On 13 October 2022 A major amendment to the Commercial Companies Code came into force, which focuses on expanding the powers of the supervisory board in capital companies.
The following will be discussed the new responsibilities and powers of the supervisory board in capital companies.
Obligation to report to the Supervisory Board
The amendment introduces an obligation on the supervisory board of the capital company to evaluate (i) the annual financial statements and (ii) the activity reports of the company's management for the last financial year.
The above documents are to be examined in accordance with the accounts, the company's other documentation and the facts. An obligation was also introduced for the Supervisory Board to assess the board's profit-sharing proposals or to cover the loss for a given financial year.
The assessments made by the Supervisory Board shall be presented in a written report on the activities of the Supervisory Board drawn up at least once a year.
In the case of limited liability companies, the rules implemented do not specify exactly what the supervisory board's activity report is to look like, as opposed to public limited liability companies.
The Supervisory Board will have the right to request information and documents on the state of the company
The amendment introduces a new power on the side of the Supervisory Board under which the Supervisory Board will have the right to:
examination of all company documents,
require that any information, documents, reports or explanations concerning the company be produced or provided, inter alia, with regard to the company's activities or assets.
At the request of the supervisory board, the management of the company, appointed procuratives as well as persons employed in the company under a contract of employment, as well as persons employed under civil law contracts shall be obliged to provide information if they perform their activities on a regular basis.
This obligation will also apply to subsidiaries and related companies.
At the request of the supervisory board, the entity shall be required to provide the requested information or documents as well as explanations without delay, no later than within the time limit. two weeks from the date on which the Supervisory Board made its request, unless a longer period has been fixed to submit them.
A fine was introduced in the case of, inter alia, lack of transmission of the requested documents, information, failure to provide explanations. The fine shall also be fined for providing information contrary to the facts.
Changes in meetings of the Supervisory Board
The amendment provides for an extension of the powers of the Chairman of the Supervisory Board. It is for the President to hold meetings of the Supervisory Board and to organise the work of the Supervisory Board. Both the articles of association and the statutes must not restrict the powers of the members of the supervisory board.
The amendment also introduced changes in the way the meetings of the Supervisory Board were convened. The new regulations provide that the Supervisory Board will be called upon two ways. After first members of the supervisory board will receive an invitation which must have specific elements. After second it will be possible to convene the Supervisory Board without sending invitations, provided that all members of the Supervisory Board agree and do not object to bringing specific items to the agenda.
It is also possible for the Supervisory Board to adopt resolutions not covered by the agenda. Such resolutions will be valid unless the opposition of the members of the supervisory board is raised, and the articles of association or statutes exclude this possibility.
The amendment also provides for the obligation to draw up minutes of the supervisory board meetings. In this regard, obligations were introduced identical to the existing obligations regarding the resolutions of the company's board of directors. The minutes of such a meeting must be signed at least by the chairman or the manager of the vote, unless the articles of association or statutes impose additional requirements in this respect.
As a general rule, the Supervisory Board shall adopt resolutions by an absolute majority in a public vote unless the articles of association or statutes provide for other forms of adoption of resolutions.
In the opinion of the legislators, meetings of the supervisory board should be convened in accordance with the circumstances justifying the convening of meetings, at least once a quarter.
Other amendments made to the amendment
In the light of the new rules, the Supervisory Board of the Company will be able to establish permanent or ad hoc committees of the Supervisory Board. Their creation depends on the adoption of a resolution by the Supervisory Board. The committee set up is tasked with supervising specific areas of activity of the company. It is worth noting that, despite the establishment of the committee, the members of the supervisory board are still responsible for the supervision, including within the remit of the committee.
After the amendment, the Supervisory Board will be entitled to adopt a resolution on the subjection of a specific case concerning the company's activities by the Supervisory Board adviser. Such an advisor will be able to prepare analyses on behalf of the Supervisory Board as well as opinions.
It should be stressed that the Supervisory Board itself enters into an agreement with the Supervisory Board's adviser, so the Board is not competent to block the performance of the Supervisory Board's adviser.
Such advisers shall have the same rights as the Supervisory Board with regard to the use of company documents, access to information, as well as requests for clarification.
Meetings of the Supervisory Board with key auditor
The amendment required that a key auditor or other representative of the audit firm should participate in the meetings of the supervisory board, which shall be the subject of the assessment of the company's accounts, the management report and the conclusions on the distribution of profit or loss, as well as the drawing up of the supervisory board's report. This obligation applies to capital companies whose financial statements are audited by the statutory auditor.
Share company – information obligations after amendment
The legislator introduced a new obligation on the part of the board of directors of the public limited liability company, according to which the board of directors of the public limited liability company is obliged to inform the supervisory board of certain matters concerning the company, subsidiaries and related companies.
This obligation exists whether the board of directors of the public limited liability company is called upon by the Supervisory Board to provide information.
The Management Board should inform the Supervisory Board of the joint stock company about the resolutions adopted, the company's property status, as well as the progress in the implementation of the development goals set by the company.
The amendment also requires the supervisory board to obtain approval when a joint stock company enters into a transaction with its parent company, subsidiary or related company, if the value of all transactions with that company during the financial year exceeds the threshold 10% assets of the company calculated on the basis of the company's recently approved financial statements.
The statutes of the company may provide for a different regulation of the matter. Prior to the approval of the Supervisory Board of the company, the Management Board is obliged to provide key information on transactions to the Supervisory Board i.e. e.g.
the basic information on the pages of the transaction, the nature of the company's relationship with the other participants in the transaction, the subject matter of the transaction taking into account its value and an explanation of why the transaction is beneficial for the company.
This does not apply to companies whose shares are admitted to trading on a regulated market and companies belonging to groups of companies.
Author: Maksymilian Kulczycki
The author is a graduate of the Kozminski Academy in the field of Law and Finance and Accounting. From 2022 Associated with Russel Bedford Poland. In 2018 He completed his bar application at the District Bar Council in Warsaw. In 2019 obtained a positive result from the bar exam. His professional interests include the law of commercial companies, in particular mergers and acquisitions, conversions and tax law, in particular corporate income tax.