One of the main objectives of the Commercial Companies Code reforms is to strengthen supervisory boards. One of the key solutions introduced by the new regulations is to give the supervisory board the possibility, independently and without the involvement of the management board, to appoint an advisor to the supervisory board. This position should be entrusted to an external entity that possesses the expertise and qualifications enabling them to examine specific issues. Since when do the new regulations come into force, who is the advisor to the supervisory board, and what is their role?
When do the new Commercial Companies Code regulations come into force?
The amendment to the Commercial Companies Code, along with the provisions regarding new privileges for supervisory boards and the appointment of a supervisory board advisor, their role, appointment process, and duties, is set to come into force on October 13, 2022. It will include provisions such as broader access for the supervisory board to information, the ability to request specific information, documentation, reports, or explanations, and even the requirement to obtain the supervisory board’s consent for transactions of significant value. Additionally, it will introduce the principle of business assessment of the situation and an obligation for supervisory boards to act loyally towards the company. However, the most important provision in the new Commercial Companies Code will be the possibility of independently appointing a supervisory board advisor. Therefore, let us now examine this position.
How will the supervisory board advisor be appointed?
According to the amendment, the appointment of the supervisory board advisor is possible for joint-stock companies as well as limited liability companies.
However, the basis for their appointment will vary between companies. In a limited liability company, the resolution regarding the appointment of the advisor can be adopted by the board, provided it is stipulated in the company’s statute. As for joint-stock companies, the supervisory board will have the authority to do so, while the statute or articles of association may only exclude or limit its right to enter into agreements with the advisor, for example, by authorizing the general meeting to determine the maximum remuneration for all appointed advisors, thus limiting the cost that the company can incur during the fiscal year.
The board will always represent the company in the agreement between the company and the supervisory board advisor.
Who can become a supervisory board advisor?
The regulations specify that only someone who:
- has professional knowledge and qualifications necessary to examine a given matter;
- ensures the preparation of an objective and accurate report of the examinations;
- is a legal entity provided that the persons responsible for the examination and reporting on behalf of the advisor to the supervisory board meet the above-mentioned requirements.
External entities may also include specialized units meeting the above requirements, operating within the structure of a shareholder or partner.
What role is the advisor to the supervisory board supposed to play?
The advisor to the supervisory board will be tasked with investigating matters related to the company’s operations or its assets, or preparing specific analyses and opinions. Of course, this will be at the expense of the company. Its management, in turn, will be required to prepare all necessary documents for the advisor and provide them with any requested information. To ensure compliance by the management with this obligation, the legislator has established penalties for individuals through whom the management fails to provide the advisor to the supervisory board with requested information, provides inaccurate information contrary to the actual state, or withholds any important information or documents. A fine ranging from no less than 20,000 to no more than 50,000 Polish złoty is imposed for such conduct. However, imprisonment may also be imposed as a penalty. Additionally, a fine will be imposed even on a person who commits any of the mentioned acts unintentionally. It will, of course, be lower, ranging from 6,000 to 20,000 Polish złoty. These provisions make it possible to hold both management members and company employees accountable.
What duties will the advisor have?
Of course, the advisor to the supervisory board will also have certain obligations. Not only the advisor themselves, but also any person performing duties on their behalf or for them, will be obliged to maintain confidentiality of all non-public information and documents from the company. This obligation will be unlimited in time. There is also no doubt that it will be the advisor’s duty to carry out the tasks entrusted to them professionally, diligently, and conscientiously.
The results of the advisor’s work may be useful not only to the supervisory board. In joint-stock companies, the board will have the opportunity to decide on sharing these results with shareholders, provided that it does not cause any harm to the company (or any related company or subsidiary cooperative). Harm could involve the disclosure of company secrets related to commercial, organizational, or technical matters. In the case of joint-stock companies, a deadline for providing the results of the advisor’s work in this manner has been specified. This deadline is two weeks from the date of the supervisory board’s resolution, following the same procedure as for convening the general meeting.
The decision belongs to the partners and shareholders.
Partners and shareholders of limited liability companies and joint-stock companies, in which supervisory boards have been established, now have time to make a decision. They can enable the appointment of a supervisory board advisor (in a limited liability company) or limit, and even completely exclude, the possibility of appointing a supervisory board advisor (in a joint-stock company). The supervisory board advisor can be valuable support for this organ of the company, promoting its professionalization and better protection of the rights of partners or shareholders. However, the position of the supervisory board advisor also has a disadvantage for companies, namely it can prove to be very costly. It is therefore worth carefully analyzing whether the supervisory board advisor is really necessary in the company and making appropriate resolutions to be included in the statute or agreement at the right time.