As early as 13 October 2022, the Act of 9 February 2022 amending the Act – Code of Commercial Companies and certain other acts will come into force. This is one of the biggest amendments to the said Act, which will strongly affect the functioning of limited liability companies, i.e. limited liability companies, simple joint stock companies and joint stock companies.
Amendments to the Code of Commercial Companies:
- Introducing a solution called, among others, holding law, which regulates the relations between a group of companies in which there is a relation of dominance and dependence;
- Regulate the liability of the management bodies of companies, as well as of the companies themselves;
- Modify the powers of supervisory bodies of companies;
- Clarification of the method of calculating the term of office of company bodies.
Powers of supervisory authorities
The amendment to the Code of Commercial Companies extends the powers of supervisory bodies of capital companies and clarifies the existing ones.
Request for information
The Supervisory Board of a limited liability company, joint-stock companies in order to perform its duties may examine all documents of the company, review the state of the company’s assets and demand from:
- persons employed in the company on the basis of an employment contract or
- performing for the company certain activities on a regular basis under a contract of specific work, contract of mandate or any other contract of similar nature
prepare or transmit any information, documents, reports or explanations concerning the company, in particular its activities or assets.
The Act provides that any of the above information shall be provided promptly, not later than two weeks after the date of the request, unless a longer period is specified in the request.
A similar arrangement has been provided for simple public limited companies where similar powers are also given to non-executive directors.
Supervisory Board Advisor
Supervisory boards have the possibility to appoint a supervisory board advisor whose task is to examine a specific matter concerning the company’s activity or its assets. Importantly, in the case of limited liability companies such a possibility must be provided for in the articles of association.
The board’s advisor and the individual who acts on his behalf or for him are obliged to keep confidential all information that is not of a public nature and documents that they have received from the company. This obligation is not limited in time.
In the case of a simple public limited liability company and a joint-stock company, the articles of association/ articles of association may either exclude or limit the board’s power to contract with an adviser to the board, in particular by empowering the general meeting to determine the maximum total cost of remuneration of all advisers to the board which the company may incur during a financial year.
The contract between the company and the advisor is concluded by the supervisory board and in this case it is the board that represents the company.
Supervisory board committee
The amendment to the Commercial Companies Code also regulates the possibility of appointing by supervisory boards permanent or ad hoc committees consisting of supervisory board members to perform specific supervisory activities.
The use by the board of directors of the establishment of a committee of the board of directors does not relieve its members of their responsibility to supervise the company.
The amendment provides such a possibility for limited liability companies and joint stock companies. In case of simple joint stock companies the possibility of appointing committees of the board of directors was already provided for earlier.
It is worth thinking about what committees are needed on councils? For example: Audit Committee, Communications Strategy Committee, Cyber Security Committee. It all depends on the individual needs of the client.
Report of the Supervisory Board
An annual obligation is imposed on supervisory boards to prepare a report on the activities of the supervisory board for the previous financial year.
- In limited liability companies, the supervisory board reports to the shareholders’ meeting;
- In simple public limited companies, the board/non-executive directors report to the general meeting;
- In joint stock companies, the supervisory board shall report to the general meeting.
Importantly, the Act indicates the obligatory elements of the supervisory board’s activity report only in the case of a joint-stock company:
- Results of the evaluations of the management report on the company’s activities and the financial statements for the previous financial year,
- Results of evaluations of management board’s proposals concerning profit distribution or loss coverage,
- evaluation of the situation of the company, with consideration of the adequacy and effectiveness of the internal control systems, risk management, ensuring compliance with the standards or applicable practices, and internal audit,
- evaluation of the management board’s fulfilment of its information obligations,
- evaluation of the way in which the management board prepares or communicates to the supervisory board the information, documents, reports or explanations requested in the manner described above in the section on the possibility to request information,
- information on the total remuneration payable by the company for all studies commissioned by the board during the financial year.
The legislator gives the supervisory bodies of limited liability companies and simple joint-stock companies some kind of freedom in preparing the reports in question.
Where an audit of the financial statements of a company limited by shares is imposed by statute, then the board is required (at least one week in advance) to give notice to the key auditor who has audited the company’s financial statements of the date of the meeting to be held:
1) assessing the Management Board’s report on the Company’s operations and the financial statements for the previous financial year in terms of their compliance with the books, documents and facts;
2) assessing the Management Board’s proposals concerning the distribution of profit or coverage of loss;
3) preparing and submitting to the general meeting of shareholders an annual written report on the results of the evaluations referred to in points 1 and 2, as well as a written report on the activity of the supervisory board for the preceding financial year (report of the supervisory board).
At this meeting, the statutory auditor or another representative of the audit firm shall present the audit report, including an assessment of the basis for the declaration made on the company’s ability to continue as a going concern, to the supervisory authority and answer questions from the members of the board.
The Act provides a similar arrangement for simple public limited companies, with the board of directors or a committee thereof being responsible for notifying the auditor.
Transactions with related parties
In the case of joint-stock companies, the legislator introduces the requirement to obtain consent of the supervisory board for entering into a transaction with the parent company, subsidiary or affiliated company, the aggregate value of which with the value of transactions entered into with the same company during the financial year exceeds 10% of the company’s total assets as determined in the last approved financial statement of the company. The provision allows, however, for the possibility of excluding the necessity of obtaining the supervisory board’s consent through a relevant provision in the company’s articles of association.
Before making the decision referred to above, the company’s management board is required to provide the supervisory board with information about:
1. the firm or other designation of the parties to the transaction,1. the firm or other designation of the parties to the transaction,
2. the nature of the relationship between the company and the other parties to the transaction,
3. the subject of the transaction,
4. the value of the transaction,
5. circumstances necessary to assess whether the transaction is justified in the company’s interest.
Importantly, in the case of transactions involving recurring benefits fulfilled under a contract of indefinite duration, the transaction value is considered to be the sum of the benefits provided under the contract in the first three years of its term.
In connection with the amendment of the Code of Commercial Companies, further materials will be prepared in this regard. Should you have any questions, please do not hesitate to contact me.18 lipca, 2022 Brak komentarzy