- In accordance with Article 15(1) of the Commercial Companies Code:
“The conclusion by a capital company of a credit agreement, loan agreement, guarantee or other similar agreement with a member of the management board, supervisory board, audit committee, proxy, liquidator or in favour of any of these persons requires the consent of the shareholders’ meeting or the general meeting, unless the Act provides otherwise.”
Firstly, a meeting of the company’s shareholders should be convened, during which a resolution will be passed granting consent for a member of the management board to enter into a loan agreement with the company. In the absence of such consent, it will not be possible to grant a loan to the company, and any such agreement entered into will be void.
- Pursuant to Article 230 of the Commercial Companies Code:
“The disposal of rights or the incurring of a liability for a performance whose value exceeds twice the amount of the share capital requires a resolution of the shareholders, unless the articles of association provide otherwise. The provision of Article 17 § 1 shall not apply.”
Secondly, one must compare the amount of the loan to be granted with the amount of the company’s share capital, and if there is a need for the shareholders to adopt an additional resolution, it would be necessary to check whether the articles of association contain a provision exempting the company from this obligation.
- Pursuant to Article 210 § 1 of the Commercial Companies Code:
“In an agreement between the company and a member of the management board, and in any dispute with such a member, the company shall be represented by the supervisory board or by a proxy appointed by a resolution of the shareholders’ meeting.”
It should be noted that merely obtaining corporate approvals is not sufficient for the validity of a loan agreement. Any agreement concluded by the company with a member of its management board requires a departure from the standard method of representation in favour of the method of representation specified in Article 210 § 1 of the Commercial Companies Code. If a supervisory board has been appointed in the company, a member selected by it shall be authorised to validly conclude the loan agreement. In the absence of a supervisory board, the company’s shareholders’ meeting should appoint a proxy to conclude such a loan agreement.
- Pursuant to Article 210(2) of the Commercial Companies Code:
“Where the shareholder referred to in Article 173(1) is also the sole member of the management board, the provision of paragraph 1 shall not apply. A legal transaction between that shareholder and the company represented by him or her must be in the form of a notarial deed. The notary shall notify the registry court of each such legal transaction via the ICT system.”
In the situation described above, i.e. where a member of the management board is also the sole shareholder of a limited liability company, the loan agreement must, to be valid, be concluded in the form of a notarial deed; consequently, the application of the specific form of representation set out in Article 210(1) of the Commercial Companies Code will not be legally effective in this case. In order to conclude the loan agreement, the member of the management board will have to visit a notary to make the relevant declarations in his own name and on behalf of the company in the notary’s presence.
In summary, the conclusion of a loan agreement between a limited liability company and a member of its management board entails the need to fulfil a number of conditions; therefore, before carrying out this legal transaction, it is advisable to familiarise oneself with the currently applicable regulations and the company’s articles of association to ensure that such an agreement will be legally effective.
Frequently asked questions
Can I grant a loan to a company where I serve as a board member?
Yes, this is possible, but it requires prior consent from the shareholders’ meeting to enter into such an agreement. Without this resolution, entering into the loan agreement is invalid, so a shareholders’ meeting should be convened before finalizing the transaction.
What are the consequences of granting a loan without shareholders’ consent?
If an appropriate resolution expressing consent to enter into the agreement is not adopted, the transaction itself will be invalid. The company therefore cannot legally and effectively incur an obligation to a board member without prior approval of this action by the shareholders.
Who represents the company when signing a loan agreement with me as a board member?
According to law, standard representation of the company cannot be performed by a board member in a matter concerning themselves. The agreement must be represented by the supervisory board or an attorney appointed by resolution of the shareholders’ meeting for the transaction to be valid.
Do I need to check the loan amount against the share capital?
Yes, if the loan value exceeds twice the amount of the share capital, an additional shareholders’ resolution may be required. However, the company’s articles of association should be checked first, as they may exclude this requirement.
What happens if I am the sole shareholder and sole board member?
In this specific situation, the loan agreement must be concluded in the form of a notarial deed, which means it is necessary to go to a notary. Standard representation by the supervisory board does not apply then, and the notary will notify the registry court of the performance of the action.
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HWW Hewelt Wojnowski Lindner i Wspólnicy is a Warsaw law firm advising businesses and public entities. We combine experience in commercial law, energy, tax, data protection and litigation to deliver solutions tailored to our clients’ business realities.
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