A limited-liability company is represented by its management board. The right of the management board to represent the company covers all actions, including entering into contracts, court actions, making declarations, accepting declarations, etc. It cannot be restricted. However, the management board cannot represent the company in its dealings with a member of the management board.

If the management board includes a single person, then regardless of the provisions of the articles of association, the sole member of the management board, acting alone, represents the company. In the case of a multi-member board, the rules of representation are set forth in the articles of association, but if the articles of association do not address this issue, two members of the management board acting jointly or one member of the management board acting together with a commercial proxy are required to make declarations on behalf of the company.

But sometimes the parties to a transaction forget that representation of a company is not the exclusive domain of the management board, and the Commercial Companies Code provides for certain exceptions to this rule. One of the most significant is representation of the company in its dealings with a member of the management board. In a contract between the company and a management board member, or in a dispute with a management board member, the company is represented by the supervisory board or an attorney-in-fact appointed by a resolution of the shareholders meeting. This regulation is intended to protect the interests of the company (and thus its shareholders) in the event that the interests of the board member conflict with the interests of the company. In this case, violation of the rules of representation means that the act (such as a contract) is invalid.

In the Polish legal system, there are other examples of these types of protections. For example, if the interests of the company conflict with the interests of a management board member, or his or her spouse, relatives and kin up to the second degree, or persons with whom he or she is personally related, the management board member should disclose the conflict and abstain from participating in determination of the matter. The management board member may also request that this fact be noted in the minutes. Such safeguards are necessary, as conflicts of interest are not at all uncommon. Below we will focus on selected practical problems related to representation of the company by a special attorney-in-fact appointed by a resolution of the shareholders meeting.

Attorney-in-fact of shareholders meeting and attorney-in-fact of the board

The special attorney-in-fact of the shareholders meeting has a statutorily defined scope of authority (representation in relations with the management board specified in the resolution appointing the attorney), different from the scope of authority of an attorney-in-fact for the company appointed by the management board.

The management board may not grant a power of attorney or a commercial proxy to represent the company in its dealings with a member of the company’s management board.

On the other hand, the shareholders meeting may neither delegate the power to appoint a special attorney-in-fact to another body of the company, nor itself directly act in place of the attorney-in-fact appointed by resolution, and represent the company in relation to a member of the management board. Unfortunately, such temptations occur especially in wholly-owned companies, where the sole shareholder exercises all the powers of the shareholders meeting.

Limitations on who can serve as a special attorney-in-fact

The code does not contain explicit restrictions on who can be a special attorney-in-fact for the shareholders meeting. (There are explicit restrictions, for example, on a shareholder’s proxy at the shareholders meeting: neither members of the management board nor employees of the company can serve as such proxies.)

Since there is no such explicit restriction, it could be argued that the shareholders meeting may appoint as a special attorney-in-fact a member of the management board (other than the one at issue) or an employee of the company.

As for the members of the management board, in practice, different views are presented in this regard. Some argue that this is permissible, there is no outright ban, and the shareholders are free to decide whom to appoint as special attorney-in-fact. Others believe that a management board member cannot be a special attorney-in-fact, as this would amount to impermissible representation of the company by the board in its dealings with the board. And they argue that there still would be a conflict between the interests of the company and the management board member handling the case of a person with whom he or she works on a permanent basis as part of the management board. Moreover, a conflict of interest could arise between a board member appointed as special attorney-in-fact to represent the company with respect to another board member. Then that management board member would have to abstain from participating in the case.

Form for special power of attorney

Another issue is the form of the special power of attorney, i.e. whether the rule of “derivative form,” as in the case of other powers of attorney, applies or not. (“Derivative form,” under Art. 99 §1 of the Civil Code, means that if some special form is required for a legal act, a power of attorney authorising performance of that act requires the same special form.) This is not explicitly addressed in the law, but it seems that since the attorney-in-fact is to be appointed by a resolution of the shareholders meeting, and the Commercial Companies Code indicates that such a resolution may in principle be adopted in ordinary written form, derivative form is not required. Thus, a resolution granting a power of attorney in ordinary written form should be sufficient, even for an action for which a form more rigorous than written form is required (e.g. a sale of real estate by deed between the company and its management board member).

This was also the view adopted by the Supreme Court of Poland in the judgment of 15 June 2012 (case no. II CSK 217/11), holding that the provisions of the Civil Code do not apply to the form of a special power of attorney granted by the shareholders meeting, and the delegation of powers to the attorney takes place in a special procedure, i.e. on the basis of a resolution of the shareholders meeting, the form of which is regulated in the Commercial Companies Code. The court pointed out that the act of appointment, which is a resolution of the shareholders meeting, is subject only to the rules set forth in the Commercial Companies Code. While regulating the method and procedures for adopting resolutions, its provisions also specify the form of their adoption. Therefore, there are no grounds to require that a special form for a special power of attorney be maintained, and thus a form derived from the action to be performed by the attorney-in-fact.

In practice, however, some parties to transactions may demand that the resolution of the shareholders meeting comply with the same form as the action to be taken, relying on an earlier judgment of the Supreme Court of 27 February 2009 (case no. II CSK 509/08), which took a different view of the connection between the provisions on powers of attorney in the Civil Code and a special power of attorney granted by the shareholders meeting.

Special power of attorney for anything: General, generic, or for a specific matter

Another practical problem is the granting of an enduring power of attorney to represent the company in all dealings with a member of the management board.

In practice, the question often arises whether a special power of attorney should be granted each time for a specific action, or whether it may be granted as a general (ogólne) or generic (rodzajowe) power of attorney. This boils down to the question of whether Civil Code Art. 99 applies to the content of such a power of attorney, or—as with form—the provisions of the Civil Code do not apply. Pursuant to Art. 99, a general power of attorney includes authorisation to act in the ordinary course of business. For actions outside the ordinary course of business, a generic power of attorney (specifying the type of actions authorised) is required, unless the law requires a power of attorney for a particular action.

The views are divided on whether a special power of attorney granted by the shareholders meeting can be general or generic. However, according to the Supreme Court resolution of 30 January 2019 (case no. III CZP 71/18), when concluding an agreement in a dispute with a member of the management board of a limited-liability company, on the basis of a resolution of the shareholders meeting, the company may be represented by an attorney-in-fact authorised by type, for a specific contract, or for a specific dispute.

In that resolution, the Supreme Court confirmed that a special power of attorney:

  • May (but need not) be specific—a power of attorney granted to conclude a specific agreement with a specific member of the management board or to represent the company in a specific dispute with a member of the management board is of a special nature and therefore should be granted each time before concluding a specific agreement or conducting a specific dispute
  • May be generic, that is, limited to an indicated type of agreement or dispute, or agreements or disputes with a specific member of the management board
  • Cannot be general (carte blanche), that is, granted to represent the company in all contracts or disputes with any member of the management board, as the Supreme Court held that the narrow subject matter of the special power of attorney precludes granting it in the form of a general power of attorney.

Special power of attorney not limited in time

In the aforementioned resolution, the Supreme Court also confirmed that there are no legal obstacles precluding the possibility of granting a perpetual power of attorney—a power of attorney that remains in effect until revoked. A shareholder resolution granting a special power of attorney may specify an expiration date, but if it does not, and nothing to the contrary appears from its contents, it would have to be assumed that such a power of attorney is perpetual.

The importance of proper representation

The rules of representation and granting of power of attorney are an essential issue in any legal action. Above we have only outlined the issues that we encounter in transactions. Adherence to special rules of representation for actions between a company and its management board is of exceptional importance. An act performed in violation of these rules is absolutely void. It will not be possible to ratify it after the fact, as could be done for example in the case of an action by a purported attorney-in-fact (i.e. a person not actually authorised to act or exceeding the scope of authorisation) or an action by a purported body of a legal person (e.g. acting as the management board of a company by persons who are effectively not members of the company’s management board).