{"id":3044,"date":"2024-12-18T12:02:37","date_gmt":"2024-12-18T11:02:37","guid":{"rendered":"https:\/\/www.ecovis.com\/poland\/?p=3044"},"modified":"2024-12-18T12:09:05","modified_gmt":"2024-12-18T11:09:05","slug":"management-control-in-a-limited-liability-company-risk-protection-mechanisms-and-the-liability-of-the-management-board","status":"publish","type":"post","link":"https:\/\/www.ecovis.com\/poland\/blog\/management-control-in-a-limited-liability-company-risk-protection-mechanisms-and-the-liability-of-the-management-board\/","title":{"rendered":"Management control in a limited liability company: Risk protection mechanisms and the liability of the management board"},"content":{"rendered":"

Conducting business in a limited liability company (sp. z o.o.) requires appropriate oversight of the actions of the members of the management board. Under the Commercial Companies Code, the management board members have broad powers to conduct business and represent the company. Although such an arrangement is necessary for the smooth operation of the company, it does come at the risk of abusive or erroneous decisions that may jeopardise the financial condition and reputation of the company.<\/strong><\/p>\n

Control mechanisms in the articles of association<\/h3>\n

In order to mitigate the risks arising from the actions or omissions of management board members, it is worth considering additional control mechanisms in the articles of association. Examples include:<\/p>\n

    \n
  1. Requirement to obtain consent for key decisions:<\/strong>
    \nThe management board may be required to obtain the approval of a supervisory authority (e.g. a supervisory board) or the shareholders before making decisions concerning significant areas of the company\u2019s business.<\/li>\n
  2. Limits on the value of transactions:<\/strong>
    \nThe articles of association may specify a maximum value of transactions that the management board may enter into without additional approval from shareholders or the supervisory board.<\/li>\n
  3. Procedures for related party transactions:<\/strong>
    \nDetailed reasons and approval of any related party agreements or the granting of additional benefits, such as bonuses, to management board members may be required.<\/li>\n
  4. Reporting on the state of the company\u2019s business:<\/strong>
    \nManagement board members can be required to submit regular reports on the financial situation, ongoing projects or business risks, which will allow shareholders and supervisory authorities to better monitor the company\u2019s activities.<\/li>\n<\/ol>\n

    The management board regulations \u2013 a tool to promote transparency<\/h3>\n

    The management board regulations are an additional document that can set out controls put in place in the articles of association. It should include:<\/p>\n