Amendment to the Commercial Companies Code from 13 October 2022
In less than a month, on 13 October 2022, the amended provisions of the Commercial Companies Code will enter into force. This amendment is one of the major changes in company law so far.
The long-pending amendment to the Commercial Companies Code, signed on 4 April 2022 by the President, will cover, among other things, the following areas of company law:
1. Holding law
The new rules are intended to enable companies that will participate in a group of companies to pursue a common interest. A group of companies is formed by a parent company and its subsidiary or subsidiaries, which on the basis of a resolution on participation in a group of companies, are guided by a common intra-group strategy. The new regulations concerning groups of companies will enable, among other things:
- the issuing by the parent company of binding instructions to companies concerning the conduct of the company's affairs;
- strengthening the influence of the parent company over the subsidiaries by i.a. the parent company's right of access to documents of the subsidiary;
- the introduction of a squeeze-out institution in a limited liability company giving the parent company the possibility of compulsory purchase of minority shareholders’ shares of a subsidiary limited liability company in a situation where it directly holds at least 90% of the share capital of the subsidiary.
2. Liability of members of the governing bodies
Another important change concerns the liability of members of management and supervisory boards (as well as members of audit committees and liquidators) by introducing of the Business Judgment Rule. This will make it possible to exempt from liability for damage caused to the company as a result of decisions of the governing bodies that turned out to be erroneous, provided that they were taken within the limits of reasonable business risk based on information adequate to the circumstances.
3. Strengthened role of the supervisory board
After the amendment, the supervisory board will receive powers that will enable it, among other things, to request from the management board information about the company's situation, progress in the implementation of development plans (strategies), transactions and other business-significant events, as well as the obligation to immediately provide information and documents that the supervisory board requests within 2 weeks.
In addition, the amendment introduces the possibility of appointing an advisor to the supervisory board to examine a specific issue of the company's activity or its assets.
4. Form of meetings of the management board and the supervisory board
Both the meetings of the supervisory board and the management board will be formalized, which will entail, among other things, that the resolutions of these bodies will have to be recorded.
5. Changes concerning the management boards of companies
The term of office of the management board members after the amendment will be calculated in full financial years. After the expiry of the term of office, the amendment introduces an additional obligation of loyalty and secrecy as to the information obtained during the term of office. The list of offences in respect of which a person convicted by a final judgment may not act as a member of the management board, supervisory board, audit committee, liquidator or commercial proxy will also be extended.
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Learn more: The biggest amendment to the Commercial Companies Code in 20 years