Business Law: New rules for administrative proceedings | In Principle

A proposal for a long-promised act intended to facilitate the operation of businesses was published on the Government Legislation Centre website in February. The proposed Business Law contains a set of rules that would apply in administrative proceedings from as early as September 2017.

The Business Law proposal from the Minister of Development and Finance is part of a package called the “Business Constitution,” to include the following other proposals:

• Act on the Central Registration and Information on Business and Information Points for Businesses
• Act on the Joint Commission of Government and Businesses and the Business Advocate
• Act on Rules for Participation in Commerce by Foreign Businesses and Other Foreign Persons.

Business Law—scope of act and basic improvements for businesses

The Business Law (Prawo przedsiębiorców) would first and foremost replace the current Business Freedom Act. The bill contains provisions governing the conduct of inspections and regulation of business activity. The act is preceded by a preamble indicating the need to reinforce the guarantee of business freedom, citing constitutional principles of equality, non-discrimination and sustainable development. The act is aimed at fostering growth of the Polish economy.

The bill contains a definition of economic activity similar to the current one (organised gainful activity, performed independently and continually), with a major difference: the definition excludes activity by individuals not entered in the Central Registration and Information on Business (CEIDG) if their business income does not exceed 50% of the minimum wage in any month. Such a person could still apply for entry in CEIDG, however.

The Business Law also provides for a starting incentive. A person who takes up economic activity for the first time, or renews it (under conditions detailed in the bill), would not be required to pay social insurance contributions (ZUS) for the first 6 months.

New rules for administrative proceedings

The proposal deserves the greatest praise for its codification of a number of rules, clarifying those contained in the Administrative Procedure Code. They should greatly improve the position of businesses in proceedings before administrative authorities.

The bill expressly states that businesses can take any action that is not prohibited by law. It also states that the authorities can impose duties on businesses only when this possibility is provided for by law. This is an expansion on the constitutional principle of legalism, identified by the proponents with the maxim “Whatever is not prohibited by law is permitted.”

Besides the need to conduct proceedings in a manner engendering confidence in public authority and to comply with the principles of impartiality, proportionality and equal treatment, the administrative authorities are to be guided also by the principle of trust in businesses. There should be a presumption that a business is operating honestly, lawfully, in compliance with fair practice.

Another provision states that any doubts as to the state of facts should be resolved in favour of the business. Moreover, the bill provides that if in a proceeding involving imposition of an obligation, or limitation or removal of a right, there is any doubt as to the content of a legal norm, those doubts should also be resolved in the business’s favour. But these rules do not apply if entities with conflicting interests are involved in the proceeding or the result of the proceeding would directly affect the interests of third parties, and in situations where separate regulations require the business to demonstrate certain facts. The authorities could also refuse to apply these rules when justified by a legitimate public interest.

The drafters also intend to reinforce the principle of legal certainty. Thus authorities would not be permitted to depart from established practice in resolving matters under the same factual or legal conditions without justified grounds. Moreover, in a situation where under separate regulations there is a doubt in interpretation as to the substance of the entitlements of a business, the principles provided for in the Business Law should be applied if they are more advantageous to the business than the norms arising under other laws.

The bill states that matters involving businesses should be resolved thoroughly and expeditiously, and the authorities should use the simplest means leading to resolution of the matter. They would not be allowed to demand that businesses submit documents not required by applicable regulations, or demand submission of originals, certified copies or sworn translations unless required by separate regulations. The bill expressly states that authorities would have no right to refuse to accept applications and other writings that are incomplete. Proceedings would also be expedited by communicating with businesses orally, by telephone, or using other means—when the business consents to this form of communication and the regulations do not require written form. All such measures should be appropriately memorialised.

Amendment of other acts

The regulations introducing the various acts in the Business Constitution package would amend 178 different existing acts. Most of the proposed changes arise from a need to adapt current regulations to changes connected with adoption of the new acts listed above.

It should be pointed out, however, that the bill once more proposes to amend the regulations governing commercial proxies (prokury). The change this time would expressly enable a proxy to be issued by businesses registered in CEIDG (such as sole traders and ordinary partnerships). So far most legal commentators have limited the possibility of issuing this special type of authorisation to entities entered in the Commercial Register of the National Court Register (e.g. companies).

Summary

The rules for conducting administrative proceedings proposed for codification in the Business Law may have a beneficial effect on the legal situation of businesses. But the full ramifications of these regulations cannot be determined until the act enters into force and we observe the actual practice of administrative authorities and how these procedural rules are interpreted by the administrative courts.

Currently the bill for the Business Law is undergoing public consultations. We will continue to follow the work on the proposal and comment on specific proposed solutions on our portal.

Martyna Robakowska, M&A and Corporate practice, Wardyński & Partners