Amendments to the Companies Act: Changes to the liability of members of management and supervisory boards

The authors of the amendment propose a new provision whereby the liability of both management board members and supervisory board members would be based on the so-called business judgement rule.

The introduction of this principle is intended to allow for the exclusion of liability for damage caused to the company as a result of decisions by its governing bodies which prove to be erroneous, provided that such decisions were taken within the bounds of reasonable business risk and based on information appropriate to the circumstances. The proposed amendment constitutes a legal recognition that risk is one of the indispensable elements of conducting business. By taking reasonable risks, companies can generate profits, introduce innovations or venture into new areas. According to the authors of the amendment, this change is intended to benefit both partners and shareholders, as well as society and the state. The introduction of the business judgement rule will emphasise that the actions of board members should not be assessed retrospectively, through the lens of results, but from the perspective of the correctness of the decision-making process, with regard to the time of the decision and the circumstances surrounding it.

Thanks to the amendment, members of a governing body who have performed their duties diligently and loyally and who have decided to have the company take a risk will be protected in the event that, in hindsight, the decision proves to have been misguided and has caused damage to the company. At the same time, it will still be possible to sanction reckless actions.

Similar provisions can be found in the codes or laws of many countries, including Austria, Croatia, the Czech Republic, Spain, Germany, Portugal, Slovakia and Romania. It is also included in the European Model Code of Company Law.

Author

Aleksandra Lindner

Adwokat, Partner

Expert in energy, commercial and business law - She has extensive experience in the areas of energy, commercial and business law, gained both at renowned Warsaw law firms and by serving as in-house lawyer at leading energy, financial and new technology companies. Her professional practice focuses on providing comprehensive legal services to corporations, managing mergers and acquisitions (M&A) transactions, transformations of commercial companies, and in resolving corporate disputes.

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