Jacek Bondarewski

A shareholder’s right to exercise individual supervision of the affairs of a limited-liability company

Shareholders may obtain knowledge about the affairs of a limited-liability company not only from the company’s annual financial report and the management board’s annual business report. Shareholders may review the books and records of the company themselves, with the assistance of experts if they wish.

Not all shareholders of Polish limited-liability companies realise that they have the right to exercise individual inspection of the company and to receive information about the company’s operations, in addition to the information contained in the company’s annual financial report and the management board’s annual business report. This right may be limited or excluded only if a supervisory board or audit committee is appointed, or if the right is limited or excluded by the articles of association (Commercial Companies Code Art. 213 §3). If the company has no supervisory board or audit committee and there are no restrictions or exclusions in the articles of association, any shareholder, regardless of the number of shares held, has the right at any time to review the company’s books and records, to prepare a balance sheet for the shareholder’s own use, and to demand further information from the management board (Commercial Companies Code Art. 212 §1). This is an individual right and generally may not be assigned to a third party, although the law provides that a shareholder may exercise supervisory activities together with persons authorised by the shareholder. Such person may be a specialist in examination of corporate books and particular types of documents, which means that the shareholder may be assisted by experts.

The management board of a limited-liability company may refuse to provide a shareholder with access to documents or further information if there is a justified concern that the shareholder will use them for purposes contrary to the interests of the company and thus expose the company to a significant loss (Commercial Companies Code Art. 212 §2). The code does not expressly require that the shareholder be presented with a written justification for such refusal, but it should be assumed that this is necessary, particularly in light of the further rights the shareholder has in the event of a refusal.

A shareholder who has been refused access has a right to a ruling on the reasonableness of the refusal via a resolution of shareholders. Such resolution should be adopted within one month after submission of a demand by the shareholder. Because the refusal to provide a shareholder with corporate documents and information is a disputed matter, the shareholder in question becomes a party to a dispute with the company and therefore should not vote on resolution of the dispute (under Commercial Companies Code Art. 244). If the shareholders’ resolution upholds the refusal to provide documents and information to the shareholder, or if no such resolution is adopted by the deadline provided, the shareholder may apply to the registry court for an order requiring the management board to present the requested documents or information. The application must be filed within 7 days from receipt of notice of the shareholders’ resolution upholding the refusal to provide the documents or information, or 7 days after the end of the one-month period for adoption of a shareholders’ resolution on whether to uphold the denial of access. When considering the matter, the court must consider the shareholder’s standing to seek the information, the scope of the request, and the reasonableness of the management board’s denial of the request.

A shareholder’s right of inspection is somewhat specific in nature, because it is an individual right provided for by law (and thus does not require any additional provision in the articles of association), but it is not a personal right of the shareholder (that is, it is not a right associated with specific, named shareholders). It is also not the same as a minority right, because it is not tied to holding any specific fraction of the share capital. A minority right is a different type of right which may lead to conducting an audit of the company. Under Commercial Companies Code Art. 223, upon request of a shareholder or shareholders holding at least one-tenth of the share capital, the registry court may, after seeking the position of the management board, appoint a qualified auditor to review the company’s accounts and operations.

Jacek Bondarewski, Corporate Law Practice, Wardyński & Partners