On 13 October 2022 the amendments to the Commercial Companies Code have entered into force, which will be followed by amendments from 9 February 2022 The most important change is the introduction of the Business Judgement Rule principle – business evaluation into the regulations on companies with limited liability and public limited liability companies.
This rule means the possibility to exclude liability for damage caused to the company by wrong decisions of its authorities which have caused damage to the company, within the limits of legitimate business risk, business judgement and due diligence.
As a result of the amendment, the importance of legal analyses, opinions, reports, etc. of defence documents on decisions taken will be increased.
The legislator clearly points out that any information, analyses, opinions available to the Authority in the decision-making process will be necessary to assess the appropriateness of the discharge of a member of the Authority. This will probably strengthen the tendency to create the so-called Defense-file (i.e. documentation in defence of the position when making decisions). The importance of legal analyses, opinions, reports, etc. of defence documents on decisions will therefore be increased.
Prior to the entry into force of the amendment of the KSH, the case law and the doctrine held that information, legal analyses, opinions, etc. could be the basis for the decision of the board of directors.
In writing, it is indicated that the members of the Management Board must not treat the information received uncritically without making an independent evaluation.
As the case-law points out, "the entrustment of the problem to a professional domain and to an appropriate education is not tantamount to due diligence." What is more, a member of the board, having the power to conduct the affairs of the company, cannot transfer responsibility for decisions made to a person who is subordinate to him or acting on his behalf.
Business judgment rule a limited liability company
In the case of limited liability companies, the legislator decided to repeal section 2 and introduction section 3, which expressly states that a member of the Management Board, the Supervisory Board, the Audit Board and the liquidator shall be without prejudice to the obligation to pay due diligence if, acting loyally to the company, he acts within the limits of legitimate economic risks, including on the basis of information, analyses and opinions, which should be taken into account in the circumstances concerned in the careful assessment.
Business justice rule a public limited company
Under that amendment, the provision has been substantially modified Article 483 KSH. The legislature has repealed the existing section 2 in the article cited and added to it section 3, according to which the members of the Management Board do not infringe Article 483 KSH, if their action or omission led to injury on the part of the company, but the decision was made within the limits of the so-called legitimate economic risk (business justice rule).
As a result of the amendment, the members of the bodies of public limited companies and sp.
z o.o., who carefully and loyally carried out their duties and who decided to undertake business/business risks on the basis of appropriate studies or analyses, will benefit from protection in case it was later found that the decision was incorrect and led to damage.
The legislator assumed that members of the company's organs should be able to be free of liability for the economic damage suffered by the company as a result of incorrect decisions by the authorities if the process of taking such decisions was carried out correctly.
Author: Bartosz Nawrot, legal consultant, associated with Russell Bedford Poland law firm from 2018.