Commercial Proxy: A Guide for Foreign and Domestic Investors in a Polish Limited Liability Company

Updated: 16.10.2024

Running a limited liability company (sp. z o.o.) in Poland involves many challenges. Company owners and management have to deal not only with operational issues, but also with administrative and legal issues, which can be time-consuming and complicated.

That is why there is a tool in Poland’s legal system that can make managing a company much easier – the commercial proxy. It is a special type of power of attorney that allows a company’s management board to delegate some of its responsibilities to a proxy, a trusted person who can act for and on behalf of the company through a formal legal document.

A commercial proxy is a power of attorney granted by an entrepreneur subject to registration in the KRS or CEIDG.

Please find below an explanation of what a commercial proxy is, how to appoint a proxy, what powers the proxy has, what the proxy is responsible for, and the advantages and disadvantages of appointing a commercial proxy. The content is designed for foreign investors and Poland entrepreneurs who want to better understand this legal tool and use it in their business.

What is a commercial proxy?

A commercial proxy is a special type of power of attorney granted by a company to an individual who has full legal capacity. The term ‘commercial proxy’ is a contracted form originating from the Middle English word ‘procuracie’, highlighting its historical mhttps://html-cleaner.com/eaning and context. Unlike ordinary powers of attorney, a commercial proxy covers a wide range of legal activities related to the running of a company.

This means that a proxy may represent the company not only in day-to-day matters, but also in judicial and administrative matters that relate to the running of the company.

Importantly, the powers of the commercial proxy are comparable to those of the board of directors, particularly in operational matters. The proxy acts in the name of and on behalf of the company, which means that his or her decisions and actions have a direct impact on the operation of the company.

Who can become a commercial proxy holder?

An individual who has full legal capacity.

Interestingly, the law does not require the commercial proxy to be a Poland citizen – a foreigner can also become a proxy. This is important information for foreign investors who want to appoint a commercial proxy from their own country.

How to appoint a commercial proxy?

The process of appointing a proxy in a limited liability company is relatively straightforward, but requires compliance with certain procedures. In a limited liability company, the commercial proxy is appointed by the board of directors on the basis of a unanimous resolution. This means that all members of the board must agree to the granting of the proxy.

It is worth noting that the power of attorney becomes effective when it is granted and not until it is entered in the National Court Register. The appointment of a commercial proxy should be disclosed in the Register of Entrepreneurs of the National Court Register (KRS). In this way, the company’s counterparties can verify without problems whether a person can effectively represent the company.

Appointment of a commercial proxy in a limited liability company – step by step:

1. Unanimous resolution of the management board – The company’s management board passes a resolution to appoint a proxy. It is important that all members of the board of directors are unanimous on this decision, as the establishment of a commercial proxy is a matter for the company’s management bodies.
2. Communicate the act/resolution appointing the commercial proxy to the proxy – Formally inform the proxy of his/her appointment.
3. Obtaining the commercial proxy’s consent to his/her appointment – The proxy must consent to the function. Consent may be obtained either before or after the resolution for his appointment.
4. Notification to the National Court Register – Although the commercial proxy becomes effective as soon as it is granted, it should be notified to the National Court Register for the transparency of legal transactions. Registering a commercial proxy avoids misunderstandings and doubts about the company’s representation vis-à-vis third parties.

How to revoke a commercial proxy?

The revocation of a commercial proxy also constitutes an act performed by the management board of a limited liability company. Each member of the management board has the right to unilaterally revoke the proxy, which means that the consent of the other members of the management board is not required for this decision. In practice, the revocation of a proxy may take place at any time and its effectiveness does not depend on an entry in the KRS.

As with appointment, the revocation of a commercial proxy should be notified to the KRS. Although this entry does not affect the effectiveness of the revocation itself, it is important for formal reasons and ensures transparency towards third parties.

Entry in the register avoids a situation in which counterparties or other parties acting with the company are unaware of the change in the company’s representation. However, the deletion of the commercial proxy from the KRS is important for the limited liability company itself, as it reduces the risk of the revoked proxy taking actions on behalf of the company without authorisation.

What are the types of commercial power of attorney?

Poland law distinguishes several types of commercial proxy, which can be adapted to the specifics of the business:

1. Independent commercial proxy – This is the simplest and broadest form of proxy, in which a spontaneous proxy acts independently, without the need to cooperate with other persons.
2. Joint commercial proxy – In a joint proxy, rights are granted to several persons who must act jointly. This is a good option if you want important decisions to be made by more than one person, which increases security and control over the actions of the proxy. Joint proxy is often used in larger companies where key decisions require several people to work together.
3. Joint commercial proxy with a board member – This is a special type of joint proxy where the proxy can only act jointly with a board member. This structure gives the board of directors greater control over the actions of the proxy, while allowing for flexible management of the company. This model is particularly useful in situations where the board wants to retain greater control over key decisions, but still needs support in day-to-day management.
4. Branch commercial proxy – Branch proxies are limited to specific branches of the company, meaning that the proxy only has authority over the business of the branch in question. This is ideal for large companies that operate in multiple markets or locations. With a branch proxy, you can precisely manage the activities in individual branches by delegating responsibility to proxies operating in the field.

What powers does a commercial proxy have?

A commercial proxy has wide-ranging powers to act on behalf of the company in both day-to-day and strategic matters – but related to the running of the business. This includes entering into contracts, negotiating terms and conditions with contractors, and representing the company before courts and authorities.

There are, however, certain limitations to the powers of the commercial proxy that arise under the law. A commercial proxy may not independently:

• Dispose of the company,
• Put the company into temporary use,
• Dispose of and acquire real estate.

A separate power of attorney granted by the company is required to carry out the above actions, as well as the approval of the shareholders’ meeting. In practice, this means that although the proxy has broad powers, certain key decisions must be taken by the board of directors or at least with its consent. A commercial proxy cannot, for example:

• approve the company’s financial statements,
• vote on resolutions of the board of directors.

Liability of the commercial proxy

The liability of a proxy is one of the key issues to bear in mind before deciding to appoint one. A commercial proxy is primarily liable to the company for actions taken within the scope of his/her authority, which includes the duties of a proxy.

His or her liability covers any damages that may arise from improper performance of duties, going beyond the scope of his or her authority and acting to the detriment of the company for which he or she is acting.

Expiry of a power of attorney by operation of law

A power of attorney expires automatically in several situations that arise by operation of law. Such cases include:

1. Deletion of the company from the KRS – When the company is dissolved or deregistered, the commercial proxy automatically ceases to be valid. In such a case, the proxy no longer has the right to represent the company as it ceases to exist.
2. Declaration of bankruptcy or opening of liquidation of the company – When the company is declared bankrupt or the liquidation process begins, the commercial proxy ceases to be valid because the company ceases to function normally. In such situations, the management of the company passes into the hands of a receiver or liquidator and the proxy loses his powers.
3. Death of a proxy – The commercial proxy expires automatically on the death of the person performing the function. In such a case, the company’s board of directors may appoint a new proxy, but the previous proxy ceases to be effective upon the death of the commercial proxy.

Advantages and disadvantages of appointing a commercial proxy

Like any legal solution, the appointment of a proxy has its advantages and disadvantages. It is worth considering these carefully before you decide to appoint a commercial proxy in your company. One of the advantages of a joint proxy with a member of the management board is that the proxy can act jointly with a member of the management body, which increases control over decisions and can contribute to better management of the company.

Advantages of appointing a commercial proxy in a company:

1. Ease of appointment and revocation – The process of appointing and revoking a proxy is relatively easy and quick, and a commercial proxy can act from the moment of appointment.
2. Time saving – The proxy can make operational decisions quickly and efficiently, relieving the board of day-to-day responsibilities. This allows the board to focus on key strategic issues, leaving the day-to-day management of the company to the proxy.
3. Flexibility in action – The commercial proxy allows the board to act more quickly and efficiently, especially in situations that require immediate decisions. In a dynamically changing business environment, the ability to react quickly to changes is crucial to the success of the company.
4. Professionalising management – Appointing an experienced proxy can enhance the professionalism and effectiveness of a company’s management. A commercial proxy with the right qualifications and experience can make a significant contribution to a company’s growth and improved financial performance.
5. Increased control – A joint proxy or joint proxy with a member of the board allows for increased control over key decisions. This allows the board to be confident that the decisions made by the commercial proxy are in the interests of the company.

Disadvantages of appointing a commercial proxy in a company:

1. Risk of abuse – The broad powers that a commercial proxy has can lead to a risk of abuse, especially if the person does not act in accordance with the company’s interests. In the case of a independent commercial proxy, which allows the proxy to act independently, this risk is even greater, as the commercial proxy can make decisions without having to cooperate with other proxies. It is therefore important to select proxies who enjoy the full confidence of the board of directors.
2. Lack of full control – In the case of a self-appointed proxy, the board may feel limited in monitoring the day-to-day activities of the commercial proxy. Although the proxy should act in accordance with the interests of the company, the board may not have full control over all decisions made.

-The above risks can, however, be mitigated by putting appropriate procedures in place within the limited liability company.

A commercial proxy will improve the management of the company

A commercial proxy in a limited liability company is a tool that can significantly improve the management of the company. The appointment of a proxy gives the company greater flexibility and allows the board to focus on key strategic issues.

However, like any tool, a commercial proxy has its advantages and disadvantages, which should be carefully considered before deciding to grant it. It is worth remembering that a proxy cannot dispose of a company or encumber real estate without an additional power of attorney, which is an important part of the company’s governance regulations.

For foreign investors and Poland entrepreneurs who want to maximise the potential of a commercial proxy, our law firm offers comprehensive support in terms of advice, document preparation and representation before registration authorities.

Contact us to find out more about the possibilities offered by the procuration and how to manage it effectively in your company!

FAQs on Commercial Proxy

What are the benefits for the Company and shareholders when appointing a commercial proxy in company?

Appointing a commercial proxy in a Polish limited liability company (sp. z o.o.) allows the management to delegate responsibilities, such as operational and legal tasks, to a trusted individual. Effective management of the proxy’s president can bring rapid development of the company and tangible benefits to the shareholders in corporation.

However, a commercial proxy should not be confused with a voting proxy. A commercial proxy cannot represent shareholders at shareholder meetings also at annual shareholder meeting. For this purpose, a shareholder should appoint a separate proxy authorized to replace him at shareholder meetings.

The commercial proxy’s powers and proxy statements are broad, but they cannot independently dispose of real estate or approve financial statements without additional authorization. This process streamlines management while maintaining necessary controls. In addition, the management of the company is relieved, so it is worth considering such a solution in corporations.

What limitations does a commercial proxy statement have?

Despite the broad powers of a commercial proxy, there are certain limitations. A proxy cannot independently dispose of real estate or approve the company’s financial statements. Key decisions, such as handling shareholder proposals at an ordinary shareholders’ meeting or casting votes during elections for board members, require the shareholders’ vote.