Contributed by Dentons.
1. Corporate Structure Of The Companies
1.1. General Legal Framework
Polish company law is primarily regulated by the Commercial Companies Code of September 15, 2000, (Kodeks Spolek Handlowych) (CCC) with additional regulations applicable to listed companies provided for in the Act on Public Offerings, Conditions Governing the Admission of Financial Instruments to Organised Trading and Public Companies of July 29, 2005 (Ustawa o ofercie publicznej i warunkach wprowadzania instrumentow finansowych do zorganizowanego systemu obrotu oraz o spolkach publicznych) (Act on Public Offer). Moreover, the Warsaw Stoch Exchange (Gielda Papierow Wartosciowych w Warszawie) has adopted a corporate governance related soft-law, the Best Practice for GPW Listed Companies 2021 (WSE Best Practice), which applies to all companies listed on the WSE’s Main Market (Rynek Glowny) according to the comply-or-explain approach.
Barring the European Company (Societas Europaea) regulated in the Council Regulation (EC) No 2157/2001 of 8 October 2001 on the Statute for a European company (SE) with only a handful of entities registered in Poland, there are three types of companies provided for and regulated under Polish law: a limited liability company (spolka z ograniczona odpowiedzialnoscia), a simple joint-stock company (prosta spolka akcyjna), and a joint-stock company (spolka akcyjna), with the limited liability company and the joint-stock company being the preferred and most-used by investors. In broad terms, a Polish limited liability company is the equivalent of the German Gesellschaft mit beschrankter Haftung (GmbH) or the French Societe a Responsabilite Limitee (SARL), while the Polish joint-stock company is the equivalent of the German Aktiengesellschaft (AG) or the French Societe Anonyme (S.A.).
While there are no legal requirements regarding the type of company in which a business of a certain size should operate, the form of a limited liability company is considered to be more suitable for small- and medium-size businesses with a small number of shareholders or lower capital requirements, while the form of a joint-stock company being the advisable type for the larger ones. It is worth noting that only joint-stock companies (following complying with other applicable regulatory requirements) are eligible to be listed on a stock exchange. Moreover, specific kinds of activities, mainly related to banking and other financial activities, cannot be performed by a limited liability company and should be performed by a joint-stock company. The main examples of such prohibited activities are: banking activities (involving granting credit facilities), financial holding activities, other financial intermediation, insurance activities, activities of pension funds, and trust activities.
Depending on the size of the company or the shareholders’ choice, the corporate bodies of a limited liability company are:
(i) the Shareholders’ Meeting;
(ii) the Management Board; and
(iii) the Supervisory Board and/or an Auditors’ Committee; a Supervisory Board/Auditors’ Committee is, in most cases, optional.
The corporate governance of a limited liability company may operate in a one-tier or a two-tier system. The two-tier system with the Management Board (zarzad) as the executive body running the operations of the company and the Supervisory Board (rada nadzorcza) or Auditors’ Committee (komisja rewizyjna) exercising permanent supervision over the company’s activities is mandatory for limited liability companies with share capital exceeding PLN 500,000 and with more than twenty-five shareholders. Companies that do not meet both of the above requirements may choose whether to operate in a one-tier (with only the Management Board) or two-tier system.
An obligatory corporate body in each limited liability company is the Shareholders’ Meeting (zgromadzenie wspolnikow) – the body making decisions concerning the company’s key issues, such as (by the book, i.e. unless the articles provide otherwise, where possible): the examination and approval of annual financial statements, amendments to the articles of association of the company (umowa spolki), disposal or encumbrance of the company’s business as a going concern or organized part thereof, acquisition or disposal of real property, appointment or dismissal of Management Board members, and other fundamental corporate activities, such as approving mergers, divisions, or transformations of the company or its dissolution. It is worth noting that most Shareholders’ Meeting resolutions may be recorded in the form of minutes taken in simple written form. However, Shareholders’ Meeting resolutions amending the company’s articles of association, approving mergers, divisions and transformations, approving the dissolution of the company or transfer of its registered seat abroad need to be recorded in the form of minutes taken by a notary public.
The CCC grants shareholders some discretion to determine the corporate governance of a limited liability company, including the organization and powers vested in the specific corporate bodies (especially the shareholders’ meeting), allowing the company’s articles of association to provide for modifications relative to the statutory model.
The corporate bodies of a joint-stock company are:
(i) the General Meeting;
(ii) the Supervisory Board; and
(iii) the Management Board.
Unlike in the case of limited liability companies, a joint-stock company may only operate in a two-tier system, with the Management Board as the executive body running the day to day operations of the company, and the Supervisory Board as the non-executive body, supervising the Management Board.
The corporate body representing all the shareholders of a joint-stock company is the General Meeting (walne zgromadzenie). Similar to the Shareholders’ Meeting in a limited liability company, the General Meeting is the body making decisions on the most important company matters such as (by the book, i.e. unless the statute provides otherwise, where possible): examination and approval of annual financial statements, amending the company’s statute (statut), disposal or encumbrance of the company’s business as a going concern or an organized part thereof, acquisition or disposal of real property, appointment or dismissal of the Supervisory Board members and other fundamental corporate activities, such as approving mergers, divisions, or transformations of the company or its dissolution. All resolutions of the General Meeting need to be recorded in the form of minutes taken by a notary public.
The shareholders of a joint-stock company are granted less leeway in determining the company’s corporate governance since in the case of joint-stock companies the CCC allows for fewer deviations from the statutory model.
The founders/shareholders of both a limited liability company and a joint-stock company may be one or more of the following: natural persons (osoby fizyczne), legal persons (osoby prawne), or unincorporated organizational entities that have legal capacity (jednostki organizacyjne niebedace osobami prawnymi, ktorym ustawa przyznaje zdolnosc prawna), e.g., partnerships.
There is no minimum number of shareholders required by law. Both a limited liability company and a joint-stock company may be incorporated by a single entity and operate as a single-member company. In such companies, the sole shareholder exercises all the powers vested in the Shareholders’ Meeting and the General Meeting respectively, however, while still observing the requirements regarding the form of taking the minutes prescribed by law. To the above rule, there is one exception: neither a limited liability company nor a joint-stock company may be incorporated solely by a single-member limited liability company.
It is worth noting that for a joint-stock company to be eligible to enter any listing on the WSE, either on the Main Market (being the regulated market) or on NewConnect (being a multilateral trading facility), it must meet certain criteria regarding the free-float of the shares.
The share capital of a limited liability company shall amount to at least PLN 5,000 and is divided into shares (udzialy) with the nominal value of one share being not less than PLN 50. In case of a joint-stock company, the share capital shall amount to at least PLN 100,000 and is divided into shares (akcje) with the nominal value of one share being not less than PLN 0.01. In order to incorporate a limited liability company, shares taken up in exchange for in-kind contributions shall be fully paid up no later than one year after the company’s registration. In joint-stock companies, in the case of shares taken up in exchange for cash contributions, at least one-fourth of the nominal value thereof shall be paid up prior to the company’s registration. Moreover, where shares are taken up exclusively in exchange for in-kind contributions or in exchange for both in-kind and cash contributions, the contributions amounting to at least PLN 25,000 shall be paid up prior to the company’s registration.
Under Polish law, in the case of both a limited liability company and a joint-stock company, a shareholder is a separate legal entity from the company and, as a matter of principle, takes no liability for the company’s obligations. From a practical point of view, the business risk is limited to the capital contributed to the company; save for certain exceptions discussed in more detail below, Polish corporate law does not provide for piercing the corporate veil regulations.
There are two statutory exceptions to the above-mentioned principle. First relates to the liability of shareholders of companies “in organization,” i.e., during the period following their formation (execution of the articles of association or the statute, respectively) and until their registration with the court registry. Shareholders of companies in organization shall be liable, jointly and severally with the company, for the company’s liabilities up to the value of the unpaid contributions set forth in, respectively, the articles of association or statute of the company.
The second exception relates to the recently adopted “holding law.” The new regulations allow to formalize existing corporate groups into so-called “groups of companies” with one dominant company. In a formalized group of companies, the dominant company may (if this is justified by the group’s interest) issue binding instructions to its subsidiaries. As a result, certain additional requirements being met, the dominant company may be held liable towards the subsidiary, its remaining shareholders, but also towards third parties – the subsidiary’s contractors, for damage resulting from the performance by the subsidiary of such binding instruction.
1.2. The Function of the Supervisory Board
As indicated in Section 1.1., a Supervisory Board or an Auditors’ Committee are – in the vast majority of cases – optional in limited liability companies. Shareholders of limited liability companies enjoy a right of direct supervision over the Management Board’s and the company’s activities. However, such right of individual supervision may be excluded in the articles of association in case a Supervisory Board or an Auditors’ Committee is established.
If a Supervisory Board is established in a given limited liability company, it exercises permanent supervision over the company’s activities in all aspects of its business. The Supervisory Board may inspect all documents of the company, request reports and explanations from the Management Board and employees, and audit the company’s assets. The specific duties and powers of the limited liability company’s Supervisory Board include:
(i) evaluation of the Management Board’s report on the operations of the company and the financial statements for the previous financial year with regard to their compliance with books, documents, and facts;
(ii) preparation and submission to the shareholders’ meeting of a written report on the activities of the Supervisory Board for the past financial year (Supervisory Board report);
(iii) requesting the Management Board, proxies, and persons employed by the company under an employment contract or performing certain activities for the company on a regular basis under a contract for work, a contract of mandate; etc. to prepare or submit any information, documents, explanations, etc. concerning the company, its subsidiaries, and affiliated companies (the Management Board shall not restrict access to such information and shall submit it promptly, no later than within two weeks of notification);
(iv) the possibility of establishing an ad hoc or standing committee consisting of members of the Supervisory Board to perform specific supervisory activities;
(v) the power to pass a resolution to have a certain matter relating to the company’s business or assets examined by a selected advisor (advisor to the Supervisory Board) at the company’s expense.
The articles of association may extend the powers of the Supervisory Board, and, in particular, provide for the obligation of the Management Board to obtain the consent of the Supervisory Board prior to performing the actions specified in the articles of association, and transfer to the Supervisory Board the right to suspend all or individual members of the Management Board in performance of their duties for important reasons (reserved for the Shareholders’ Meeting in the statutory model).
If an Auditors’ Committee is established in a given limited liability company, its duties include evaluation of the Management Board report on the operations of the company, the financial statements for the previous financial year, and motions of the Management Board concerning the distribution of profit or coverage of losses as well as drawing up and submitting to the Shareholders’ Meeting annual written reports presenting the outcome of the above-mentioned evaluation. Where there is no Supervisory Board in a company, the articles of association may provide for a broader scope of duties of the auditors’ committee.
The Supervisory Board or an Auditors’ Committee of a limited liability company shall be composed of at least three members appointed and removed by the Shareholders’ Meeting, however, the articles of association may provide for a different manner of appointing and removing members. Members of the Supervisory Board shall be appointed for a one-year term of office, unless the articles of association provide otherwise. A member of the Management Board, holder of a commercial proxy (prokurent), liquidator, head of branch or plant, chief accountant, attorney-at-law, or advocate employed with the company shall not, at the same time, be a member of the Supervisory Board or the auditors’ committee.
Establishing a Supervisory Board is mandatory in a joint-stock company as it shall exercise permanent supervision over the company’s activities in all aspects of its business. Shareholders of a joint-stock company are not entitled to exercise direct supervision over the Management Board and the company’s activities. Instead, they are entitled to request the Management Board to provide information concerning the company. However, the Management Board may refuse to provide such information if it could inflict damage on the company, an associated company, or a dependent company, partnership, or co-operative, in particular through the disclosure of technical, commercial, or organizational secrets of the business enterprise.
The Supervisory Board cannot direct or manage the affairs of the company. The key duty and power of the Supervisory Board are to continually supervise the company’s operations. For that purpose, the Supervisory Board may scrutinize any and all of the company’s documents, demand reports and explanations from the Management Board and employees of the company, and audit the state and condition of the company’s assets. The specific duties and powers of the joint-stock company’s Supervisory Board include:
(i) appointment and dismissal of Management Board members, unless the statute provides otherwise;
(ii) representation of the company in contracts between the company and a member of the company’s Management Board and in disputes with him;
(iii) granting consent for payment of interim dividends;
(iv) appointment of a statutory auditor to carry out a mandatory audit of the company’s financial statements if the statute provides so;
(v) indication of the dividend date, if the relevant resolution of the Shareholders’ Meeting does not indicate it.
The Supervisory Board may also suspend from the Management Board all or individual members thereof for important reasons and delegate members of the Supervisory Board, for a period of no longer than three months, to temporarily perform the duties of members of the Management Board who have been removed, resigned or who, for other reasons, are incapable of performing their duties. The statute may provide for a broader scope of powers of the Supervisory Board, and, in particular, provide for the obligation of the Management Board to obtain the consent of the Supervisory Board prior to undertaking actions set forth in the statute.
The Supervisory Board should be composed of at least three, and in public joint-stock companies – at least five, members appointed and dismissed by the General Meeting. However, the statute may provide for a different manner of appointing as well as dismissing the Supervisory Board members. The term of office of a member of the Supervisory Board shall be no longer than five years. A member of the Management Board, a liquidator, persons reporting directly to a member of the Management Board or a liquidator, holder of a commercial proxy, head of a branch or a plant, as well as chief accountant, attorney-at-law, or advocate employed at the company shall not, at the same time, be a member of the Supervisory Board.
Both in the case of limited liability companies and joint-stock companies, in performance of their duties, members of the Supervisory Board (or the Auditors’ Committee if applicable) shall exercise due diligence arising from the professional nature of their activities and be loyal to the company. A member of the Supervisory Board (or the auditors’ committee) shall, in the performance of their duties, exercise due diligence arising from the professional nature of their activities and be loyal to the company, e.g., not disclose company secrets, even after their mandate has expired.
To avoid the risk that one Supervisory Board member, by abusing their supervisory powers, adversely affects the ordinary conduct of the company’s operations, the general rule under the CCC is that the Supervisory Board exercises its duties collectively, i.e., each supervisory action requires an appropriate resolution of the Supervisory Board. An exception to this rule is the possibility of establishing an ad hoc or standing committee of the Supervisory Board or, only in joint-stock companies, the delegation of a Supervisory Board member to individually perform certain supervisory actions – this also requires a specific resolution by the Supervisory Board. Establishing a committee of the Supervisory Board or delegating a Supervisory Board member to individually perform certain supervisory actions shall not relieve other members of their responsibility for exercising supervision in the company.
Members of the Supervisory Board (or the Auditors’ Committee) are liable towards the company for any damage inflicted through an act or omission contrary to the provisions of law or, respectively, the articles of association or statute of the company unless no fault is attributable to such member. However, members of the Supervisory Board (or the auditors’ committee) shall not be in breach of the obligation to take due care arising from the professional nature of their activities if, acting loyally to the company, they act within the limits of reasonable economic risks (the so-called business judgment rule), including on the basis of information, analyses, and opinions which should be taken into account in the relevant circumstances when carrying out a careful assessment.
1.3. The Function of the Executive Board
The Management Board is the sole executive body of the company authorized to act for and on its behalf. The main function of both limited liability companies’ and joint-stock companies’ Management Boards is to represent the company towards third parties (i.e., binding the company) and manage the company’s affairs. The scope of these duties entails an obligation to act in the company’s best interest and the Management Board members, who owe a duty of care towards the company, are obliged to focus on the company’s welfare, rather than the interests of its shareholders or the holding group. Both in the case of a limited liability company and a joint-stock company, their shareholders may be appointed to the Management Board.
The limited liability company’s Management Board comprises at least one person. Its members are appointed by the Shareholders’ Meeting unless the company’s articles of association provide otherwise. A shareholders’ meeting resolution or the articles of association may specify the requirements that Management Board member candidates should meet, e.g., regarding their qualifications or education.
There are no statutory limitations regarding the maximum length of the Management Board members’ term of office. A Management Board member may at any time resign or be dismissed, either for cause (in particular for a breach of the articles of association) or without cause, but the articles of association may limit the right to dismiss a member to significant reasons.
In the case of joint-stock companies, Management Board members are appointed by the Supervisory Board, unless the statute provides otherwise. In practice, the statute often provides for deviations from this rule, e.g., granting the individual shareholders the right to directly appoint and dismiss members of the Management Board. Requirements to be met by the Management Board member candidates may be specified by the company’s statute or the General Meetings’ resolution.
The term of office of the joint-stock company’s Management Board members should be no longer than five years. Reappointment is permitted. A Management Board member may at any time resign or be dismissed, either for cause (in particular for a breach of the statute or the Management Board’s bylaws) or without cause, but the statute may limit this right to dismiss for significant reasons only. A Management Board member may also be suspended by the Supervisory Board.
Moreover, the joint-stock company’s Management Board shall be obliged, without additional notice, to provide the Supervisory Board with information on:
(i) resolutions of the Management Board and their subject matter;
(ii) the situation of the company, including with regard to its assets, as well as significant circumstances related to the conduct of the company’s affairs, in particular in the operational, investment, and personnel areas;
(iii) progress in the implementation of the designated directions of development of the company’s activities, whereas it should indicate deviations from the previously designated directions, along with the statement of reasons for deviations;
(iv) transactions and other events or circumstances which significantly affect or may affect the financial situation of the company, including its profitability or liquidity;
(v) changes to information previously provided to the Supervisory Board if such changes materially affect or may affect the situation of the company.
Members of both limited liability companies’ and joint-stock companies’ Management Boards shall, in performance of their duties, exercise due diligence arising from the professional nature of their activities and be loyal to the company. Just like members of the Supervisory Board (or the Auditors’ Committee), Management Board members are liable to the company for any damage inflicted through an act or omission contrary to the provisions of law or, respectively, the articles of association or statute of the company, unless no fault is attributable to such member. No breach of the obligation to take due care arises if the Management Board member acted loyally to the company and within limits of reasonable economic risks (the so-called business judgment rule), including on the basis of the information, analyses, and opinions which should be taken into account in the relevant circumstances when carrying out a careful assessment.
The above liability exemption does not apply if the grounds to declare the bankruptcy of a limited liability company or a joint-stock company do occur, and the company’s Management Board members fail to file a petition for bankruptcy in accordance with the Polish Act on Bankruptcy Law of February 28, 2003. In such case, if the potential execution against the company proves ineffective, the company’s Management Board members shall be jointly and severally liable for the company’s liabilities towards third parties, as well as the company’s tax arrears.
1.4. Conflicts of Interest and Related Party Transactions
In the event of a conflict of interests between either a limited liability company or a joint-stock company and a member of its Management Board, their spouse, relatives and second-degree next of kin, and persons with whom the member of the management has a personal relationship, the member of the Management Board should disclose the conflict of interests and refrain from participating in the settlement of such issues and may request that this fact be recorded in the relevant minutes of the meeting of the board.
A member of the Management Board may not, without the company’s consent, engage in a competitive business or participate in competitive entities as a partner in a partnership or a civil law partnership, or a member of the authorities of a company, or participate in any competitive legal person as a member of its authorities. The above prohibition also applies to participation in a competitive company, if a member of the Management Board holds at least 10% of shares in such company or the right to appoint at least one member of the Management Board. Unless, respectively, the articles of association or the statute provide otherwise, consent shall be granted by the authority which has the power to appoint the Management Board.
Under Polish law, there are no rules regarding a limited liability company’s related party transactions. In the case of joint-stock companies, such rules are in place; different for private and listed joint-stock companies. The conclusion by a private (not listed) join-stock company with an affiliated company of a transaction the value of which, taken together with the value of transactions concluded with the same company during a given financial year, exceeds 10% of the total assets of the company within the meaning of the accounting regulations, determined on the basis of the last approved financial statements of the company, shall require the approval of the Supervisory Board, unless otherwise provided for in the statute of the company.
In the case of listed joint-stock companies, conclusion of a transaction with an affiliated entity, the value of which exceeds 5% of the total assets within the meaning of the accounting regulations, determined on the basis of the last approved financial statements of the company, requires the consent of the company’s Supervisory Board. When making a decision on granting consent to the conclusion of such a transaction, the Supervisory Board takes into account whether it is possible to prevent the affiliated entity from taking advantage of its position and ensuring appropriate protection of the interests of the company and shareholders not being affiliated entities, including minority shareholders. The company must disclose on its website the information about such transaction no later than at the time of conclusion. Such information contains:
(i) the business name of the affiliated entity with which a transaction is concluded, and in the case of entities affiliated being natural persons – their first and last name;
(ii) the description of the nature of relations between the company and the affiliated entity with which the transaction is concluded;
(iii) the date and value of the transaction;
(iv) information necessary to assess whether the transaction has been concluded on market terms and whether it lies in the legitimate interest of the company and shareholders not being affiliated entities, including minority shareholders.
Listed companies are also subject to Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse (market abuse regulation) and repealing Directive 2003/6/EC of the European Parliament and of the Council and Commission Directives 2003/124/EC, 2003/125/EC and 2004/72/EC (MAR), which provides for a reporting obligation on insiders’ transactions. Pursuant to MAR, listed companies must disclose information on transactions on the company’s securities done by individuals discharging managerial responsibilities as well as persons closely associated with them.
1.5. Legal Framework for Large Companies
As mentioned in Section 1.1., there are additional regulations applicable to join-stock companies listed either on a regulated market or a multilateral trading facility. Under Polish law, these are mainly the Act on Public Offer, MAR, and the WSE Best Practice, with additional regulations promulgated in other legislation.
The WSE Best Practice, nicknamed the WSE’s corporate governance code, contain several postulates and recommendations regarding the listed companies’ corporate governance, applied according to the comply-or-explain approach. These relate to disclosure policy, investor communications, functioning of the management and Supervisory Boards, internal systems and functions, conduct of the General Meetings, shareholders’ relations, conflict of interest, related party transactions, and remuneration of corporate bodies members. In particular, pursuant to the WSE Best Practice, each listed company should maintain efficient internal control, risk management, and compliance systems and an efficient internal audit function adequate to the size of the company and the type and scale of its activity.
Moreover, pursuant to the Act of May 11, 2017, on certified auditors, audit firms and public supervision, listed companies must establish an Audit Committee (komitet audytu) (within the meaning of the Regulation (EU) No 537/2014 of the European Parliament and of the Council of 16 April 2014 on specific requirements regarding statutory audit of public-interest entities and repealing Commission Decision 2005/909/EC). The Audit Committee shall consist of at least three members, appointed by the Supervisory Board from its members. At least one member of the audit committee shall have knowledge and skills in accounting or auditing. The majority of members of the audit committee, including its chairman, must be independent of the company (e.g., must not be a person representing the controlling shareholder). The powers and duties of the audit committee include, in particular:
(i) monitoring the financial reporting process, the effectiveness of internal control systems and risk management systems, and internal audits, including with regard to financial reporting and the performance of auditing activities, in particular, the performance of the audit by the audit firm;
(ii) controlling and monitoring the independence of the auditor and audit firm, in particular when services other than audit are provided to the company by the audit firm;
(iii) informing the Supervisory Board of the results of the audit and explaining how the audit contributed to the integrity of financial reporting in the public interest entity, as well as what role the audit committee played in the audit process.
2. Corporate Governance Framework
2.1. Transparency and Public Disclosures
Under Polish law, transparency and disclosures to be made by private (non-listed) companies are limited. The main publicly available source of information regarding Polish companies is the registry of entrepreneurs of the National Court Register (rejestr przedsiebiorcow Krajowego Rejestru Sadowego) (NCR), containing the basic data regarding the company, including its financial statements, shareholding, the composition of the corporate bodies, and manner of representation. The ccope of mandatory disclosure is statutorily regulated. All entries in the NCR shall also be published in the Court and Business Gazette (Monitor Sadowy i Godpodarczy). Such information contained in the NCR is easily accessible through the NCR’s website. Each company is obliged to update its information disclosed in the NCR, while the underlying documents and information concerning the company should be announced or filed with the registry court. Such documentation includes, in particular, the articles of association of the company and all its updates, acts of appointment of the corporate bodies’ members, and acts regarding the share capital increase or reduction. The underlying documentation filed with the registry court is also publicly available, however, for inspection at the court’s office, not on the NCR’s website. Moreover, joint-stock companies must operate their own websites, where they are obliged to publish all corporate announcements required by law or by their statute. The requirement to maintain a website is not applicable to limited liability companies.
Additionally, both limited liability companies and joint-stock companies are required to disclose their ultimate beneficial owners in the respective central register – Central Register of Ultimate Beneficiaries (Centralny Rejestr Benficjentow Rzeczywistych).
Further transparency, disclosure, and/or registration obligations may apply depending on the business activities carried out by the given company.
In the case of listed companies, the disclosure obligations are more extensive. Under Polish law, the following types of information require disclosure, and must be notified, both to the public and to the Polish Financial Supervision Authority (Komisja Nadzoru Finansowego) (PFSA):
(i) periodic information – periodic consolidated financial statements and statements made by the responsible persons;
(ii) inside information/price sensitive information – information of a precise nature, which has not been made public, relating, directly or indirectly, to the company or to one or more financial instruments, and which, if it were made public, would be likely to have a significant effect on the prices of those financial instruments or on the price of related derivative financial instruments;
(iii) on-going information – mandatory information on certain one-off events in the life of the Company listed expressly in the regulations;
(iv) corporate events – information on corporate events in the life of the Company provided to the stock exchange and relevant securities depository – in Poland, the Central Securities Depository of Poland (Krajowy Depozyt Papierow Wartosciowych) – to enable them to service General Meetings, payments of dividends and conduct similar actions;
(v) notifications of major holdings – notifications filed by larger shareholders with information on crossing large shareholding thresholds;
(vi) notifications on the company’s acquisitions or the disposal of own shares;
(vii) insiders’ notifications (please see Section 1.4.)
(viii) reports on corporate governance – reports on compliance or non-compliance with the WSE Best Practice.
2.2. Public Authorities Responsible for Monitoring Corporate Governance
In Poland, there is no public authority directly monitoring corporate governance. In case of the private companies, a similar function is performed by the NCR, which inspects the documents received in connection with the application for entry for their compliance with statutory law. In the case of listed companies, the PFSA is the authority conducting their supervision, however mostly in respect of compliance with their information and reporting obligations.
Poland closely follows the ESG regulatory requirements regarding non-financial reporting and disclosures provided by the European Union. Domestically they are implemented through several laws, but mainly by the Polish Accounting Act of September 29, 1994 (Ustawa o rachunkowosci) (Accounting Act). Apart from the Accounting Act, there are also other regulations concerning the disclosure of information about the environment, society, and corporate governance in Poland. They focus on clean energy as well as regulating air, land, and water pollution, protecting human rights, workers, and consumers, protecting animal welfare, preventing unfair competition, and fostering equality.
The audit of the financial statements, including non-financial parts, should be carried out by a certified public accountant listed in the register of certified public accountants maintained by the National Council of Certified Public Accountants (Krajowa Rada Bieglych Rewidentow). The manner in which auditors perform their work is supervised by the Polish Audit Supervision Agency (Polska Agencja Nadzoru Audytowego). The supervision of the Polish capital market, where most of non-financial reporting and disclosures may appear is carried out by the PFSA.
2.4. Internal Controls and Fraud Measures
Audits of internal control systems are present in the public sector and focus on the proper use of public finances and the operation of public institutions.
In the private sector audits of internal controls systems are limited. The obligation to implement an internal control system and its regular audits concerns public companies and financial institutions, e.g., banks or brokers. These rules do not concern other parts of private markets but may serve as a benchmark for elaborating best practices in those other sectors.
There is a regulation defining rules for the assessment of internal audit independence in the public sector, i.e., the Polish Act on Public Finances dated August 27, 2009 (Ustawa o finansach publicznych).
3. Shareholder And Board Committees
3.1. What Committees Are Prescribed by Law?
Apart from corporate bodies described in Section 1., there are no other mandatory boards or committees in either a limited liability company or a joint-stock company. As indicated before, the articles of association or statute of the company may provide for the establishment of specialized committees within, respectively, a Shareholders’ Meeting or a General Meeting, a Supervisory Board, or a Management Board, but such committees may perform only advisory functions, as they cannot be assigned with the powers and duties of the main corporate bodies.
3.2. What Committees Are Mandatory for Large Companies?
Please see our remarks in Section 1.5.
3.3. Remuneration of Supervisory and Executive Board Members
There are no statutory rules regarding the remuneration of the management and Supervisory Board members in private companies. In the case of public companies, the Act on Public Offer requires the company’s General Meeting to adopt, by way of a resolution, a remuneration policy with regard to the members of the Management Board and the Supervisory Board. The solutions adopted in the remuneration policy should contribute to the implementation of a business strategy, long-term interests, and stability of the company. The remuneration policy includes in particular:
(i) a description of fixed and variable remuneration components, together with bonuses and other cash and non-cash benefits which may be granted to the members of the Management Board and the Supervisory Board;
(ii) an indication of mutual proportions of the remuneration components;
(iii) an explanation of the manner in which the working conditions and remuneration conditions of the company’s employees other than the members of the Management Board and the Supervisory Board were taken into account when establishing the remuneration policy;
(iv) an indication of the period for which employment contracts, mandate contracts, task-specific contracts, or other contracts of a similar nature have been concluded with the members of the Management Board and the Supervisory Board, together with an indication of the periods and conditions of termination of such contracts, and if no such contract has been concluded with a member of the Management Board or the Supervisory Board – an indication of the type and period for which the legal relationship between said member of the Management Board or of the Supervisory Board with the company has been established, as well as the period and conditions of termination of the legal relationship;
(v) a description of the main features of additional pension and disability pension schemes and early retirement schemes;
(vi) a description of the decision-making process used in order to establish, implement, and review the remuneration policy;
(vii) a description of measures taken to avoid conflicts of interest related to the remuneration policy or management of such conflicts of interest.
Additional recommendations regarding the remuneration policy and the remuneration of the supervisory and Management Board members are provided in the WSE Best Practice.
Specific regulations apply in the case of state-owned companies.