Management and supervision in a simple joint-stock company by the board of directors
On March 1, 2020, an amendment to the Commercial Companies Code (hereinafter: CCC) enters into the Polish legal system, introducing a new type of capital company, namely a „simple joint-stock company”, whose operating principles are regulated in art. 3001-300134 of CCC.
The establishment of a simple joint-stock company by the legislator is associated with the introduction of many new legal solutions, including in the field of corporate law, the purpose of which is primarily to facilitate access to the market for the so-called start-ups that implement projects in the field of new technologies and information processing (IT), as we have already written in the article from July 31, 2019.
At this point, special attention should be given to the new type of governing bodies of a capital company, dedicated exclusively to a simple joint-stock company, which is the board of directors.
In the light of art. 30073 § 1 of the CCC the board of directors manages the company’s affairs, represents the company and oversees the management of the company’s affairs, and thus combines the powers of the management board and the supervisory board.
From the literal wording of Art. 30052 § 1 of the CCC, conclusion is that the conduct of the affairs of a simple joint-stock company may be entrusted to the board of directors or the management board, and these bodies may not be appointed in parallel. In the event of a management board being appointed, the company may be supervised by the supervisory board, but its establishment is not mandatory and depends on the content of the articles of association (art. 30052 § 2 of the CCC).
Notwithstanding the establishment of the supervisory board, each shareholder is entitled pursuant to art. 30024 of the CCC to the right to individual control of a company, to which the relevant provision of Art. 212 of the CCC regulating the method of exercising the right of individual control by a partner in a limited liability company. Consequently, it should be recognized that a shareholder may independently or jointly with a person authorized by him at any time review the company’s books and documents, draw up a balance sheet for his use or request explanations from the management board.
The powers of the board of directors, in addition to statutory provisions, are specified in the articles of association and the regulations of the board of directors.
As indicated in art. 30075 §1-3 of the CCC the board of directors, if it is a multi-person board, works as a rule in a collective way, i.e. all directors are obliged and entitled to jointly manage the company’s affairs, unless the articles of association or the regulation of board of directors provide otherwise. Resolutions of the board of directors, apart from other matters mentioned in the act or articles of association, require: (1) making decisions of strategic importance for the company, (2) establishing annual and long-term business plans, (3) determining the organizational structure of the company’s enterprise and shaping basic related functions with running a business. The appointment of a commercial proxy requires the consent of all directors, while any commercial director may revoke a proxy.
The amendment to the Code of Commercial Companies allows in the provision of art. 30076 of the CCC the possibility of introducing, by way of regulations or a resolution of the board of directors, the division of the members of the board of directors into executive directors whose task is to run the enterprise and create the so-called executive committee and non-executive directors supervising the company’s affairs and creating the so-called board committee.
Particular duties of non-executive directors include assessing the correctness and reliability of reports on the company’s activities and the financial statements, and submitting to the general meeting an annual written report on the results of this assessment (art. 30076 § 3 of the CCC). Each non-executive director may examine all company documents, request directors and employees of the company for reports and explanations, review the company’s assets and request directors and employees of the company to present to the board of directors or its committee certain documents, reports or explanations at their next meetings (art. 30076 § 5 of the CCC).
As indicated in art. 30077 § 1-2 of the CCC, the director is entitled to represent the company in all judicial and extrajudicial activities, and this right cannot be restricted with legal effect against third parties.
If the board of directors is composed of several persons and the articles of association do not contain any provisions in this regard, the submission of statements on behalf of the company requires the cooperation of two directors or one director together with a commercial proxy (art. 30078 § 1 of the CCC).
Referring to the legal relations between the company and the director, it should be noted that pursuant to art. 30079 § 1, 3-4 of the CCC, in contracts and disputes between the director and a simple joint-stock company, the company is represented by a proxy appointed by a resolution of shareholders – and in the case of division into executive and non-executive directors – in contracts and disputes involving the executive director, the company may also be represented by the non-executive director, acting on the basis of a resolution of the board of directors, adopted only by non-executive directors, insofar as the articles of association so provide.
However, in a single-member joint-stock company, if the sole shareholder is also a director, the above-described principles laid down in art. 30079 § 1 and 3 of the CCC, shall not apply. In such a case, a legal transaction between this shareholder and the company he represents requires a notarial deed, and the notary notifies the registration court via the ICT system, each time such legal action is performed.