It would appear that obtaining corporate approvals belongs to the internal affairs of the company, that it concerns only the company itself and not its counterparties. However, when concluding an agreement with a capital company, it is worth noting that the board of directors acting on its behalf should provide us with all the required consent by law. Otherwise, we expose ourselves to a number of inconveniences.
The obligation to obtain the agreement of the competent authority of the company to carry out its legal activity is a very important element in the functioning of the companies. The purpose of obtaining the consent of the relevant authority is to protect the interests of the company and its shareholders and persons third.
This obligation protects the company and shareholders from the negative consequences of the board's voluntary activities. What is very important, it is in the interests of both the persons representing the company and the partners of the company. The absence of such consent entails significant inconveniences for the counterparty.
Approval – General information
The obligation to obtain consent shall lie with the members of the Management Board or with the representative(s) established by the Management Board and the liquidators. The obligation shall always apply where the Code of Commercial Companies or a contract (statute) requires "agreement" or "agreement" of the body concerned.
The resolution itself should concern a specific and marked activity. It should define precisely the limits of the freedom of management. It is not acceptable to grant a ‘framework agreement’ or ‘sheetboard agreement’ for a given type of activity (although some authors allow such a solution).
The resolution (agreement) is also not subject to the requirements of the form provided for in the legal act. If, therefore, the company with the o.o. intends to conclude a real estate sale agreement (form of notarial act), then the resolution of the meeting of shareholders may be concluded in ordinary written form.
Legal and contractual obligation — differences
The obligation to obtain consent may result from a bill or from a contract. Acting without the consent required by the Act gives rise to severe sanctions in the form of annulment of such an act. It is therefore in the interest of both parties to obtain the consents required by the Act.
In view of the severe sanction in the form of nullity, the parties should each time inform each other of their respective consents. In the model situation in the conclusion of contracts, the parties should make a statement of agreement and the resolution itself should be annexed to such agreement.
The lack of agreement required by the contract (statute) of the company does not result in the annulment of such action. They remain important and effective. However, it may give the management responsibility to the company for breach of the contract (statute) of the company.
It is in principle only in the interests of the members of the board of directors of that company that the agreement requires approvals. It does not affect in any way the validity of the contract and therefore the interests of the counterparty.
Obtaining the consent required by the Act
The Code of Commercial Companies provides for approval in the following cases:
1) concerns both the limited liability company:
•
the obligation to obtain the agreement of the meeting of shareholders of the company from the o.o. or the general meeting of the public limited liability company to conclude a credit, loan, guarantee or other similar agreement by the company with a member of the board, supervisory board, audit commission, proxy, liquidator or to any of these persons (Article 15(1) KSH).
•
obligation to obtain the agreement of the meeting of shareholders of the company from the parent company or the general meeting of the parent company to conclude a loan, loan, guarantee or other similar agreement by the subsidiary with the member of the board, supervisory board, audit commission, proxy, liquidator of the company to the parent company (Article 15(2) KSH).
•
the obligation to obtain the consent of the shareholders of the company from the o.o. or the general meeting of the public limited liability company to dispose of the property by liquidators. The resolution should then indicate the minimum selling price ( Article 282(1) dd. 3 and Article 468(1) dd. 3).
2) concerns the company of:
- •
- the obligation to obtain the agreement of the meeting of shareholders of the Polish limited liability company. to sell and lease the company or its organised part and to establish limited rights in kind (Article 228(3)).
- •
- the obligation to obtain the consent of the company's shareholders to acquire and dispose of immovable property, perpetual use or to participate in immovable property (unless otherwise provided) ( Article 228(4) ).
- •
- obligation to obtain approval of the meeting of shareholders of the Polish limited liability company. to conclude a holding contract (Article 228(6)).
- •
the obligation to obtain the consent of the shareholders of the company from the o.o. to a regulation of the law or to enter into an undertaking by the company from the o.o. with a value twice the amount of its share capital (unless the articles of association provide otherwise), (Article 230). However, in this case, the lack of consent does not invalidate the legal act carried out and (as in the case of consent required by the company's contract) the organisational or civil liability of the managers.
3) concerns a public limited liability company:
- •
- obligation to obtain a consentable meeting to carry out financing activities by the company to acquire or acquire its shares (Article 345(5) dd. 1).
- •
- the obligation to obtain an agreementable meeting to conclude a sale agreement and lease the company or its organised part and to establish a limited right in rem (Article 393(3)).
- •
- obligation to obtain a consentable meeting the acquisition and disposal of immovable property, perpetual use or participation in immovable property (unless the statutes provide otherwise), (Article 393(4)).
- •
- obligation to obtain a consentable meeting to conclude a holding contract (Article 393(7)).
- •
obligation to obtain an agreementable assembly to conclude before expiry 2 years from the registration of the company of the acquisition agreement for it of any property, at a price exceeding 1/10 paid-up share capital, from the founder or shareholder and some other persons (Article 394(1)).
•
obligation to obtain an agreementable meeting to conclude a share-sub-issue agreement in connection with the increase in share capital (Article 433(5)).
•
the obligation to obtain the approval of the supervisory board to pay the dividend advance ( Article 349(1) dd. 2).
•
the obligation to obtain the approval of the supervisory board when concluding a contract with the subject when the articles of association of the company delegates this competence to the supervisory board ( Article 433(5) dd. 3).
•
the obligation to obtain the approval of the supervisory board to determine the issue price and to issue shares in exchange for non-monetary contributions to the issue of shares within the target capital (unless the statutes provide otherwise), ( Article 446(2) ).
•
the obligation to obtain the approval of the supervisory board, when the Management Board adopts a resolution to deprive shareholders of the right to collect in full or in part in connection with the issue of shares within the target capital, where such competence has been conferred on the Management Board in the statutes ( Article 447(2) ).
As already noted at the beginning of this article, the action taken without the required resolution of the body is absolutely invalid. However, follow-up validation by adopting a resolution within the time limit is acceptable 2 months from the date on which the company made the declaration. Failure to adopt a legally required resolution may reveal itself (to be raised by one of the parties to the activity) even after many years from the moment of the activity.
In this respect, particular attention should be paid to the risk posed by the company or its contractor acting in bad faith. A company or its counterparty may, even after many years of performance (or even performance of the contract), rely on absolute nullity and thus deviate from performance of the contract. It may also demand that the situation be restored before a faulty action is taken, or it may aim to form an agreement on new, more favourable conditions for itself.
Obtaining the consent required by the contract (statute) of the company
The agreement (statute) of the company may impose an obligation to obtain a resolution of the supervisory board, a review committee and a meeting of shareholders in the company from the O.O. or a general meeting in a joint stock company. Contracts (statuies) of companies often formulate developed catalogues of activities which are subject to the approval of the supervisory or ownership authority.
The requirement of consent often defines generic (e.g. the conclusion of credit agreements, loans) or amounts (e.g. the acquisition of a right or undertaking to a company with a value exceeding 1,000,000 PLN).
As in the previous case, the resolution (agreement) may be ‘completed’ by the Authority on time 2 months after the date on which the declaration was made on behalf of the company and has retroactive effect.
More importantly, unlike the obligation to obtain the consent required by the Act, the action carried out without the consent required solely by the company's contract (statute) remains valid. However, lack of consent may give rise to organisational responsibility or compensation to board members.
The application of criminal sanctions is also not excluded.