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  • The amendment to the National Court Register Act

Shareholder shall pay a fine for the failure to appoint a member of management board

27 April 2018

Wiesław Łatała , Managing Partner, Legal Adviser |

The amendment to the National Court Register Act gives the real possibilities of enforcing the obligation to appoint of the management board.

The aim of amendment

15th March 2018 both the amendment to the National Court Register Act and other amendments of other legal acts enter into force. The amendment’s main purpose is to protect the certainty and safety of legal transactions by establishing a legislative instruments which allow registry courts to impose an obligation on shareholder to set up the management board.

What will change?

So far, when shareholders did not set up the management board, the registry court did not have any instruments as a means of exerting pressure on shareholders to fulfill their duties. In the absence of a management board the registry courts called shareholders for set up the management board within a given period. The request could remain unanswered due to the lack of negative consequences for shareholders who fail to fulfill their obligations. This concerns, inter alia, the situation of failure to appoint a member of management board, in order to avoid of liability risks. Under these circumstances the court officer for the company was established, but legal guardianship is expensive and time-consuming. Usually that leads not to the appointment of the management board but at most to the dissolution of the company. This situation shall change - in case of failure to appoint a members of management board – a fine of up to 10.000 PLN may be imposed on shareholders (with the possibility of recurrence).

There is nothing to be afraid of

The scope of the fine will be limited and the legal measure should only be used in justified situations. Registry court can impose a fine, but court must analyze the situation in the company and assess the desirability of imposing a fine. If the shareholder proves that he has done everything with due care to appoint a management board, but this has not been possible for reasons beyond his control, the court will refrain from imposing a fine. The fine are not truly penal, it will be a stimulus for passive shareholders, which shall induce shareholders to act. Thus, fine will be applied to shareholders who completely underestimate their role in the company.  Therefore, in order to avoid a fine, when a management board has not been appointed in the company, it will be necessary to demonstrate that efforts to establish it was made.