Adopting resolutions by the management board or the supervisory board of a limited liability company (spółka z ograniczoną odpowiedzialnością – sp. z o.o.) and a joint stock company (spółka akcyjna – S.A.) over a distance – planned changes under the so-called anti-crisis shield

Company law

March 24 2020/ k-admin

1. The so-called anti-crisis shield

The ongoing SARS-CoV-2 pandemic (COVID-19) is likely to cause an economic crisis with currently unpredictable consequences. As part of the crisis prevention and assistance to entrepreneurs on March 21, 2020 a draft of act amending the Act (of March 2, 2020) on special solutions related to the prevention, counteracting and combating of COVID-19, other infectious diseases and crisis situations caused by them and some other acts (ustawa o zmianie ustawy o szczególnych rozwiązaniach związanych z zapobieganiem, przeciwdziałaniem i zwalczaniem COVID-19, innych chorób zakaźnych oraz wywołanych nimi sytuacji kryzysowych oraz niektórych innych ustaw) – the so-called anti-crisis shield (hereinafter referred as: “Act”) was announced. According to media reports, the Act is to be submitted to the parliament (Sejm) on 26 or 27 March 2020. In this entry I would like to focus on one particular aspect of the Act, i.e. the amendment of the Code of Commercial Companies (Kodeks spółek handlowych, hereinafter referred to as: “c.c.c.”). introducing the possibility of adopting resolutions by the management board or the supervisory board of limited liability company (spółka z ograniczoną odpowiedzialnością, hereinafter referred to as: “LLC”) and joint-stock company (spółka akcyjna, hereinafter referred to as: “JSC”) in writing and over a distance, by using means of direct communication.

2. The current legal status of adoption of resolutions over a distance

Before analysing the draft of the Act, it is worth to mention the current legal status:

  1. In case of the management board of LLC the regulations do not explicitly provide possibility of adopting resolutions over a distance, nor prohibit such actions. In this context, it should be pointed out that the norms stipulated in article 208 § 2-8 c.c.c., regulating the operation of a multi-person management board have supplementary character which allows to introduce a model of operation different than provided by c.c.c. In the legal doctrine the position allowing to adopt resolutions over a distance or in writing prevails. There is also no doubt that in practice resolutions are adopted in such forms.
  2. In case of the supervisory board of LLC adopting resolutions in writing or over a distance is allowed if the articles of association (umowa spółki) so provide (with the exception of issues covered by art. 222 § 5 c.c.c.).
  3. In case of the management board of JSC the regulations do not clearly determine the admissibility of adopting resolutions over a distance. The views of legal doctrine are more diverse than in the case of the management board of LLC. Some of those who argue against admissibility of adopting resolutions over a distance indicate art. 376 c.c.c., which requires that the resolutions of the management board have to be recorded in the minutes (for LLC there is no such provision, there is a question if this leads to lack of obligation of recording). Theoretical doubts do not change the fact that also in JSC resolutions over a distance are adopted in practise.
  4. In case of the supervisory board of JSC, adopting resolutions in writing or over a distance is allowed if the articles of association (statut) so provide (with the exception of issues covered by art. 388 § 4 c.c.c.).

3. Planned amendments

The Act provides:

  1. In case of the management board of LLC and JSC that it would be allowed to adopt resolutions in writing or by using means of direct communication over a distance, unless the articles of association provide otherwise.
  2. In case of the supervisory board of LLC and JSC, the Act indicates that the supervisory boards may adopt resolutions in writing or by using means of direct communication over a distance, unless the articles of association provide otherwise (which is a reversal of the current situation in which the articles of association have to allow to such forms of adopting of resolutions). In addition, the draft of the Act contains provisions according to which the resolution is valid if all board members have been notified of the content of the draft resolution and at least half of the board members have participated in the adoption of the resolution. At the same time, restrictions on the subject matter of resolutions adopted in such forms would be removed.

4. Summary

The above-mentioned amendments clarify the existing doubts as to the admissibility of adopting resolutions over a distance and facilitate acting of the management and supervisory boards. Consequently, not only from the point of view of the ongoing pandemic making it difficult or even impossible to pass resolutions in the traditional form, but also taking into account the development of technology and the practice existing in companies, the amendments should be assessed positively. At the same time, it has be pointed out that in order to start functioning over a distance, such form of action may require clarification. In this context, the question arises as to whether it would be sufficient to introduce appropriate rules in the by-laws of the management or supervisory board, or whether it would be obligatory to amend the articles of association. In conclusion, it should be stressed that on the date of publication of this entry (March 24, 2020), the discussed amendments are only a draft and there is still no information if and in what form they will finally enter into force.

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