Obligation to adopt a resolution on the continued existence of the company – Article 233 CCC

When approving the financial statements, it should be verified that the balance sheet does not show the so-called qualified loss. If it arises, the Commercial Companies Code (CCC) imposes on the management board of a limited liability company the obligation to convene without undue delay a general meeting in order to adopt a resolution on the continued existence of the company.

The objective of this provision is to inform shareholders about the poor financial situation of the company and to induce them to take corrective actions (e.g. make additional capital payments, increase the share capital or to take out a loan).

What is a qualified loss?

A qualified loss is a loss exceeding the threshold specified in Article 233 §1 CCC, i.e. a loss in excess of the sum total of the supplementary and reserve capitals and half of the initial capital. When calculating the loss, it is necessary to take into account the amount of losses from all previous years. The need to convene a general meeting of shareholders is assessed on the basis of the annual balance sheet, forming a part of the financial statements, or the current balance sheet.

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Convening a shareholders’ meeting

The shareholders’ meeting should be convened by adopting an appropriate resolution, in compliance with the formal requirements provided for in the CCC. Action without undue delay refers both to the convening of the general meeting and the date on which it is held. In practice, a resolution on the continued existence of the company may be adopted at an extraordinary or annual meeting – convened as soon as possible. The agenda of the annual general meeting of shareholders should include an item concerning the adoption of a resolution on the continued existence of the company.

Penalties for non-compliance with obligations

In the event of failure to convene a general meeting of shareholders, the company’s management board exposes itself to liability for damages (if the company suffers damage as a result of such failure) and criminal liability (fine up to PLN 20,000). The management board that correctly convened the shareholders’ meeting is not liable for incorrect decisions or their absence. This liability lies with the shareholders.

In a single-member company in which a member of the management board is also the sole shareholder, the provision of Article 233 §1 CCC does not apply.

Therefore, it should be remembered that when approving the financial statements, if the conditions for adopting a resolution on the continued existence of the company are met, the management board and the shareholders fulfill their obligations.

 Author:

Anna Szczerba
Director of the Company Law Department
TGC Corporate Lawyers

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