Consequences of an Ordinary General Meeting of Shareholders which has not approved the annual report for the mandate of the members of the Management Board.

The paricicpation in the Management Board of a limited liability company is of a cadence character. The term of office can be regulated by shareholders in the Articles of Association upon their discretion, for example by determining the term of office for indefinite time or by indicating the time of cadence the Management Board or simply by applying a solution from the Code of Commercial Companies which provides for one year term of office.

An important issue is a distinction between the concepts of the 'term of office' and the 'mandate', which are not understood in the same way. The term of office is presented as the period of being the member in Management Board of a limited liability company. Mandate is understood as the authorization of a member of the Management Board to perform his/her function. In the doctrine as well as judicature it is assumed that the lapse of time of the duration of term of office and the expiration of a mandate can happen in a different moment. The member of the Management Board can perform his authorization as part as the mandate during a shorter period, due to circumstances defined in the article 202 § 4 of the Code of Commercial Companies, and a mandate can last longer than the time of office. Art. 202 § 1 and 2 of the Code of Commercial Companies provides that the mandate of a member of the Management Board expires as of the day of approval of the financial report by the Ordinary Meeting of Shareholders.

It means, that the lack of approval by the Meeting of the financial statement is not important for the term of office of the Management Board, which terminates with the end of the last financial year or on a different date, which was indicated by shareholders in the Articles of Association. The problem of the expiration of mandate, when the financial statement is not approved by the Ordinary Meeting of Shareholders, is a different issue, which is regulated in the article 202 § 1 and 2 of the Code of Commercial Companies. However, there is dispute in jurisprudence in understanding of this regulation, in the wording: 'takes place the ordinary General Meeting which approve the financial statement'.

The article 202 the Code of Commercial Companies specifies, that expiration of the mandate takes places as of the day on which the Ordinary Meeting of Shareholders is held , which is approving the financial statement for the last financial year, when the function of the member of the Management Board was performed.  As we have said above, there is dispute in understanding of this regulation.

Predominant is the position presented by a Polish law professor Kidyba, who is of an opinion that this provision provides both for General Meeting during which:

1. the financial statement was approved;
2. the financial statement was not-approved, but the shareholders voted with that respect.

The minority opinion is that the conditions of the art. 202 § 1 and 2 Code of Commercial Companies are completed, when the Meeting adopted only a resolution about approving the financial statement. Thus a negative resolution does not have any influence over the time of office of the the directors. This interpretation is based purely on the wording of that article. In conclusion, not-approving of the financial statement by the Meeting can not affect the term of office of the member of the Management Board.

In our opinion the interpretation based solely on the texting of this provision is not acceptable due to the reasons why this provision was adopted. If the term of office expires in case the report is approved, for practical reasons it is even more justified that the term of office should expire if the report is not approved (it can be implied that there were some reasons why the approval had not been granted and it is always prepared by the Management Board as a result of their annual work and performance). Therefore in case of such a refusal of approval it should be even more justified that the term of office of the members of the Management Board expires.

Anna Dudkiewicz

Lawyer

Zdanowicz & Partners

Contact: blog@zdanowiczlegal,pl

What steps do I have to take in order to acquire an inheritance in Poland?

Generally the acquisition of inheritance in Poland takes place by law on the day of death of the testator (article 922 of the Polish Civil Law Code). From this date all the financial and property rights and obligations, as a rule, are transferred to the heir. There is no need to take up any legal steps. Although if you wish to prove towards third parties and towards the offices, to prove that you are a heir, you will need to apply to the court for a decision which is called ‘a confirmation of acquisition of inheritance’ (stwierdzenie nabycia spadku). This is needed when you for example wish to register yourself as a new owner of a car or real estate or just collect means from the bank account etc. This is a formal and cheap procedure, not complicated and not long lasting, as long as there is no dispute who is the heir. In this case you need to be prepared for a long battle with other ‘heirs’ and this usually requires a lawyer to conduct such a case. 

One more issue should be noted. If you are a foreigner and acquire a real estate in Poland, you should check whether a permit issued by Ministry of Internal Affairs is needed. Generally you do not need it if you are a statutory heir (this is regulated by Polish Civil Law Code) and the testator was the owner of perpetual usufructuary for at least 5 years. However there are many exceptions which should be checked in each particular case. 

Aleksandra Dalecka 

attorney at law 

Marek Zdanowicz & Partners Law Office 

Contact: blog@zdanowiczlegal.pl

When I should apply for bankruptcy under Polish law?

To the surprise of many businessmen, the rules on bankruptcy are rather severe in Poland. 

The law says that bankruptcy should be declared when the debtor became insolvent. This provision seems to be of an usual nature but when we have a look at the definition of insolvency, we would find that the debtor is considered to be insolvent when it does not fulfill due pecuniary obligations. Additionally, when we talk about companies, they are treated to be insolvent when their debts are higher than the value of their assets, even if a company fulfills its obligations. A conclusion – no matter how high are your debts, when you stopped paying, consider applying for bankruptcy. Only the court may overrule the petition for bankruptcy in case when the delay in paying debts is smaller than 3 months and the sum of the debts does not exceed 10% of the balance sheet value of the enterprise of the debtor unless this situation seems to be of a permanent character or it may cause damage to creditors. The debtor himself cannot decide that the debts are too small and irrelevant. Therefore even if there is a practice on the market that companies pay with delay, remember about the risk of bankruptcy petition from the creditors. 

If you are a debtor, remember that you must apply for the bankruptcy within 2 weeks term from the day the insolvency occurred. Otherwise the Members of the Management Board (in case of a ltd) are under a risk of personal responsibility for company’s debts, not to mention criminal provisions. 

Aleksandra Dalecka 

attorney al law 

Zdanowicz & Partners Law Office 

Contact: office@zdanowiczlegal.pl

Liquidation of a ltd (sp. z o.o.) in Poland

In order to liquidate a limited liability company, its Management Board, and later on its liquidators and shareholders have to take up certain corporate steps. The whole procedure should not last more than 9 months, unless there are unexpected obstacles. 9 months in our experience is an average period of well prepared liquidation, including all statutory terms and waiting time in the courts.

Generally the whole procedure can be divided into the following steps:

1) Preparation of Shareholders Meeting in order to open liquidation and accept balance sheet of opening of the liquidation and appoint liquidators. Usually the members if the Management Board become liquidators but you can also hire this service. 

2) Registration of opening the liquidation in proper bodies (Companies’ register, statistic Office, Tax Office). This is now quite a quick procedure, usually, in Warsaw, if the application is well prepared and there is no need to complete any additional documents, it should not last longer than 2 – 3 weeks in the register of companies. It is connected with some administration issues – the company must for example prepare a new stamp and inform the bank. 

3) Announcing about opening of the liquidation in Court and Economy Gazette in order to allow creditors to file the claims. It is done at the same time as applying to the companies register for revealing the opening of the liquidation. 

4) After 6 months from the announcement in the Court and Economy Gazette - another Meeting of Shareholders should take place in order to distribute remaining assets (if any, but still – this step should take place) and accept a balance sheet on the day proceeding the day of the distribution of assets; In the meantime different organization issues have to be settled – like concluding an agreement with archivist company who will keep the documents in terms required by law in Poland, etc. 

5) Another Shareholders’ Meeting in order to accept ‘0’ balance sheet (after distribution of assets); 

6) Application to companies’ register and Tax Office in order to delete the company. 

By law, the assets of the company cannot be divided before the lapse of the 6 – month period from the announcement to the creditors. If you add all the organizational issues and time for registration, as we mentioned, the whole procedure takes up app. 9 months. The situation may be different in case of any claims against the company or lack of proper book – keeping etc.



Please feel free to contact our Office with respect to liquidation services. Please be informed, that we prepare proper strategies, assist in appointing and finding a liquidator, take care of liquidation of the companies when the Directors are already abroad etc.

Aleksandra Dalecka 

attorney at law 

Zdanowicz & Partners Law Office 

Contact: blog@zdanowiczlegal.pl

Do I need a work permit in Poland?

The answer depends on the foreigner’s origin or his status. Issues related to employment of foreigners are specified in the Act on promoting employment and labour market institutions of 20 April 2001 (unified text: Dz.U. [Journal of Laws] No. 69 Item 415, as amended) and in executive orders. 

Foreigners are allowed to work in Poland when they meet specific conditions, which, for example, are: 

- refugee status granted in Poland, 

- permission to settle in Poland, 

- citizenship of a European Union Member State, 

- citizenship of a European Economic Area Member State, that is not EU Member, 

- permission to work in Poland. 

In some cases a work permit is not needed. It happens when a foreigner is allowed to settle in Poland for specific time because of marriage to a Polish citizen or when he or she is a family member of a foreigner who has permission to settle in Poland. Work permit is not necessary when a person is entitled to stay and work in one of the European Union Member States and European Economic Area Member States which are not EU members. The same is when international agreements or different regulations grant foreigners a right to work without a permission. 

There are also situations when the work permit is a must, for example, when foreigners work in Poland under the contract of employment with an employer whose registered office, place of residence, branch, facility or other form of business is located in Poland; when a person work for foreign employer who delegate him/her to work in his department in Poland for a period exceeding 30 days in a calendar year; if a person performs work for a foreign employer without a branch, facility or other form of business in the Republic of Poland and is delegated to the Republic of Poland for the purpose of execution of a service of temporary and casual nature (export service). 

Work permits are issued by a province governor upon the request of an employer intending to employ a foreigner. They are issued for a specified period of time, not longer than 3 years and may be prolonged. Permits are issued for a specific employer, specific foreigner and in a specific place for a specific work position for a period defined by specific dates. A work permit can be prolonged provided that foreigner's employer submits an application to the province governor not later than 30 days before expiry of a current work permit. In such situation the period of an offered employment must begin directly after the end of the period for which a permit had been already issued and the position offered to the foreigner must be the same as the one for which the previous permit had been issued. 

Emilia Bartosiak 

prawnik 

Kancelaria Zdanowicz i Wspólnicy Sp. k. 

kontakt: blog@zdanowiczlegal.pl 

How to buy an apartment in Poland? Do I need any permits?

Purchasing property by foreigners is governed by the provisions of the Act of 24 March 1920 on Purchase of Real Estate by Foreigners. The first article of the Act states general rule that a foreigner require a permit from the Minister of Internal Affairs to buy real estate. 

This permit is issued upon the motion of a foreigner, for example, if acquisition of real estate does not pose threat to the defensiveness, national security or public order, and is not in contradiction with social policy and public health considerations or when the foreigner proves that there are circumstances confirming his/her bonds with the Republic of Poland. Such circumstances are Polish nationality or Polish origin, being married to a citizen of the Republic of Poland, a permit to reside for a definite time or to settle in Poland. 

There are also some situations when a permit is not required. This is, for example, in a case of: 

- acquisition of a separate apartment, 

- acquisition of real estate by a foreigner residing in the Republic of Poland for at least 5 years following the granting of a permit to settle thereto, 

- acquisition by a foreigner, who is a spouse of a Polish citizen and residing in the Republic of Poland for at least 2 years following the granting of a permit to settle thereto, of real estate that as a result of acquisition shall constitute marital estate of the spouses. 

It is not obligatory to obtain a permit by foreigners who are citizens or entrepreneurs of Member States of the European Economic Area. But it does not apply to acquisition of agricultural and forest real estate, during the period of 12 years of the Accession of the Republic of Poland to the European Union and acquisition of second house, during the period of 5 years from the Accession. We would like to remind that the Accession took place on the first of May 2004. 

Emilia Bartosiak 

lawyer

Zdanowicz & Partners Law Office

kontakt: blog@zdanowiczlegal.pl 

A Polish citizenship in case of a marriage

According to the Act on Polish citizenship of 15 February 1962, a person married to a Polish citizen may also obtain a Polish citizenship when marriage lasts at least 3 years. A foreigner must also reside in Poland on a basis of a settlement permit or long – term residence permit of the European Communities or have the right of permanent residence.

In order to become a Polish citizen such person has to make a declaration of acquiring Polish a citizenship by the province governor who issues a decision on this matter. Declaration can be filed only within 6 months from the date of the permit to settle or within 3 years and 6 months from the date of marriage to a Polish citizen.

Emilia Bartosiak
prawnik
Kancelaria Zdanowicz i Wspólnicy
kontakt: blog@zdanowiczlegal.pl