Decisions taken remotely by company bodies | In Principle

Among many problems facing businesses now is efficient management and decision-making when members of the company’s governing bodies cannot appear in person at headquarters for various reasons. Technology ensures efficient communications, but the possibility for corporate bodies to take resolutions remotely has been debatable in some situations.

Below we present a summary of the current regulations and planned changes involving adoption of resolutions remotely by companies’ management boards, supervisory boards and shareholders. We also indicate which possibilities can be used now, before the changes come into force.

Resolutions of the management board

In a limited-liability company and a joint-stock company, the rules of decision-making by the management board are slightly different.

In a limited-liability company, each member of the management board has the right and obligation to manage the company’s affairs. Each member of the management board may also, without a prior resolution of the management board, conduct matters within the ordinary course of business. However, if even one of the other members of the management board opposes the matter before it is settled, or if the matter exceeds the ordinary course of business, a prior resolution of the management board is required. This should be distinguished from representation of the company in dealings with third parties, when cooperation with other persons may be necessary (depending on the articles of association, e.g. with another member of the management board or a commercial proxy).

Resolutions of the management board may be adopted if all members have been duly notified of the management board meeting.

In a joint-stock company, if the management board is composed of several members, all its members are obliged and entitled to conduct the company’s affairs jointly, unless the articles of association provide otherwise. Therefore, in a joint-stock company, the principle of joint action applies.

Resolutions of the management board may be adopted if all members have been duly notified of the management board meeting. The minutes of the meeting are recorded. The minutes should include the agenda, the names of the management board members present, the number of votes cast for individual resolutions, and dissenting opinions. The minutes are signed by the members present (Art. 371 and 376 of the Commercial Companies Code).

• Management board resolutions taken remotely: current regulations

The atypical circumstances related to the COVID-19 epidemic mean that before the provisions are changed, it is necessary to take into account the solutions that can already be applied. So far, the possibility of adopting resolutions by the management boards of companies by means of direct, remote communications has been disputed. Nonetheless, many companies decided to include relevant provisions in their articles of association (sometimes also in the management board’s bylaws), as the regulations did not contain relevant provisions in this respect, but also did not explicitly exclude them.

However, it was also argued that in a joint-stock company, all resolutions of the management board should be recorded in minutes and require the presence of the members of the management board at the meeting, confirmed by their own handwritten signature, and, as a result, adoption of resolutions outside the meeting is unacceptable. Therefore, a need arose to introduce appropriate changes to the Commercial Companies Code directly resolving these dilemmas.

But at present, in many companies, taking resolutions remotely will be forced for purely practical reasons. Therefore, before the planned changes come into force, it is worth considering Art. 78¹ §2 of the Civil Code, according to which a declaration of will made in electronic form is equivalent to a declaration of will made in writing. On the other hand, to maintain electronic form for a legal action, it is sufficient to submit a declaration of will in electronic form affixed with a qualified electronic signature.

• Management board resolutions taken remotely: draft amendments

The latest draft (21 March 2020) of the coronavirus aid act (amending the Special Coronavirus Act of 2 March 2020) provides for significant changes in these issues.

The draft would allow the following possibilities for adoption of resolutions remotely by the management board, unless the articles of association provide otherwise:

• A meeting of the management board may be attended via direct remote communications.
• The management board may adopt resolutions in writing or via direct remote communications.
• Members of the management board may participate in adopting resolutions by casting their votes in writing through another member of the management board.

Therefore, adoption of resolutions remotely by the management board will be permitted, unless the articles of association of a limited-liability company or joint-stock company provide otherwise.

Supervisory board resolutions

In the case of the supervisory board, the draft would reverse the rule for adopting resolutions remotely and through another member of the board (Art. 222 of the Commercial Companies Code for a limited-liability company, Art. 388 for a joint-stock company). Until now, this has been allowed if provided for in the articles of association. The planned change would allow this procedure to be applied in all companies unless explicitly excluded in the articles of association.

The draft provides for the following possibilities, unless the articles of association provide otherwise:

• A meeting of the management board may be attended via direct remote communications.
• The members of the supervisory board may take part in adoption of resolutions by casting their vote in writing through another member of the supervisory board; casting a vote in writing will not apply to matters placed on the agenda at a supervisory board meeting.
• The management board may adopt resolutions in writing or via direct remote communications. A resolution is valid when all members of the board have been notified of the wording of the draft resolution and at least half of the board members participate in adoption of the resolution. The articles of association may provide for stricter requirements for adopting resolutions under this procedure.

The draft would also repeal (in both a limited-liability company and a joint-stock company) the provisions preventing voting in writing or remotely for election of the chairman and deputy chairman of the supervisory board, appointment of members of management board, and dismissal and suspension of these persons.

Shareholders’ meeting/general meeting resolutions

Shareholders’ meetings of limited-liability companies and general meetings of joint-stock companies (or joint-stock limited partnerships) may be held using electronic communications, if this possibility is provided for in the articles of association (Art. 234¹ of the code for a limited-liability company, Art. 406⁵ for a joint-stock company).

There is no information on planned amendments to the legislation in this respect.

An amendment to the Commercial Companies Code which came into force in 2019 gave shareholders of limited-liability companies the opportunity to participate in the shareholders’ meeting via electronic communications (for joint-stock companies such a possibility has existed since 2009). However, it either type of company, a condition for holding meetings in this form is a relevant provision in the articles of association.

We know from practice that although more than half a year has passed since the introduction of this change, not many shareholders of limited-liability companies have decided to introduce such a change in the articles of association. The relevant provisions for joint-stock companies have been in place for more than 10 years, but many of them still do not have adequate provisions in their articles to activate this possibility.

As the work on the aid act is still ongoing, it is difficult to predict whether any changes to these specific provisions will be adopted in the current situation.

For many shareholders and their companies, it is not possible to immediately introduce appropriate provisions in their articles of association, especially as this may take at least one or two months (any amendments to the articles of association become effective only when entered in the National Court Register).

It seems that in this emergency situation, the parliament could try to remove the restriction on the possibility of participating in shareholders’ meetings using electronic communications and, for example, make this subject to the consent of all shareholders to this form of meeting, either once for all or in each case.

In single-member limited-liability companies, this problem generally does not exist, as Art. 227 §2 of the Commercial Companies Code allows for the possibility of adopting most shareholders’ resolutions in writing (written voting). Since last year, this also applies to resolutions of the annual (ordinary) shareholders’ meeting.

It is also possible to use this form in multi-person limited-liability companies. Resolutions may be adopted without convening a shareholders’ meeting if all shareholders agree in writing to a specific decision or to conduct the vote in writing. However, this mode is excluded in cases where it is necessary to adopt resolutions in a secret ballot, for example in personnel matters such as granting a release or changes in the membership of the management or supervisory board, as it is not possible to comply with the secrecy requirements in a written vote.

It should be remembered that minutes of the meetings of a limited-liability company on certain issues, and all minutes of general meetings of joint-stock companies, should be recorded by a notary. Therefore, the notary should also dispose of appropriate electronic tools for the proper conduct of the meeting, so as not to block the possibility of holding meetings using electronic communications.

Proxy

However, in any case where it is necessary to physically attend and appear at a meeting at one place in Poland, shareholders may avoid personal participation in the meeting by granting a proxy to a third party to appear and vote on their behalf (taking into account the prohibition of meetings of more than 50 people under the current regulation of the Minister of Health). The proxy may be granted in writing (sent to the proxy by post/courier) or, pursuant to Civil Code Art. 78¹, in electronic form with a qualified electronic signature (sent to the proxy by email).

However, it is not obvious how to respond to a potential request from the National Court Register to demonstrate the authority arising under a proxy issued in this way. It may be enough to attach to the application a pen drive or other medium containing a proxy signed electronically (at least until March 2021, when the rules for submitting documents to the National Court Register are to be further amended).

Additionally, it should be noted that in public companies, granting a proxy in electronic form does not require a qualified electronic signature. At the same time, a public company must indicate to shareholders at least one method of notifying the company by electronic communications of issuance of a proxy in electronic form. The public company will then take appropriate action to identify the shareholder and the proxy, to verify the validity of the proxy granted in electronic form. Such activity should be proportionate to the aim.

Dr Kinga Ziemnicka, attorney-at-law, Łukasz Śliwiński, attorney-at-law, Daria Goliszewska, M&A and Corporate practice, Wardyński & Partners