Criminal liability of board members in Poland

Last updated: 04.02.2026   

Criminal liability of board members in Poland – Introduction

In Polish business practice, the liability of management board members and entrepreneurs is most commonly associated with civil liability – compensation and financial liability. However, many actions taken at the intersection of a company’s financial crisis and management decision-making may also carry criminal consequences.

In practice, this means that individuals conducting business activity or holding positions in a company’s governing bodies may be exposed not only to personal liability, but also to criminal liability – including imprisonment – if their actions exceed the limits of acceptable business risk. This may include, for example, misleading counterparties when obtaining financing, abuse of authority, misappropriation of assets, actions aimed at frustrating the satisfaction of creditors, or creating legal or organizational structures designed to hinder the enforcement of claims.

When Business Risk Becomes a Crime?

Consider a company on the brink of insolvency. The management board seeks new financing while simultaneously implementing “rescue” measures: reorganizing operations, reallocating assets, and selectively settling liabilities at the expense of certain creditors. In the background, negotiations intensify, contracts become increasingly risky, and assets are transferred to newly formed companies.

The key question arises: does this still constitute permissible crisis management, or has the boundary into criminal liability already been crossed exposing board members to criminal proceedings before criminal courts?

Restructuring as such is not unusual and is often necessary. The problem begins when these “rescue” measures, in reality, worsen the position of creditors, and when decisions are taken in breach of legal duties or without any sound market justification.

Polish law provides that many such actions may be classified not merely as poor business judgment, but as economic crimes (white collar crimes). Of particular relevance are the following provisions of the Polish Criminal Code:

• Article 296 (abuse of trust / acting to the detriment of an entity),
• Article 286 (fraud, including in commercial relationships),
• Article 300 (hindering or reducing the satisfaction of creditors),
• Article 301 (actions aimed at limiting creditor satisfaction, such as transferring assets to a newly created entity in the event of insolvency),
• Article 302 (favoring certain creditors to the detriment of others)

Abuse of trust – Article 296 of the Criminal Code

Article 296 § 1 of the Criminal Code penalizes the causing of significant financial damage by a person responsible for managing the assets or business activities of another entity, where such damage results from an abuse of authority or a failure to fulfil legal duties. Currently, “significant damage” is defined as damage exceeding PLN 200,000.

Potential perpetrators include not only management board members, but also financial directors, proxies, and individuals who de facto manage an entity, even if they have not been formally appointed.

As of October 2023, criminal liability also extends to situations involving the creation of a direct risk of significant damage. Importantly, motions for prosecution may now be filed not only by the injured company itself, but also by shareholders, partners, or members of cooperatives.

It must be emphasized that not every failed business venture constitutes a criminal offense. Both Supreme Court case law and legal practice consistently stress that actions taken within the boundaries of acceptable business risk – provided they are justified and supported by appropriate analysis – do not meet the criteria of a criminal offense. Criminal liability arises only when decisions are manifestly unreasonable or clearly contrary to the interests of the company.

Example from practice

• transferring company assets to a related entity or to a business owned by the same individuals without receiving adequate consideration (e.g. transferring inventory or equipment “on paper” without actual payment),
• transferring company funds to the private bank account of a management board member without a valid legal basis (e.g. in the absence of resolutions, contracts, or legitimate remuneration grounds),
• financing another entity, such as a newly established company, using the funds of the original company, again without legal justification or equivalent value.

In such cases, law enforcement authorities focus less on the formal documentation and more on the economic substance of the transactions – in particular, whether the company actually received any market-equivalent benefit or was left with depleted assets.

Fraud – Article 286 of the Criminal Code

Fraud consists of misleading another person in order to obtain a financial benefit, resulting in an unfavorable disposition of property.

Where the disposition concerns property of significant value (exceeding PLN 200,000), the offense is subject to a more severe penalty pursuant to Article 294 § 1 of the Criminal Code.

In business practice, fraud most commonly relates to obtaining financing, such as loans, advances, or payments, by:

• misleading the other party as to the intention or the actual ability to perform the obligation, or
• misleading the other party as to the intended use of the funds, involving money and securities trading

Importantly, criminal liability may arise even where, at the time the agreement was concluded, the perpetrator had at least an awareness of a potential risk of insolvency.

In such cases, members of management boards and other decision-makers may be held criminally liable and may face criminal liability as criminal defendants.

Example from practice

• a company obtains funds from an investor under a contract (e.g. a loan agreement),
• the investor decides to transfer the funds based on assurances regarding repayment, financial stability, or the specific use of the money,
• It later emerges that, already at the time the contract was concluded, the company’s financial situation – or the management’s actual intentions – rendered those assurances untrue or merely apparent, and the funds were not used for the declared purpose.

In such cases, key evidence typically includes correspondence, financial documentation from the period in which the agreement was concluded, the actual flow of funds, management decisions, and whether asset transfers were carried out simultaneously.

Concealment of assets and obstruction of enforcement – Article 300 of the Criminal Code

This provision applies to situations in which a debtor threatened with insolvency or bankruptcy, acting with the intent to prejudice a creditor, conceals, removes, disposes of, or encumbers assets. The mere sale of assets is not criminal if it is carried out on market terms and in good faith.

In practice, decisive importance is attached to the purpose and effect – or at least the foreseeable effect – of the actions, namely whether they lead to a deterioration in the debtor’s ability to satisfy creditors.

Example from practice: on the eve of enforcement proceedings, an entrepreneur transfers company vehicles to a family member. The consideration is symbolic, and the purpose is to avoid seizure by the enforcement authority.

Use of a New Entity to Limit Creditor Satisfaction in Bankruptcy – Article 301 of the Criminal Code

In situations of business distress, a common scenario involves establishing a new entity and transferring assets to it. While corporate reorganization may be lawful, the risk of criminal liability arises where such actions constitute a criminal act under Polish law and are taken to the detriment of creditors.

In particular, criminal liability may arise where:

• a new entity is created or used to limit the ability to pursue claims against the original entity, especially where assets are transferred within existing corporate structures,
• assets are transferred without equivalent consideration,
• the original business entity is left with debts it is unable to satisfy, while the new entity continues operations using the transferred assets.

Selective repayment of creditors – Article 302 of the Criminal Code.

Favoring creditors occurs when a debtor who is insolvent or at risk of insolvency repays or secures only certain creditors at the expense of others.

Example from practice: a company satisfies its liabilities towards a related entity while ignoring other creditors. Even a single repayment following this pattern may be sufficient to fulfill the statutory elements of the offense.

The Boundary Between a Business Mistake and a Crime

Criminal law does not penalize risk-taking as such, provided that it is economically justified and based on rational analysis. Business decisions taken in good faith, even if they ultimately prove unsuccessful, do not in themselves give rise to criminal responsibility under civil law or criminal law.

The problem arises when actions are taken in breach of statutory duties or solely in the decision-maker’s own interest, to the detriment of the company or its creditors. In such cases, conduct may be assessed as criminal conduct falling within the scope of criminal provisions, regardless of the legal form of the undertaking or the involvement of legal entities.

For this reason, particular importance should be attached to:

• transparency – maintaining complete and reliable financial documentation,
• equal treatment – avoiding preferential treatment of selected creditors,
• timely action – filing for bankruptcy or restructuring without undue delay where grounds exist,
• avoiding sham transactions – especially those involving related parties.

Failure to observe these principles may result in exposure to criminal investigation, conducted in accordance with criminal procedure, and may lead to financial penalties imposed on both individuals and the corporation liable.

Summary

The criminal liability of management board members and entrepreneurs is not a theoretical construct, but a real aspect of doing business in Poland, particularly within commercial companies, including a limited liability company, joint stock companies, and limited joint stock partnerships. Modern managers, regardless of the size of the enterprise, should be aware not only of management and financial optimization mechanisms, but above all of the limits of liability arising from the Criminal Code.

The law does not penalize reasonable business risk. However, a lack of proper analysis, documentation, or deliberate actions taken against the interests of the company may be assessed as exceeding permissible boundaries.

Timing is also critical. Delayed bankruptcy filings, selective repayment of creditors, or asset transfers may be viewed not as attempts to save the business, but as conduct that exacerbates creditor losses. In an environment where information flows quickly between institutions, reliance on the “invisibility” of such actions is illusory.

The line between a business mistake and a criminal offense is thin but identifiable. It lies in intent, the rationality of decisions, and demonstrable due diligence. Awareness of these principles is not only a safeguard against criminal sanctions, but also a foundation of responsible business conduct.

FAQ: Criminal liability of board members and entrepreneurs for actions to the detriment of creditors in Poland