New provisions on supervisory board under Polish Commercial Companies Code

Pursuant to Art. 3821 CCC, the supervisory board may adopt a resolution on examining a specific case concerning the company's activities or assets by a selected advisor (supervisory board advisor) at the company's expense. The advisor to the supervisory board may also be appointed to prepare specific analyses and opinions. The advisor may be a natural or a legal person, but the law does not provide for any other requirements, such as the experience or knowledge of the advisor. Nonetheless, the advisor must possess the knowledge and experience necessary to examine the activity or to prepare the analysis devoted to him by the supervisory board, as the nomination of unqualified persons may lead to the liability of the supervisory board for being negligent in the selection of candidates and, in particular, due to the unjustified expenses incurred by the company.

It must be underlined that nomination of advisors has already existed in the companies' practice. However, the supervisory board has become independent in this respect because the supervisory board will represent the company in the contract between the company and the advisor of the supervisory board . The right to nominate the advisor constitutes a vital competence that may strengthen the supervisory board to exercise independent judgments. The appointment of the advisor may also influence the presumptive liability constituting a premise of the business judgment rule (see below p. III.2.). The advisor may provide for an external audit and prepare opinions and analyses necessary to adopt an independent and substantive resolution in the company's best interest.

The choice of the form of contract with the advisor rests in the competence of the supervisory board, unless the company's by-laws provide otherwise. In the said types of services, covering the preparation of analyses, opinions, or the examination of the selected issues, a contract for performance a specified work shall usually proceed (art. 627 CC ) or an innominate contract for services to which the provision of the mandate contract applies accordingly . Additionally, the supervisory board is responsible for determining the advisor's remuneration.

Nonetheless, the company's by-laws may exclude or restrict the right of the supervisory board to conclude agreements with the supervisory board advisor, in particular by empowering the general meeting to determine the maximum total cost of remuneration of all advisors of the supervisory board that the company may incur during the financial year. This restriction is mentioned only as an example. The company's bylaws may impose further restrictions, in particular, a limit of contracts concluded yearly or a limit of resolutions nominating advisors, as well as the scope of the advisor's examination. Moreover, the company's by-laws may entirely exclude the right to nominate advisors.

The manner of representation by the supervisory board has not been statutorily detailed. Hence it must be treated equally to the manner of representation of the company by the supervisory board in contracts and disputes with the management board members. Owing to the doctrinal and judicature views, the representation power addresses the body in its entirety, meaning that the resolution of the supervisory board on concluding the contract is required, which empowers the board chairman (or any other of its members) to sign the contract or eventually the contract needs to be signed by all the members of the supervisory board . In practice, the empowerment of the chairman appears consistently.

The management board must provide the supervisory board's advisor with access to documents and provide the information requested. Thus, the advisor to the supervisory board and the natural person performing activities in his name or on his behalf is bound to maintain confidential all not publicly revealed information and documents received from the company. The obligation of secrecy is not limited in time. Breaching the confidentiality duty may result in the liability of the advisor or any natural person under the provisions of the Civil Code. In the case of the advisor, this must be a contractual obligation under the contract concluded with the advisor. Additionally, it may result in criminal liability indicated in the Penal Code . Under Art. 266 PC, whoever-against the statutory provisions or an accepted obligation-discloses or makes use of information they have learned in connection with an office held or work they have performed or public, social, business, or scientific activity they have conducted, is liable to a fine, the penalty of limitation of liberty or the penalty of deprivation of liberty for up to 2 years .

On the other hand, under Art. 587 (2) CCC, whoever-acting contrary to the obligations resulting from Art. 3821 § 3 CCC- fails to furnish the information, documents, reports, statements, or explanations in due time or submits the same that are inconsistent with the facts or conceals data significantly affecting the content of such information or document is liable to a fine no lower than PLN 20,000 and no higher than PLN 50,000 or a penalty of limitation of liberty. Where the perpetrator acts unintentionally, he or she shall be liable to a fine no lower than PLN 6,000 and no higher than PLN 20,000. The introduction of penal provisions for submitting inconsistent information and documents or concealing the data might be justified. In contrast, the penalty of limitation of liberty for failing to furnish the information in due time seems too stringent. Nonetheless, using the term "significantly affect" may raise disputes about the discretionary form of this provision.

The supervisory board may make the advisor's work results available to shareholders unless this could harm the company, an associated company, dependent company,