The institution of the forced board initially raised great concerns among entrepreneurs who feared the mass takeover of their companies by prosecutors. Over time, however, it turned out that to date the forced board was only applied in five cases. What is the new tool in practice?
Forced board introduced above 3 years ago, a novel implementing the EU Directive No. Directive 2014/42 concerning the so-called extended confiscation.
The project's authors indicated in the explanatory memorandum that although the current rules provided for the safeguarding of the enforcement of the ruling on the whole company, this possibility was very rarely used.
More often, the security was directed to individual property components – the components of the company – which led to difficulties in the company's operation.
Extension of the scope of the forfeiture provided for in the proposed Article 44a kpk, as well as the need to ensure the possibility of securing, other than the forfeiture of decisions, argued for the development of the code rules on the security covered by the company.
On the other hand, the owner or other person in charge of the undertaking on his behalf may ask the prosecutor or the court which issued the freezing order to exclude certain assets or property rights from the security
How does it work?
According to Article 292a The Code of Criminal Procedure may be established in the form of the establishment of a compulsory board of directors and the appointment of an administrator if the accused person is accused of committing a crime.
The reason for establishing such a security may be because of the concern that, without such a security, enforcement of the judgment will be impossible or significantly impeded. The decision to establish a forced board is issued by the prosecutor.
That provision shall specify the undertaking or its organised part and shall indicate the manager of the persons holding the restructuring adviser’s licence referred to in Act dated 15 June 2007 the license of the restructuring advisor.
After the order has been given, the prosecutor shall at the latest within 7 the days apply to the court for its approval. Approval 7 days from the date of transmission of the order to him.
A complaint shall be brought against the court on the approval of the order to secure or to secure the parties, the victim and the owner or the manager of the undertaking on his behalf.
The role of a forced administrator is to ensure the continuity of the work of a secured undertaking and to provide the court or prosecutor with information relevant to the ongoing proceedings, in particular the manner and circumstances in which that undertaking is used to commit a crime or conceal its benefit and the items and documents that may constitute evidence of the case.
In addition, such administrator shall draw up a list of the assets and property rights of the undertaking and transmit it to the prosecutor or court which issued the freezing order.
In relation to collective entities, and therefore legal entities and non-legal entities to which separate provisions confer legal capacity, it is possible to apply a forced board if the evidence gathered indicates a high likelihood that the entity may be liable on the basis of Act dated 28 October 2002 the liability of collective entities for criminal offences under penalty.
The establishment of a forced board involves excluding the owner from the day-to-day management of the company. On the other hand, the owner or other person in charge of the undertaking on his behalf may ask the prosecutor or the court which issued the freezing order to exclude certain assets or property rights from the security.
A decision to exclude the complaint shall be given to the parties, the victim and the owner of the undertaking or to another person in charge on his behalf.
The extension of the circle of persons entitled to make such a complaint about the victim is motivated by the fact that the victim may be the beneficiary of the amounts of money charged to the convicted person.
Forced board in practice
one of five companies using the tool are Metropolitan Investment (MI), which proposed investments in the form of bonds and shares in special-purpose companies, in the real estate market. It is suspected that the investment appropriations were earmarked for other purposes than those indicated under the emission conditions.
After the temporary arrest of the company's founders, who are now waiting for the trial, a restructuring advisor entered the company, the decision of the Regional Prosecutor's Office in Poznań.
This may result in some customers being paid, although the company's owners are convinced in a statement that they could better get the company out of trouble.
„However, efforts for our release were supported by a large group of investors who invested in Metropolitan Investment S.A. close 50,000,000 PLN and who trust us to recover the funds entrusted to the company – writes Łukasz Włodarczyk and Robert Jas, founders of MI. "However, it will not be possible to implement the measures taken in the event of our temporary arrest. This will also undermine any efforts made and - in the end it will reconcile with the interests of our customers. Only on the wild can we implement the pre-established assumptions that will lead to the repayment of all commitments made."