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Resolutions of shareholders of a limited-liability company

When is it necessary to hold a shareholders’ meeting, and when can it be dispensed with? Comments under the amended provisions of the Commercial Companies Code

Effective 1 March 2019, the Commercial Companies Code in Poland was amended by repealing Art. 231 §4. That provision stated that the possibility of written balloting is excluded on matters that are mandatorily included in the agenda of the ordinary (annual) meeting of shareholders of a limited-liability company. The legal landscape following this amendment should be examined more closely to understand the instances and scope where it is now possible to adopt resolutions of the shareholders of a limited-liability company without holding a shareholders’ meeting. These considerations are less important when the company has only one shareholder, as under Art. 156 of the code, the sole shareholder exercises the entitlements vested in the shareholders’ meeting.

Three alternative routes…

Art. 227 §1 of the Commercial Companies Code provides that resolutions of the shareholders of a limited-liability company are adopted at shareholders’ meetings. Two exceptions to this rule are provided for in Art. 227 §2. First, resolutions may be adopted without holding a meeting if all shareholders consent to the given resolution. This is known as voting by “circulation” of resolutions—kurenda). Second, resolutions may be adopted in written balloting. In the first instance, the point is for each of the shareholders to “ratify” (generally by correspondence) the specific wording of the proposed resolution, and the resolution is adopted if all shareholders consent to the wording of the resolution in writing. In the second case, it is sufficient for all shareholders to consent in writing to the balloting as such. The actual wording of the resolution may be the subject of discussion or revisions by the shareholders, some of whom may also ultimately vote against the resolution—unanimity is not required as to the wording of the resolution, but only as to the fact of written balloting.

…that are not always available

But the possibility of adopting resolutions outside of a shareholders’ meeting is not absolute. Not only is it as a rule an option that can be used only if all shareholders consent in each instance, but there is also a list of resolutions that cannot be adopted through this procedure at all.

Thus, all of the following resolutions must be adopted at a shareholders’ meeting:

  • Resolutions on matters requiring convening of a shareholders’ meeting (e.g. when a shareholders’ meeting if convened under Art. 233 of the code, i.e. when the loss of the company reported in its financial statement exceeds the total of supplementary capital, reserve capital, and half of the reserve capital)
  • Resolutions required to be recorded in minutes prepared by a notary (e.g. a resolution amending the articles of association)
  • Resolutions requiring secret balloting (and thus, for example, all resolutions on personnel matters, including changes in the company’s authorities or issuance of a release to members of the authorities).

Due to the amendment to the Commercial Companies Code mentioned above, a category of cases in which written voting was expressly excluded by law has been removed from this catalogue. It should nonetheless be borne in mind that resolutions on granting a release to members of a company’s authorities still cannot be adopted under the circular voting procedure. This is because this form of voting precludes the possibility of maintaining confidentiality (unlike written balloting).

Inconsistency in the code

It is sometimes pointed out in the legal literature that the catalogue of instances in which the law expressly requires resolutions of shareholders to be adopted at a meeting is broad. Indeed, the regulations refer interchangeably to “resolutions of the shareholders’ meeting” and “resolutions of the shareholders.” But it appears—and this is the dominant view—that such differentiation in terminology is incidental, as demonstrated by the wording of Art. 228 of the code, which requires adoption of a “resolution of shareholders” (and not a “resolution of the meeting”) also in matters in which previously (before the recent repeal of Art. 231 §4, mentioned above) the code excluded written balloting.

Modifications in the articles of association

Obviously, there is nothing preventing inclusion in the articles of association of additional restrictions on adoption of resolutions of shareholders outside of meetings, although it seems that (as in the case of the code) this should be done in a sufficiently explicit manner. Just as in the code, companies’ articles of association often use interchangeably (and clearly unintentionally) the notions of resolutions of the “shareholders” and resolutions of the “shareholders’ meeting.”

However, the articles of association cannot be modified in the other direction, that is by expanding the scope of situations in which holding a meeting of shareholders in order to adopt resolutions can be dispensed with.

Maciej A. Szewczyk, attorney-at-law, M&A and Corporate practice, Wardyński & Partners