The Polish Commercial Company Code (“CCC”) includes the following new content:
- Enhanced management tools – available for shareholders and supervisory boards of commercial companies in Poland. For example, management’s reporting obligations to the Supervisory Board are now more extensive.
- Ownership Regulations – Provisions that allow companies to make decisions based not only on their own interests, but also on the interests of the entire capital group to which they belong. To take into account the interests of the group, it is necessary to create a formal “group of companies”. A so-called binding instruction is then issued by the controlling entity. That set of clauses is considered to constitute either the Polish version of the Company Shares Act or German legislation. Konzernlecht;
- Corporate Governance Code – more detailed regulation of the decision-making process and recording of duties in management and supervisory boards. Corporate membership terms are more precisely defined. There are also new provisions that clarify the duties of members of the governing body. In particular, it is clearly recognized that the rules of business judgment apply to directors in managing the company.
Who does it apply to?
The new provisions of the CCC apply to all commercial companies such as Limited Liability Company (Polish abbreviation: sp. z oo), Simple Joint Stock Company (PSA) and Joint Stock Company (SA).
Holding law regulations are not compulsory. This means that a formal group of companies must first be created and does not apply to public companies or other regulated certain entities.
why is it important?
The new regulations will allow the Polish subsidiary’s corporate governance rules to be adjusted to give shareholders better insight into the company’s operations through the Supervisory Board.
Creating a group of companies may ease tensions between shareholders and local business management in assessing whether certain actions expected by shareholders are in the interests of subsidiaries. It may also provide a sense of security for local operations of multinational capital groups.
Even limited liability companies can be taken over by minority shareholders if a formal corporate group is formed (until now, forced takeovers were not possible).
What should I do?
For large shareholders of Polish companies, we recommend the following:
- Consider implementing enhanced management tools. This can be particularly important if the shareholder/investor representative is not a member of the board of directors of the Polish subsidiary.
- Consider forming a formal corporate group, especially if the interests of the Polish entity are not aligned with those of the capital group.
- Validate the Polish subsidiary’s bylaws (articles of association) to ensure compliance with new corporate governance regulations.
