Contracts executed by the company with a member of the management board

During the lifetime of a limited liability company, a person holding the position of a member of the management board may wish to enter into a contract with the company.

This type of conflict of interest arises most frequently when concluding an employment contract with a management board member. The provisions of the Commercial Companies Code expressly prohibit board members from acting on both sides of a contract. In such a case, the company is represented by the supervisory board or a commercial representative appointed under a resolution of the meeting of shareholders.

The regulations do not explicitly indicate how the supervisory board should be represented when signing a contract with a member of the management board. They state that the supervisory board should act collectively, unless the company’s articles of association or the regulations of the supervisory board provide otherwise.

The creation of a supervisory board in a limited liability company is not mandatory (unless it is a large company with a share capital exceeding PLN 500,000 and more than 25 shareholders). If there is no such board, the meeting of shareholders is required to adopt an appropriate resolution appointing a commercial representative in this respect. Such a resolution should be adopted by a written vote and cannot be adopted by circulation or without holding a meeting.

The situation becomes more complicated in the event that a shareholder is also the sole member of the management board. In this case, a legal transaction between the shareholder and the company he or she represents must be in the form of a notarial deed, and the notary must notify the competent registry court of the legal transaction via an ICT system.

A similar restriction also applies to joint-stock companies, which are also required to act through a supervisory board or a commercial representative appointed in a resolution of the general meeting.