| In Principle

At the EU and national levels, severe economic sanctions are in place against many entities, mainly Russian. After entry into force of the Sanctions Act (the Act on Special Solutions for Countering Support of Aggression Against Ukraine and Protecting National Security of 13 April 2022), first published on 26 April 2022, the Polish sanctions list maintained by the Minister of the Interior and Administration took on particular significance. The purpose of its creation is clear: to counter support for Russia’s aggression against Ukraine. Nevertheless, the criteria for inclusion in the list are not clear-cut, and the procedure for issuing a listing decision greatly limits the right to defend against wrongful inclusion, as Polish entities can easily be included in the list.

An act amending the Commercial Companies Code was published in the Journal of Laws on 12 April 2022. It establishes the rules for operation of capital groups in Poland and modifies certain rules for operation of corporate authorities. The act will enter into force six months after publication.

The management board conducts the affairs of the company, represents the company externally, and under certain circumstances can be liable to the company and its creditors. Management board members should act with due care, which corresponds to the standard of care that would be observed by a conscientious merchant in dealings of a given sort. Failure to observe due care can lead to liability of members of the corporate authorities—and conversely, compliance with due care can shield them from such liability. An amendment to the Commercial Companies Code will make certain changes to these rules.

Until now, corporate officers have had to act solely in the best interests of their own company, which has made the operation of corporate groups difficult. As of October 2022, it will be possible to issue binding instructions to subsidiaries affiliated with formalised corporate groups. What must such an instruction contain, can the execution of such an instruction be refused, and what if the company suffers a loss as a result of execution of binding instructions?

On 12 April 2022, the new Holding Law was published in the Polish Journal of Laws, introducing into the Commercial Companies Code new regulations on the activity of corporate groups, including the possibility to squeeze out minority shareholder’s stakes in subsidiaries.
 

The recent amendment to the Commercial Companies Code introduces a number of important changes for companies, especially companies operating within corporate groups. This raises the question of whether companies should adapt their corporate documents to reflect these changes.

The latest episode of News from Poland is devoted to implementation by Polish companies of sanctions imposed on Russia for its attack on Ukraine. This topic is discussed by Anna Olejniczak-Michalska from the firm’s Private Client practice and Łukasz Lasek from the firm’s Dispute Resolution & Arbitration practice.

Until the end of April, contracting authorities in Poland have time to add to their procurement documentation and competition terms and conditions new mandatory grounds for exclusion of contractors included in the sanctions list or whose beneficial owner or parent company is on the list.

Contractual penalties are a common instrument for sanctioning failures to perform non-monetary obligations (e.g. completing construction on time). Contractual penalties can be cut by the courts, but generally the Polish Civil Code indicates only the grounds for mitigating a contractual penalty. The details must be sought in the legal literature and the case law. Indeed, the regulations do not even provide guidance on how much contractual penalties can be reduced. Thus each case should be treated individually, guided by the principles discussed below.

How should a spouse consent to incurring a debt encumbering the marital community property so that the creditor can obtain security against marital property or execute against marital property? And what should a creditor do if there is no written consent?

Dishonest debtors display great ingenuity in evading their obligations. They may also turn to advisers who, for a hefty fee, provide “sophisticated” ideas to lead creditors astray. Often such ideas involve the creation of legal entities (sometimes a whole group or “chain”) to hide components of the debtor’s business from creditors. Such actions constitute abuse of legal personality for the purpose of harming creditors. Can dishonest debtors and their supporters (including advisers) who knowingly use such methods really rest easy?

In late March, the European Commission published another package of proposals aimed at making the European Green Deal a reality. Some of the proposals relate to specific product categories, e.g. construction products and textiles, but there is also no shortage of proposals to make products more sustainable and environment-friendly.