Meaning Article 369(4) with regard to Article 386(2) The Commercial Companies Code last full financial year is the one which began during the term of office of a member of the supervisory board of a public limited company – the Supreme Court adopted in its resolution of 24 November 2016, reference no. III CZP 72/16.
The question of the expiry of the mandate of a member of the supervisory board has been settled in Article 369(4) k.s.h. Under that provision, the term of office of a member of the Management Board shall expire at the latest on the date of the general meeting approving the accounts for the last full financial year of the term of office of a member of the Management Board. Based on Article 386(2) k.s.h. This regulation will also apply to a member of the supervisory board.
three Doctrine Views
In practice, the application of this provision raises doubts as to the expiry of the term of office of a member of the supervisory board when the expiry of his term of office is not simultaneous with the termination of the financial year indicated in the statutes of the company.
In this matter it is formulated in the doctrine three fundamental views.
first of these is the concept of abbreviated mandate, according to which the term "last full financial year" referred to in Article 369(4) k.s.h., shall be understood as ‘the one that ended before the end of the term of office of a member of the supervisory board’ (by justification).
The opposite concept is based on the assumption that a member's term of office may not expire earlier than the term for which he was appointed. In that case, the term ‘last full financial year’ should be understood as ‘the year in which the term of office expired’ (by justification).
However, the Supreme Court advocated the last so-called prolongation concept (an extended mandate). It assumes that the legislator does not allow him to serve in the company's bodies beyond the term of office, as the principle is the temporary identity of the term of office and the term of office. This is translated into the adoption that the term of office shall be extended until the date of approval of the accounts for the financial year in which the term of office ends.
Application of the extension concept
Based on the linguistic interpretation of the provision Article 369(4) k.s.h. in the resolution, it was accepted that "the last full financial year of the function of a member of the supervisory board should refer to the last financial year which began during the term of office for which that member was appointed" (by justification).
The Supreme Court also referred to the interpretation of the purposeful provision, indicating that the essence of the regulation is to enable the company to review the activities of its members and to ensure that appointed members are able to serve throughout the term of office.
The application of the prolongation concept best enables the implementation of the will of the company expressed in determining the duration of the term of office and the appointment of members of the supervisory board.
It must be concluded that, in the light of the vague wording of the rules and the disparity in the doctrine, the Supreme Court needed and justified the resolution of this issue. His resolution has far-reaching consequences for the practice of operating capital companies.
For example, if the term of office of a member of the supervisory board expired in July 2017, and the financial year of the company coincides with the calendar year, the term of office of that member shall expire on the date of the general meeting approving the financial statements for the last full financial year of office, i.e.
for the year 2017 (no later 30 June 2018).
Author:
Piotr Pawlak
Counselor. Graduated from the Faculty of Law and Administration of the University of Warsaw. Russell Bedford has been involved with law firm since April 2017, where he provides legal services to economic operators in the field of commercial company law. Previously gained his professional experience in two Warsaw law firms, where he dealt with projects in the field of economic, commercial and civil law.