As of 13 October 2022, the Act amending the Act – Commercial Companies Code and certain other acts will come into force. The holding company law (concern law) will regulate areas of the operation of capital groups that have so far been regulated only residually in the Commercial Companies Code. It will affect the operation of limited liability companies, simple joint-stock companies and joint-stock companies participating in domestic and international capital groups.
It should be borne in mind that the application of the new provisions of the Commercial Companies Code in the area of holding law will be voluntary and provided only for those companies that form a “group of companies” and meet the following conditions together:
- the dominant company and the dependent will be limited liability companies, simple joint stock companies or joint stock companies;
- the dominant company and the dependent will be guided by a common strategy to pursue a common interest, justifying the dominant company’s exercise of unified management over the dependent;
- the dependent will not have the status of a public company, a company in liquidation (which has commenced the distribution of its assets), a company in bankruptcy or a company subject to financial market supervision;
- the shareholders’ meeting or the general meeting of the dependent adopts a resolution on participation in the group of companies indicating the dominant company;
- the dominant company and the dependent disclose participation in the group of companies in the Register of Entrepreneurs of the National Court Register (constitutive entry; Article 4 § 1 item 51 in conjunction with Article 211 of the Commercial Companies Code in the wording from 13.10.2022).
Right to issue a binding instruction to a dependent (art. 212 of the CCC)
The dominant company will be able to issue a binding instruction to a dependent company regarding the conduct of the company’s affairs if this is justified by the interests of the group of companies.
Dependent company’s obligation to refuse to comply with a binding order (Article 213 in conjunction with Article 214 of the CCC)
will be obliged to refuse to comply with a binding order if its compliance would lead to the insolvency or threat of insolvency of that company.
Exclusion of liability of members of the bodies of the dominant company and the dependent company (Article 215 of the CCC)
A member of the management board, supervisory board, audit committee and liquidator of a dependent company will not be liable for damage caused by the execution of a binding instruction. The same will be the case for a member of the management board, supervisory board, audit committee and liquidator of a dependent company acting in the interest of a group of companies.
The dominant company’s right to information about its dependents (Article 216 of the Companies Act)
The dominant company will be able to inspect the dependent’s books and documents and request information from the dependent.
Empowering the Supervisory Board
The Supervisory Board will be empowered to request information and documents, including in particular information, reports or explanations concerning dependents and associated companies.
Importantly, the Act provides for criminal sanctions in the form of a fine or restriction of liberty in the event of failure to comply with the obligation to provide information or documents in a timely manner, in the event of the provision of information or documents inconsistent with the facts, or in the event of the concealment of data materially affecting their content.
The Board will be entitled to select an external advisor to examine a specific issue concerning the company’s business or assets at the company’s expense.
In a joint-stock company, the Supervisory Board will gain another additional competence – it will give its consent to transactions with companies with which the company has a relationship of dependence or association if they exceed 10% of the company’s total assets during a financial year (for transactions with the same company).
Along with the new powers, the Supervisory Board will also have expanded reporting obligations.
The strengthening of the Supervisory Board entails increased information duties for the Management Board, but only in a joint-stock company. The Management Board of such a company will be obliged to provide the Supervisory Board, without being requested to do so, with detailed information on a range of company matters, including material transactions, resolutions passed by the Management Board, changes in the company’s situation.
The right of a minority shareholder of a dependent company to have its shares repurchased by the dominant company (art. 2110 of the CCC)
A minority shareholder(s) or a minority stockholder(s) representing no more than 10% of the share capital of a dependent company will be able to demand the compulsory repurchase of their shares by a dominant company that represents directly or indirectly at least 90% of the share capital of the dependent company.
Obligation of the dominant company to buy out shares belonging to minority shareholders of the dependent (art. 2111 of the CCC)
The shareholders’ meeting or the general meeting of the dependent company will be able to adopt a resolution on the compulsory buyout of shares of shareholders representing no more than 10% of the share capital of the dependent by the dominant company, which directly represents at least 90% of the share capital of the dependent.
Liability of a dominant company to a dependent for damage caused by the execution of a binding instruction (Article 2112 of the CCC) (so-called business judgement rule)
The dominant company will be liable to the dependent for damage caused by the execution of a binding instruction and which is not remedied within the time limit indicated in the binding instruction, unless it is not at fault.
Liability of the dominant company to the shareholders of the dominant for a reduction in the value of the shares of the dependent (Article 2113 of the CCC)
A dominant company which, on the date of issuing a binding instruction to a dependent, holds, directly or indirectly, a majority of votes enabling it to adopt a resolution on participation in a group of companies and on amending the memorandum or articles of association of that dependent, will be liable to a shareholder or stockholder of that dependent for a reduction in the value of the shareholding or stockholding to which she/he is entitled, if the reduction resulted from the dependent’s execution of a binding instruction.
Liability of the dominant company towards the creditors of the dependent (art. 2114 of the CCC)
If enforcement against a dependent proves to be ineffective, the dominant company will be liable for damage caused to a creditor of the dependent, unless it is not at fault or the damage did not arise as a result of the depemnent’s compliance with a binding order.
Rules on the term of office and mandate of members of company authorities
The amendment clarifies the rules for calculating the term of office of members of the management board and the supervisory board:
- the term of office shall be calculated in full financial years, unless the articles of association provide otherwise;
- as a consequence, the mandate of a board member appointed on 1 June 2021 for a two-year term of office will expire on the date of the shareholders’ meeting approving the financial statements for the financial year 2023 (provided that, in the company concerned, financial year = calendar year);
- the new rules for calculating the term of office will already apply to members of company authorities in office on the date the legislation comes into force.
Extension of the catalogue of persons prohibited from holding office
The existing catalogue of persons excluded from holding the aforementioned functions in companies is extended to include persons who have been convicted by a final judgment of the offence of:
- bribery, paid patronage and abuse of office;
- failure to provide information, documents, reports or explanations to the supervisory board (newly introduced Article 5871 of the CCC);
- obstructing access to documents and failing to provide information to the advisor to the supervisory board (newly introduced Article 5872 of the CCC);
New criminal sanctions for breaching disclosure obligations (see also point iii above) against the supervisory board or the adviser to the supervisory board provide for the threat of a fine of up to PLN 50,000 or a restriction of freedom.