Competences of the President in managing the company’s affairs
The management board is an integral element of a Polish limited liability company. It is appointed by the company’s shareholders. The management board appoints its president, who heads it. This involves the president having many responsibilities that he must fulfill.
The president, as a member of the management board, has two functions in taking up matters, because he can take them up himself or he is the executive tool of the shareholders. The president, as a member of the management board, has the right to manage the company’s affairs. This applies to both judicial and extrajudicial matters. Article 208 § 3 of the Polish Commercial Companies Code allows the president to conduct matters not exceeding the scope of ordinary company activities, without a prior resolution of the management board. Activities of ordinary management may refer to internal and external affairs of the company. When deciding which activity exceeds the scope of ordinary activities, consideration should be given to circumstances such as the size and nature of the activity. In short, it is the amount of the company’s available financial resources. In proportion to the activity performed and the company’s budget, it can be concluded whether a given activity exceeds this scope. Of course, the company agreement (articles of association) may specify what activities fall under the ordinary management of the company. Therefore, decision weight is an abstract concept and depends on the conditions of a given entity. All decisions made should be rational, accompanied by documents justifying the decision.
At the beginning of 2024, the residents of the luxurious Złota 44 skyscraper were surprised with the information when the owner of the most expensive apartment presented an innovative idea called “Epic Flip”. The “epic flip” involves dividing an apartment worth PLN 23 million into 20,000 shares and selling them using tokenization technology. Each share will be available for PLN 5,000, $bigSB 777 or 504 NFT AIRdrop for all interested parties. The order of sale will be determined based on records and the originality of the motivation to purchase the share. There is no limit to the number of shares that can be acquired by individuals, but companies must have at least 10 shares. The owner reports that over 6,572 people have expressed interest in purchasing over 48,954 shares. The owner of the apartment was the first in Poland to use the tokenization mechanism in the context of real estate, thanks to which the purchase of a share in the apartment became available to a larger number of investors. Tokenization makes it possible to divide the value of real estate into digital tokens that can later be sold individually, which is completely different from the traditional real estate market, where transactions involve the transfer of entire rights to the premises. The owner responded to allegations regarding legal issues, claiming that the transaction is legal and regulated mainly by the section of the Act of April 23, 1964, Civil Code (uniform text: Journal of Laws of 2023, item 1610, as amended) regarding co-ownership. The owner also emphasized that the main goal of the project is to test the social reaction to the innovative model of co-ownership. Another practical problem is the issue of entering so many owners in the land and mortgage register, which may take years. One solution is for smaller shareholders to send proxies, but this may cause additional problems. Finding a notary who will undertake such an operation can also be a challenge, requiring a lot of time and effort.
In the face of changing regulations and court practices, the issue of liability of management board members for the tax liabilities of limited liability companies, even after their formal dismissal, constitutes a significant challenge for legal practice. The latest case law, including the final judgment of the Polish Supreme Administrative Court, sheds new light on the interpretation of the provisions regarding the scope and conditions of this liability. Analysis of these judgments, in the context of Art. 116 paragraph 1 and 2 of the Polish Tax Ordinance and the Commercial Companies Code, reveals that dismissal from the management board is not in itself a sufficient basis for exemption from liability if actual actions prove the continuation of performing the function. In the context of company management, it is crucial to monitor changes in case law and legal regulations that may affect the interpretation of the duties and responsibilities of management board members. New court decisions may bring changes in the understanding of company management regulations, emphasizing the importance of appropriate documentation and procedures. For managers and legal advisors, continuous monitoring and adaptation to current legal requirements becomes an essential element of effective risk management and avoiding potential legal consequences.
To establish a limited liability company, the establishment of a management board is required. All members of the management board are required to sign the application for entry of the company into the register. One of the first obligations of the management board is to report the formation of the company to the appropriate registry court. Remaining a member of the management board involves a number of different duties that the member must fulfill.
Duty to represent the company and manage its affairs
Projects related to the PRS sector (Private Rental Sector) are becoming more and more popular. PRS is an organized form of leasing run by specialized entities for which apartment rental is the main area of business activity.
These companies rent, among others: to a person or persons interested in purchasing real estate, after paying a specified percentage of the real estate value. Depending on the company offering such solutions, the lease length ranges from 2 to 5 years, during which interested entities rent the apartment, for example for 70% of the market rental rate (with an own payment of 30% of the property amount). So, with an own payment of 50% of the property value, the monthly rent of PLN 4,000 will theoretically be reduced to only PLN 2,000 per month.
