New duties of the Board of Directors of a limited liability company and changes in the liability of its members – amendment of the Code of Commercial Companies.

On 13 October 2022, the amended provisions of the Commercial Companies Code will come into force. The amendment to the Commercial Companies Code, passed in February this year, introduces a whole range of new provisions and amends some of the existing regulations. The most significant change is the introduction of the law on groups of companies, regulated in the newly added Section IV of the Commercial Companies Code, which applies to a parent company and a subsidiary if they have adopted a resolution on participation in a group of companies, and to a company affiliated with the parent company if the articles of association or the articles of association of the affiliated company so provide.

However, in addition to the above, the amendment to the Commercial Companies Code also introduces changes regarding the operation of Supervisory Boards and Management Boards of capital companies.

Due diligence in the performance of duties

Until now, the requirement to exercise due diligence was regulated in Article 293(2) of the Commercial Companies Code; however, as a result of the amendment, this paragraph has been repealed, and the duty to exercise due diligence arising from the professional nature of the activities of the persons listed in that provision has been transferred to other regulations. The aforementioned obligation concerning members of the Management Board will therefore be governed by the new Article 2091 of the Commercial Companies Code:

• 1. In the performance of their duties, a member of the Management Board shall exercise the diligence required by the professional nature of their activities and shall remain loyal to the company.
• 2. A member of the Management Board may not disclose the company’s secrets even after the expiry of their term of office.

However, in accordance with legal doctrine, due diligence should continue to be understood as the diligence of a professional within the meaning of Article 355 § 2 of the Civil Code.

Business Judgement Rule

Paragraph 3 has been added to Article 293 of the Commercial Companies Code, introducing the so-called business judgement rule into our legal system.

A member of the management board, supervisory board, audit committee or a liquidator does not breach the duty of care arising from the professional nature of their activities if, whilst acting loyally towards the company, they act within the bounds of reasonable business risk, including on the basis of information, analyses and opinions which should be taken into account in the given circumstances when making a careful assessment.

This rule provides for a mitigation of the liability of the aforementioned persons for damage caused to the company in connection with the performance of their duties on behalf of the company, provided they acted loyally towards the company within the bounds of reasonable economic risk.

The purpose of introducing the regulation, according to the explanatory memorandum to the draft Act, was “to provide 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 they were taken within the bounds of reasonable business risk and based on information appropriate to the circumstances”.

Provision of documents and information to the Supervisory Board upon request

The Supervisory Board has also been subject to a number of new regulations, including the ability to request that the Management Board provide it with information, documents, reports or explanations for the purpose of the Supervisory Board performing its duties.

Upon receipt of such a request, the Management Board will be obliged to provide the Supervisory Board with the information or documents without delay, no later than within two weeks of the date on which the request was submitted to the body or person concerned, unless a longer period is specified in the request.

Clarification of the provisions concerning the term of office of Management Board members

Calculating the terms of office of members of corporate bodies has always given rise to many doubts and disputes in legal doctrine. The legislator has therefore decided to resolve the issue and has added the following sentence to Article 202 § 2 of the Commercial Companies Code: “The term of office shall be calculated in full financial years, unless the articles of association provide otherwise”. Thus, if a member of a company’s Management Board has been appointed for a three-year term, we must take into account three full financial years of the term to determine when the mandate expires. The term of office of a member of the Management Board shall expire on the date of the shareholders’ meeting approving the financial statements for the last full financial year during which the member served as a member of the Management Board.

Minutes of Management Board resolutions

Finally, attention should also be drawn to the introduction of Article 2081 of the Commercial Companies Code, which establishes the principle of recording Management Board resolutions. The minutes should contain:

• the agenda
• the names and surnames of the Management Board members present
• the number of votes cast on individual resolutions
• any dissenting opinion submitted by a Management Board member, together with any supporting reasons, if submitted

The minutes shall be signed by at least the Management Board member chairing the meeting or conducting the vote, unless the articles of association or the Management Board’s rules of procedure provide otherwise.

Admittedly, in practice, resolutions of the Board of Directors were recorded in the minutes even in the absence of a statutory requirement; however, the above provision will likely contribute to standardising the practice applied to date and prevent deviations in this regard.

Author

Zuzanna Bokina-Kielbasa

Radca prawny, Managing Associate

Specializes in corporate services for business entities and personal data protection. Assists the firm's clients in the preparation of all corporate documentation, including the registration of commercial companies and the further registration of changes, and provides ongoing and comprehensive advice on business. Provides advice in carrying out transformation processes of commercial companies, including transformations and mergers. Prepares and gives opinions on contracts, regulations and current documentation…

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