The amendment to the Commercial Companies Code, which entered into force on 13 October 2022, introduced into Polish commercial law not only changes concerning groups of companies and the Business Judgment Rule , but also a number of regulations concerning the principles of functioning of supervisory boards of capital companies.

The purpose of introducing amendments to the operation of supervisory boards of capital companies is primarily to regulate procedural issues related to the functioning of this body, as well as to expand and formalize the competences of supervisory boards in order to ensure real and effective control over the activities of companies.

The amendment introduces a number of provisions aimed at strengthening the scope of company oversight. Of particular importance are those related to the obligation to provide information regarding the company's current situation. Importantly, the management board is obligated, without further request , to provide the supervisory board with information on:

Resolutions of the management board and their subject matter;
The company’s situation, including its assets, as well as significant circumstances relating to the management of the company’s affairs, in particular in the operational, investment and personnel areas;
Progress in implementing the designated directions of development of the company’s activities, while he should indicate any deviations from the previously designated directions, providing justification for such deviations;
Transactions and other events or circumstances that significantly affect or may significantly affect the company’s financial situation, including its profitability or liquidity;
Changes to information previously provided to the supervisory board, if such changes significantly affect or may significantly affect the company’s situation.

The information referred to in points 1-3 above should be provided at each meeting of the supervisory board, unless the board decides otherwise , e.g. limits the frequency of providing this information, however, the events and circumstances listed in points 4 and 5 above should be provided to the supervisory board immediately after their occurrence .

It is worth mentioning here that despite the application of the above-mentioned regulations, the company's articles of association may in fact exclude or limit all of the above-mentioned information obligations.

Important!

Pursuant to Article 389 § 7 of the Commercial Companies Code, meetings of the supervisory board should be convened as needed, but no less frequently than once in each quarter of the financial year .

It should be remembered that the implementation of the above information obligations, with the exception of information on management board resolutions and their subject matter, includes providing the supervisory board with information held by the management board, also relating to subsidiaries and affiliated companies .

In order to perform its duties, the supervisory board may:

examine all company documents,
review the company's assets,
demand that the management board, proxies, and persons employed by the company under an employment contract or regularly performing specific activities for the company under a contract for specific work, a mandate contract, or another similar contract prepare or provide any information, documents, reports, or explanations concerning the company, in particular its activities or assets . This request may also cover information, reports, or explanations held by the body or person under an obligation concerning subsidiaries and affiliated companies.

Information, documents, reports, or explanations should be provided to the supervisory board immediately , no later than two weeks from the date the request is submitted to the body or person responsible, unless the request specifies a longer deadline. The management board may not restrict supervisory board members' access to information in this regard.

Another innovation introduced by the discussed amendment is that the company will ensure the participation of the key auditor in the supervisory board meeting, which will be devoted to assessing the financial statements, the management board's report on operations, and preparing the supervisory board's report for the previous financial year. The supervisory board is required to notify the key auditor of the date of this meeting at least one week in advance .

The amended regulations also address procedural issues. The new regulations have introduced into the legal system standards for the functioning of supervisory boards in matters previously regulated solely in the company's articles of association/statute or supervisory board regulations. These include the procedure and timing for convening and holding supervisory board meetings, as well as granting the chairperson of the supervisory board the express authority to manage the work of this body.

The introduction of a number of mechanisms expanding the supervisory board's oversight powers has significantly formalized and strengthened the position of this body. Legislators have equipped the supervisory board with new tools to effectively fulfill these responsibilities. The supervisory board may, among other things, establish an ad hoc or standing committee of the supervisory board, composed of supervisory board members, to perform specific supervisory duties. The supervisory board may also adopt a resolution to have a selected advisor examine a specific matter concerning the company's operations or assets, at the company's expense. An advisor to the supervisory board may also be selected to prepare specific analyses and opinions.

The change clarifying the rules for determining the term of office of the management board and supervisory board should also be viewed very positively. For years, two approaches have been circulating on this matter, and it seems that the new regulations clearly resolve this dispute by pointing to the extension concept. However, we will attempt to discuss this issue in greater detail in our next post.

The powers and responsibilities of supervisory boards presented in the above article do not exhaust the list of supervisory board regulations introduced by this amendment. It is worth familiarizing yourself with the new rules for the functioning of supervisory boards, as they have a significant impact on the company's operations and the transparency of supervisory board activities.

This article is for informational purposes only and does not constitute legal advice.

Legal status as of February 1, 2023

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