Amendments to the Polish Commercial Companies Code during COVID-19

In connection with the prevailing coronavirus pandemic, a package of legal changes is being prepared in Poland to facilitate the functioning of companies during coronavirus pandemic. So far in Poland the legal changes caused by COVID-19 have been implemented on the basis of the main act of law dated 2 March 2020 on specific solutions related to the prevention and combating COVID-19 effects and crisis situations caused by the latter (the act of law passed by the Polish Parliament and published in the Journal of Laws under item 374, hereinafter “COVID-19 Polish emergency law”). Pursuant to the draft act amending COVID-19 Polish emergency law (that amends more than 30 different Polish acts of law, including the Polish Companies Code), in the new art. 25 there are to be implemented provisions regarding the remote decision-making by corporate bodies.

Remote decision-making in the management boards of companies is allowed unless the companies’ articles of association stipulate otherwise.

The above draft introduces the following changes:

1. board meetings may be attended using means of direct remote communication,
2. management board may adopt resolutions in writing or by using means of direct remote communication,
3. management board members may participate in adopting management board resolutions by casting their vote in writing through another management board member. (new article 208 § 5¹ – 5³ of the Polish Companies Code)

Remote decision-making in the supervisory boards of companies is allowed unless the companies’ articles of association stipulate otherwise:

A similar regulation also applies to supervisory boards in the Polish companies.

1. supervisory board meeting may be attended by means of direct remote communication, (new article 222 §1¹ of the Polish Companies Code);
2. members of the supervisory board may participate in adopting resolutions of the supervisory board by casting their vote in writing through another member of the supervisory board; a vote in writing may not concern matters placed on the agenda at the meeting of the supervisory board, (new wording of article 222 §3 of the Polish Companies Code);
3. supervisory board may adopt resolutions in writing or by using means of direct remote communication. Such resolution is valid when all members of the board have been notified of the content of the draft resolution and at least half of the board members took part in adopting the resolution, (new wording of article 222 §4 of the Polish Companies Code).

The new regulations also cancel the limitations of remote appointment or dismissal of the members of the corporate bodies in the companies in Poland.

The Act amending the COVID-19 Polish emergency law also additionally introduces to the Polish Commercial Code the possibility of remote decision making by shareholders of limited liability companies.

Pursuant to the new content of Article 234¹ § 1 of the Polish Commercial Companies Code, the participation in the shareholders’ meeting may also be taken using electronic means of communication, unless the articles of association provide otherwise.

This is a radical reversal of the shareholders’ decision-making principle, which in the case of the Polish limited liability company in principle favored the personal participation of shareholders in decision-making processes. Until now, the possibility of making remote decisions by shareholders had to explicitly follow from the company’s articles of association as an exception to the general rule.

The indicated legal solution deserves to be mentioned in the first place, because the Polish limited liability company is the most popular form of business activity chosen for doing business in Poland by foreign investors active in the Polish market.

The proposed changes relate to the manner of holding meetings and adopting resolutions by the management and supervisory bodies of Polish limited liability companies and joint stock companies These changes are intended to ensure the possibility of operation for management boards, supervisory boards and shareholders, in particular in the event of extraordinary events that may affect their internal organization. These changes do not, however, cover the Polish simple joint-stock company, since the meetings of the management and supervisory bodies of a simple joint stock company may as a rule take place using new technologies. Resolutions may also be adopted by these bodies using means of direct remote communication without the need to include appropriate authorization in the articles of association.

The spread of COVID-19 and the security measures applied to limit the associated threats pose a significant risk of decision paralysis for nearly 500,000 companies making up the Polish economy, including public companies. Managed quarantines or restrictions on the freedom of travel between continents or countries lead to the isolation of a large number of people, including members of governing bodies, including representatives of foreign investors. There are many foreigners among the management and supervisory bodies of companies from the WIG-20 and WIG-40 indexes. This situation creates a significant risk of paralysis of the activities of company bodies, which is caused by the lack of explicit regulations in the Polish Commercial Companies Code of the possibility of holding board meetings using new technologies.