Facilitating activity by holding companies in Poland

Poland: Lawmakers work on changes to liability rules in holding companies.

The Polish legislator has finally noticed that group companies are not separate, independent entities, but may pursue a common interest.

Under draft amendments to the Polish Commercial Companies Code, capital companies that are related to one another or in which one exerts a decisive influence on the others, may declare pursuit of a common interest and form a group. This will be done on the basis of resolutions by their shareholders and notification of the fact to the court register (in the case of foreign parent companies – only to the register of subsidiaries).

The fact of establishing a group will also have to be disclosed on the letterhead of group companies with their registered office in Poland. This means that formation of a group will not be automatic, but will be a decision of those companies.

Disclosure of the group in the register will mean, for example, that members of the management board of the Polish company will be able, under certain conditions, to accept binding instructions from the parent company in order to pursue a common interest. In principle, this will be possible even if the subsidiary suffers damage as a result, as long as this does not lead to its insolvency or threat of insolvency.

Management board members who carry out these binding instructions will not be liable for any damage caused to the company as a result – either in civil or criminal proceedings.

Besides, lawmakers want to mitigate the liability of management board members in all capital companies (not only those belonging to groups). They will be able to defend themselves on the grounds that they followed their business judgement and did not exceed permissible risk.

However, no changes are planned to the liability of management board members for tax obligations or in penal and fiscal liability, e.g. for understating the income of Polish subsidiaries and transferring that income abroad. In the case of such allegations, execution of binding instructions is unlikely to be an effective means of defence.

Exemption from liability of management board members for carrying out binding instructions is to be balanced by the liability of the parent company towards the subsidiary, minority shareholders and third parties – creditors.

Liability towards a subsidiary will, in practice, only come into play in the event of insolvency, with minority shareholders but also in the event of a change in structure. Regulation of liability for execution of binding instructions will therefore have to be borne in mind when selling companies.


Source: Draft Act of 9 February 2022 amending the Commercial Companies Code and certain other acts – text as submitted to the Senate

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