As provided for in Article 778(1) of the Code of Civil Procedure: “The court shall attach an enforcement clause to an enforcement order issued against a general partnership, a professional partnership, a limited partnership or a limited joint-stock partnership against a partner who is liable without limitation with all his or her assets for the partnership’s obligations, if enforcement against the partnership proves ineffective, as well as where it is obvious that such enforcement will be ineffective. This does not apply to a person who, at the time of the commencement of proceedings in the case in which the enforcement order was issued against the partnership, was no longer a partner therein.” In the event of unsuccessful enforcement against a limited liability company, the legislator has provided for the possibility of recovering debts from its board members pursuant to Article 299 of the Commercial Companies Code. How, then, can one recover a debt from a public limited company?
Admittedly, there are no provisions for a public limited company, as there are for a limited liability company, which would directly indicate the possibility of recovering the debt from members of the management board; however, this avenue is not closed. It should be borne in mind that one may rely on Article 415 of the Civil Code, which explicitly states that ‘Whoever causes damage to another through their own fault is obliged to make good such damage.’ It should be noted that the members of the management board bear liability for damage caused by the company.
One should bear in mind the provisions of Article 21(3) of the Insolvency Act, according to which members of a company’s management board are liable for damage caused by failing to file a petition for the company’s bankruptcy within 30 days of the onset of insolvency. However, specific conditions must be met, such as:
- the occurrence of damage;
- the fault of the management board members;
- the existence of a causal link between the conduct of the management board members (failure to fulfil the obligation to file a petition for the declaration of bankruptcy of the joint-stock company within the prescribed time limit) and the damage incurred.
Therefore, in order to claim damages under general principles, it will be necessary to demonstrate the existence of the above-mentioned conditions. A creditor wishing to prove damage will have to demonstrate that, as a result of the board members’ failure to file a petition for the company’s bankruptcy, they were not satisfied at all or were satisfied to a lesser extent than would have been possible had the members of the management board fulfilled their obligations, i.e. that, as a result of the failure to file the aforementioned petition, the assets of the insolvency estate were reduced. Upon establishing fault, one may rely on the presumption that the members of the management board are liable for failing to file a petition for the company’s bankruptcy.
To summarise the above, where it is not possible to recover the debt from the joint-stock company, the creditor may pursue their claims against the members of its management board. Undoubtedly, proceedings initiated under Article 415 of the Civil Code, aimed at recovering debts from members of the management board of a joint-stock company, will be more complex than pursuing claims against members of the management boards of other companies. It will be necessary to demonstrate that damage has been suffered, that the members of the management board are at fault, and that there is a link between these two elements.
Frequently asked questions
Can I pursue claims against members of the management board of a joint-stock company if enforcement against the company proved unsuccessful?
Yes, in the event of unsuccessful enforcement, a creditor may pursue claims against members of the management board of a joint-stock company. This is possible based on general principles of liability for causing damage, not special provisions regarding commercial companies. However, this procedure is more complex than in the case of other types of companies.
On what legal basis can I demand compensation for damage from the management board of a joint-stock company?
The basis for pursuing compensation is Article 415 of the Civil Code, which imposes the obligation to repair damage caused by one’s own fault. Members of the management board bear responsibility for damages caused by the company. It must be demonstrated that their action or omission caused the creditor’s loss.
What conditions must I prove to win a case against members of the management board of a joint-stock company?
It is necessary to demonstrate the existence of three elements: the occurrence of damage, fault of the management board members, and a causal relationship between their action and the damage. Particularly important is proving that the management board did not file a petition for bankruptcy declaration within the statutory deadline. The failure to file the petition must have a direct impact on reducing the assets of the bankruptcy estate.
How can I prove that the management board bears fault for not filing a bankruptcy petition?
The presumption of fault and damage, where the management board must demonstrate the absence of its liability, applies to claims under Article 21 paragraph 3 of the Bankruptcy Law. It is different with liability under general principles of Article 415 of the Civil Code, where the creditor must prove both the fault of the management board members and the occurrence of damage. In this latter case, the creditor demonstrates that as a result of the management board’s omission, they were not fully satisfied.
Is pursuing claims against the management board of a joint-stock company easier than against the management board of a limited liability company?
No, proceedings against the management board of a joint-stock company are more complicated than against other types of companies. In the case of a limited liability company, there are direct provisions enabling the pursuit of claims, while in a joint-stock company, general principles of civil liability must be applied. Therefore, more precise proof of all elements of the factual situation is necessary.
Running a company with a matter to resolve?
That is where most conversations with a lawyer begin. A consultation is paid, PLN 600 net. You pay for a real opinion: whether you have a legal problem, what you can do about it and roughly what it costs. It ties you to nothing further, and you do not need to know the law, that part is on us.
- 1 Talk
You tell us what is going on, in your own words.
- 2 What next
We tell you your options and what it costs.
- 3 We act
You give the go-ahead and the matter is ours.
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.
About the firm →
