Successive board – when does it expire? 

From a legal point of view, the economic activity is inextricably linked to the person of the owner and thus, at the time of the death of the entrepreneur, the legal existence of the undertaking it operates de facto ends. Such an entrepreneur is removed from the Central Register and Information on Business Activity from day to day, and his business is “gone”.

This problem has been seen by the legislator and In 2018 a new institution was introduced into the legal order of the so-called succession board. Act dated 5 July 2018 on the succession management of a natural person and other business succession facilitations (i.e.

Journal of Laws of 2021, item 170, hereinafter ‘the Act’) entered into force 25 November 2018 Its purpose is to allow the company to continue to operate after the death of the entrepreneur – the owner, when inheritance issues have not yet been regulated.

Article 59 The Act sets out other conditions, the ex lege of which causes the succession board to expire, which often escapes the attention of entrepreneurs who decide to apply this institution. Consequently, they mistakenly assume that the duration of the succession board is always 2 years from the date of the death of the entrepreneur, while this time may be much shorter

Appointment of a succession administrator

The succession board shall be updated upon the death of the entrepreneur, provided that the entrepreneur has applied for entry in CEIDG of the appointed succession manager. Where an entrepreneur has not appointed a succession manager in life or has not applied for the entry of an administrator into the CEIDG, after the death of the entrepreneur, the succession manager may appoint: a spouse of an entrepreneur entitled to participate in the company in the inheritance, or a statutory heir of an entrepreneur who has accepted the inheritance, or a heir of a will of an entrepreneur who has accepted the inheritance, or a debt collector who has accepted the debt note if, in accordance with the announced will, he is entitled to participate in the company in the inheritance.

Extension of the Management Board

The maximum duration of the succession board provided for in the Successive Board Act is 2 years from the date of the death of the entrepreneur. For important reasons, the court may extend the term of the succession board for a maximum period of time before the date of expiry of the succession board. 5 years after the death of the entrepreneur (Article 60 Act).

Notwithstanding that provision Article 59 The Act also sets out other grounds for ex lege's ex lege's termination, which often eludes the attention of entrepreneurs who decide to apply this institution.

Consequently, they mistakenly assume that the duration of the succession board is always 2 years from the date of death of the entrepreneur, while this time may be much shorter.

At the same time, the succession board will cease for any of the reasons mentioned Under section 1 the said Article makes it impossible to re-establish it and thus definitively and definitively ceases to be a legal entity in decline.

After first, the succession board will expire on expiry 2 months after the date of the death of the entrepreneur, if, during that period, none of the heirs of the entrepreneur accepted the inheritance or the debt-register has accepted a recovery record, the subject of which is the undertaking or the participation in the undertaking, unless the succession manager is acting for the spouse of the entrepreneur who is entitled to a share in the company in the inheritance. As a result, the legislature has established 2 monthly period, at least one from the heirs of both the statutory and the testamentary is obliged to accept the inheritance, and the debt collector is obliged to accept the recovery record if they wish to maintain the company's status in succession and continue the business activity of the deceased entrepreneur.

Management Board and acquisition of inheritance

Another condition which leads to the expiry of the succession board is the validity of the order to establish the acquisition of the inheritance, to register an inheritance certificate or to issue a European succession certificate if one the heir or collector has acquired the company in full.

This is the case where, following formal determination in succession proceedings of the successors of the company in succession, it appears that only one the entity becomes its owner in its entirety.

This may, for example, be the case where the sole heir is the spouse who had a stake in the company in the inheritance, or will be acquired in full by the debt collector.

Then only this one of the person will be entitled to decide on the fate of the inherited undertaking and there will be no need to manage in a specific way this wealth for his benefit as the sole and sole owner of the company in succession.

It may, in such a case, entrust the management of an undertaking on the basis of another legal title, such as a prosecutor or an order, or bring it to the company itself by means of an aport [1] .

This means that if one the heir to the succession board may apply to 2 months after the death of the entrepreneur and not for a maximum period 2 years. Namely according to Article 59(1)(1) Acts within 2 months after the date of death of the entrepreneur at least 1 the heir must accept the inheritance, if not done by the succession board will expire with the expiry of that deadline, and at the same time when there is only 1 the heir is the succession board expires with the moment of formal declaration of acquisition of the inheritance by the sole heir.

Termination of the Successive Board shall also take place when one of the person acquires the company as a whole in decline, which will also lead to the termination of the succession board, as it provides point 3 section 1 (vide: Article 59 Act).

This could be due, for example, to the sale of shares in the company in decline one a person (not necessarily a spouse or heir, or a registrant as one of the joint owners of the company in decline) or joint transfer of the whole company in decline by means of an aport to a capital company or a commercial law company (i.e.

the organisational unit in question) under Article 331(1) k.c., which includes Article 3(3) u.z.s.. [2]

The reasons for the expiry of the succession board are also: the end of the month from the date of the removal of the succession manager from CEIDG, unless another succession administrator has been appointed during this period; the bankruptcy of the entrepreneur; the succession of the company in decline.

For these reasons, prior to the establishment of the succession board, both the business situation of the company and the family-personal relations of the entrepreneur should be analysed in detail.

Author: Magdalena Mączka Legal advisor, Russell Bedford Dmowski & Partners Law Firm Sp. k.