Under the Polish Commercial Companies Code (known as the ‘code’), unless the articles of association provide otherwise, all shareholders have equal rights and obligations. It is possible for a company to issue preference shares with preference as to voting and to the payment of dividends. The preference privileges are limited to not more than three votes per share and to a right to receive a dividend not more that fifty per cent greater than the ordinary dividend.
Each Polish company must have a management board which manages the company. In addition, a limited liability company may have a supervisory board. The supervisory board is optional unless a company has a share capital exceeding PLN 500,000 (the minimum share capital a limited liability company must have is PLN 5,000), and there are more than 25 shareholders. If a company does have a supervisory board, the articles of association may exclude or limit the exercise of individual a control by shareholders. If the company does not have a supervisory board, each shareholder may exercise a right to supervise the company.
This right of supervision allows the shareholder, together with a person he so authorises - for example, a lawyer or an accountant - at any time to inspect the books and documents of the company, to draw up a balance sheet for his use or to request explanations from the management board. The management board may refuse to give explanations to the shareholder or to provide books and documents for inspection if there exists a justified concern that the shareholder may use them for purposes contrary to the interests of the company and as a result may cause material damage to the interests of the company.
If the management board does refuse, the shareholder may demand that the matter be resolved by a shareholders resolution which must be adopted within one month from the date of the demand. The shareholder may also apply to the court for the management board to be obliged to make the information available if the resolution of shareholders is not adopted within this time limit.
Resolutions of shareholders are adopted at general meetings. Resolutions may be adopted without the holding of an actual meeting if all the shareholders consent in writing to the decision to be taken or to a written vote. In addition to any matters that may be specified in the articles of association as requiring a resolution of shareholders, the code requires a resolution of shareholders for:
· The consideration and approval of the management board report on the operations of the company, the financial report for the previous financial year, and the granting of the approval of the performance of duties by the members of the management board.
· A decision on claims for redress of damage caused on the formation of the company or its management or supervision.
· The disposal of the business or part of the business of the company.
· The acquisition or disposal of real estate, unless the articles of association provide otherwise.
· The repayment of additional contributions to shareholders.
· The conclusion of a contract to manage a dependent company.
· The disposal of a right or the contracting of an obligation to do something of a value exceeding twice the amount of the share capital.
Within six months of the end of the financial year, each company must hold an ordinary meeting of shareholders (in effect, the annual general meeting) which must:
· Consider and approve the management board report on the operations of the company and the financial report for the previous financial year.
· Adopt a resolution on the division of profits or financing of losses.
· Grant approval of the performance of duties by the members of the management board.
These matters require a meeting and may not be dealt with by a written resolution.
Turning now to individual shareholding thresholds, the following percentages of votes (either one shareholder or a number of shareholders acting together) are required:
10 %: To request that an extraordinary general be convened and that certain matters be place on the agenda for the next general meeting. The request must be submitted to the management board in writing not later than one month prior to the propose date of the meeting. The articles of association may grant this right to a lower percentage figure.
25% +1 vote: 25 per cent plus one vote to block a resolution on a substantial change in the objects of the company.
33.3% + 1 vote: A one third majority plus one vote allows the blocking of a resolution to: amend the articles of association, dissolve the company or transfer its business or to reduce the share capital. An increase in share capital will constitute an alteration to the articles of association unless the articles provide that increases up to a specified figure do not require an alternation of the articles in which case no further shareholder approval is needed.
50 % +1 vote: A simple majority is required for all resolutions for which the law or the articles of association do not impose higher majorities. This would include, for example, the appointment and removal of management board members. A right to apply to the court to expel a shareholder from the company if all the remaining shareholders representing more than half of the share capital so apply.
66.6%: A two third majority to pass a resolution to amend the articles of association, dissolve the company or transfer its business, to reduce the share capital.
75%: To pass a resolution on a substantial change in the objects of the company in the presence of shareholders representing at least half the share capital, to pass a resolution on merger.
Under the code there are no quorum requirements – unless the articles of association provide otherwise a general meeting is valid irrespective of the number of shares represented. As noted above, a resolution approving merger under the code requires a quorum of at least fifty per cent of the shareholders.
The code sets minimum thresholds and it is possible to amend the articles of association to provide higher voting thresholds and thus protect the position of the minority shareholder in the joint venture. Indeed, a typical joint venture arrangement will involve not only ensuring that the joint venture company’s articles of association satisfy the requirements of all parties to the joint venture but also a separate shareholders’ agreement setting out how the parties will, as amongst themselves, deal with certain commercial issues arising out of their business relationship.
A resolution of shareholders which contravenes the articles of association or good practice or which harms the interests of the company or which is aimed at harming the a shareholder may be challenged in a action to annul the resolution.
The following persons may challenge a resolution (and holding one share is sufficient):
· Management board, supervisory board audit committee and individual members of those bodies.
· A shareholder who voted against the resolution and, following its adoption, requested his objection be recorded.
· A shareholder who without valid reason was prevented from participating in the meeting.
· A shareholder who was not present at the meeting if the meeting was wrongly convened or the resolution concerned a matter not on the agenda.
· In the case of a written vote, a shareholder who was not included in the vote, who did not consent to a written vote or who voted against the resolution and lodged an objection within two weeks on receiving notice of the resolution.
An action to annul a resolution must be brought within one month of the date of receipt of the notice of the resolution but not later than six month from the date of adoption of the resolution. In addition, the same persons may bring an action against the company for a declaration of the invalidity of a resolution of shareholders that is contrary to law.
In a future article, we will look at other aspects of joint venture arrangements.
Nicholas Richardson
Richardson & Partners
For further information about Richardson & Partners, please call +48 (0) 22 653 6900
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