The amendment of the National Court Register Act was intended to facilitate and modernise the establishment of economic activities and to adapt Polish regulations to the European Union Directive. The opinion of the legislative office of the Chancellery of the Senate highlighted a number of benefits, but left aside an important issue.
The procedure referred to as ‘coercive conduct’ provides for the possibility of imposing financial penalties which may be imposed on shareholders or members of supervisory boards. If a limited liability company or a public limited liability company does not appoint a board of directors, individuals can pay for it.
The technological revolution facilitates the simplification of formal procedures and minimises laborious work. The amendment to the provisions on registration proceedings was promoted as a broad IT innovation package. They weren't just supposed to use entrepreneurs. According to Senate Chancellery No.
714 one of many advantages is the automation of the verification of emerging companies and the relief of the courts. At the very beginning of this document, it can be read that "the law is the next stage of economic law reform".
Unspeakable provision for a coercive procedure
Simplifying procedures usually does not raise any controversy, but the establishment of new criminal or financial sanctions always raises the temperature of political debate.
New Sound Article 24 The National Court Register Act assumes, among other things, the possibility to call for a fine under the rigor to show that ‘the authority (the management) has been appointed or elected or that the deficiencies in its composition have been removed.
“It can be said that the bill not only modernises the procedures, but also creates the construction of an illegal state of affairs for which it provides financial responsibility. Then the question should be asked who can be punished and for what.
Structure that may encounter difficulties
The company's legal activities are not just a series of procedures that the new law wants to simplify. It is also necessary to take strategic decisions of the type which will be part of the board. Such information may have been known from the very beginning, but sometimes negotiations may be prolonged.
For example, someone can express their willingness to join the board and then change their mind because of the responsibility involved. Members of the board may resign from this function, making the company without a body authorised to represent it.
Is this reason for punishing anyone? There's a lot of doubt. The new law provides for the possibility of sanctions for such a situation against the shareholders of the limited liability company or the supervisory board of the joint stock company. Reason? They can be held responsible for failing to elect a board. The fundamental flaw is that they do not have to bear any blame for the difficulty of this choice.
The new rules on company registration may simplify procedures and save time, but may also result in financial sanctions which are very dubious.
Source: https://www.forbes.pl/biznes/grzywna-za-brak-uprawnionego-organu-w-spolce-nowelizacja-ustawy-o-krs/ecbkqy0
Author:
Andrzej Dmowski
Managing Partner Russell Bedford, Doctor of Legal Sciences, Lawyer, Tax Advisor, Restructuring Advisor, Certified Public Accountant – Expert Auditor in Ireland, Certified Fraud Examiner - Expert in Crime Detection and Abuse, Certified Internal Controls Auditor - International Internal Auditor.
Graduate of the University of Cambridge - British Centre for English and European Legal Studies - Faculty of Law and Administration, Graduate and Fellow of the Faculty of Law and Administration of the University of Warsaw.
Specializes in settlement of transactions between related entities - transfer pricing, legal and tax aspects of M&A and issues concerning derivatives of financial instruments.