With the New Year, an amendment to the Polish Commercial Companies Code will enter into force requiring every joint-stock company or joint-stock limited partnership to maintain its own website for communicating with shareholders. The new obligation is motivated by the process of digitalisation of joint-stock companies, but is also designed to increase protection of shareholders’ rights.
The amending act of 30 August 2019 introduces a new Art. 5 §5, which provides, “A joint-stock company or joint-stock limited partnership shall operate its own internet site and shall also post there, in sections set aside for communication with shareholders, announcements from the company required by law or the articles of association.”
According to the justification for the amending act, this solution should improve protection of the rights of minority shareholders, reduce instances where shareholders are not informed of issues important to them, and provide greater stability and security in commerce. It may thus be inferred from the justification that the current system for publication of announcements does not achieve this result. But maintaining companies’ own websites will not replace the existing requirement to publish notices in Monitor Sądowy i Gospodarczy. Having a website will be an additional obligation, entailing additional costs.
What should be found on a company’s website?
The basic information subject to publication on a company’s website is set forth in Art. 206 §1 of the Commercial Companies Code, which specifies that the website should contain the company’s name, registered office, address, National Court Register (KRS) number, designation of the competent registry court, tax number (NIP), and the amount of the company’s share capital. Moreover, under the new provision, the site must also contain all announcements by the company required by law or the company’s articles of association. This means that companies will have to regularly post to their websites notices concerning such matters as planned general meetings of shareholders (with the detailed agenda), draft resolutions, financial reports and auditor’s reports. According to the justification for the amending act, this requirement is dictated by the desire to limit the potential situations where shareholders are notified in such a manner that, in practice, they do not really receive notice—a phenomenon often encountered in instances of internal corporate conflicts.
Sanctions for failure to maintain website
A company that does not have a website or fails to update it regularly will be exposed to far-reaching consequences. First and foremost, failure to post information on the website about a planned general meeting, or posting notices without complying with the formal requirements provided by law, may provide grounds for challenging resolutions adopted by the general meeting. In such case, a shareholder who was not present at the general meeting will obtain grounds to assert a claim to invalidate or set aside a resolution adopted at the meeting (see Commercial Companies Code Art. 422 §2(4)).
Thus the company must ensure that it continually updates its website and that the website functions properly, to minimise the risk of the company being charged with any irregularities.
It should be borne in mind that placement of notices on the site in violation of the procedure for calling a general meeting specified by Art. 402 of the code, i.e., failing to publish all essential information or announcing the general meeting less than three weeks before the date for the meeting, may be grounds for challenging resolutions of the general meeting.
As the management board conducts the affairs of a joint-stock company, as a rule the management board will be the body responsible for operating and updating the website. Consequently, decisions on information posted on the site are to be taken by the management board. It is unclear, however, what happens if the general meeting is called by some other body of a joint-stock company. In that case, is the management board still obliged to post a notice on the website? Or does this obligation instead rest on the body convening the general meeting? In such situations, satisfying the informational obligation may prove problematic.
Fine for noncompliance with informational obligation
Failure to properly post information on the company website also carries consequences for the persons responsible for performance of informational obligations, i.e. the company’s authorised representatives. Noncompliance may result in imposition of a fine by the registry court of up to PLN 5,000 (Commercial Companies Code Art. 595).
Obligation to register website address
Along with the amendment of the Commercial Companies Code, Art. 47 of the National Court Register Act was also amended to provide that joint-stock companies and joint-stock limited partnerships are required to file their website addresses with the commercial register.
Assessment of regulation
Although this change is framed as answering the call for further digitalisation of joint-stock companies, it doesn’t fully meet the expectations of the market. The criticism voiced over the use of the word “also” in the regulation should be recognised as justified. The presence of that word means that the new solution does not replace the burdensome, and as the lawmakers themselves point out, problematic obligation to publish announcements in Monitor Sądowy i Gospodarczy. It should be admitted, however, that the change will increase transparency for companies’ contractors and suppliers, potential investors, and current shareholders.
Because this obligation enters into force on 1 January 2020, it is high time for companies to make the relevant preparations for rolling out their own website.
Michał Pypka, M&A and Corporate practice, Wardyński & Partners