejected in two instances, prolongs the legal uncertainty over Lisa's shareholder status and constitutes an extension of the Avícola Group's pattern of procedural abuse to strip Lisa of its corporate rights.