Companies in COVID-19 quarantine: A potential breakthrough in remote board meetings in Poland

UPDATE

The regulations of the Polish company law seemed a little outdated even before the era of the sanitary lockdowns. While skyping and conf-calls were far from being unheard of among directors in Poland, the legal reality has been that decisions taken by supervisory boards in limited liability companies (sp. z o.o.), as well as by the supervisory boards and management boards in joint-stock corporations (S.A.) should be - as a rule - made during meetings attended personally. So far, Polish company law has failed to determine how any new communication technologies may be utilised for holding meetings of the management boards. And in case of supervisory boards, it has allowed for new technologies facilitating meetings only if such possibility had been directly specified in the articles of association of the corporation.

Now, following the introduction of forced isolation rules preventing the members of the boards from taking part in the meetings in person, those regulations seem even more unnecessarily rigid and add yet another obstacle to an already burdened existence of companies.

With many directors in quarantine and virtually all international travel put on hold, are we facing a paralysis of the decision taking processes? Hopefully not. These issues are expected to be addressed as a part of the new law which should be introduced in Poland in the coming days as a response to the COVID-19 pandemic. Read below to learn what we are expecting from the new legislation.

Holding remote meetings of management board and supervisory board in sp. z o.o. and S.A. companies

The new law will allow the directors to participate in management board meetings and supervisory board meetings remotely, by using direct communication tools (eg. video or audio conferences), unless the company articles specify expressly that it is not possible. Consequently, as long as it is not prohibited by the company articles, it will be possible to adopt resolutions in writing (by circulation of papers), or through direct communication tools.

This is a welcomed change from an opt-in to an opt-out system, which will apply to both sp. z o.o. and S.A. indiscriminately.
The new law will also remove certain existing limitations preventing boards from taking decisions remotely or by circulation of papers. It will now be possible to decide in such way on: appointing the chairperson and vice-chair of the supervisory board, as well as appointing the management board members, or their dismissal or suspension.

The new law is expected to come into force on 1 April 2020.

Adopting resolutions remotely by the shareholders of sp. z o.o. and S.A. companies (UPDATED)

The new law in the first presented draft did not include any changes to holding shareholders’ meetings in sp. z o.o. and S.A. companies, however this has changed during in the course of drafting. Similarly as in case of management board and supervisory board, shareholders will be able to participate in shareholders' meetings (both in case of sp. z o.o. and S.A.) by using direct communication tools (eg. video or audio conferences), unless the company articles (statute) specify expressly that it is not possible.

Until the new regulations are enacted by the Parliament the available alternatives to holding a remote meeting are: adopting a resolution in writing (without holding a meeting), but only in case of sp. z o.o. companies, and with certain exceptions applying, or appointing an attorney to represent the shareholder at the meetings, e.g. by giving a power of attorney to an advocate or a legal counsel.

New deadlines for filing ultimate beneficiary information with the Polish central register

The new law also includes certain other new company regulations:

(i) postponing by three months the deadline to file with the Central Register of Ultimate Beneficiaries the required information (13 July 2020 instead of 13 April 2020); and

(ii) potentially postponing the deadlines to draft, approve and file the annual financial statements of companies – if the Ministry of Finance decides to do so in the view of the situation unfolding in the coming weeks. If it happens and the ministry issues such postponing regulation, this will mean a shift in deadlines for holding the annual shareholders’ meetings in Polish companies.

Please note that the changes discussed above are currently a work-in-progress and may yet be modified in the course of the remaining legislative process.

 

Authored by Marek Wroniak, Tomasz Żak, Mateusz Mazurkiewicz, and Michał Białobrzeski.

 

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