Resolution of supervisory board of joint-stock company may be challenged

There is no regulation in Polish law directly governing challenges to resolutions of the management board or supervisory board of a capital company. Thus there have long been doubts whether there is any way to set aside these resolutions.

Recently the Polish Supreme Court entered this debate and came down on the side of allowing a petition to set aside a resolution by the supervisory board of a joint-stock company (judgment dated 18 February 2010, Case No. II CSK 449/09, Biul. SN 2010/4/14). In this case, a former member of the management board of a joint-stock company filed an action seeking a declaration of the invalidity of the supervisory board resolution dismissing him from the management board. The court of first instance granted the relief, but the court of appeal amended the judgment and held that no petition will lie to set aside resolutions of the supervisory board of a capital company.

The Supreme Court then granted a cassation appeal and upheld the position of the court of first instance that a claim seeking a declaration of the invalidity of a resolution by the supervisory board of a capital company is permissible. The court stressed that the Commercial Companies Code governs the “functioning of commercial companies,” which should be understood also to include oversight of the correctness of resolutions adopted by the company authorities. The court then pointed out that the Commercial Companies Code expressly provides that matters referred to in the code (including the functioning of a company) but not governed by the code are subject to the Civil Code, either directly or with relevant modifications. Thus, with respect to challenging resolutions by boards of capital companies, there is no gap in the law because the Civil Code should be applied. Then, when a resolution is assessed under the Civil Code, the validity of the resolution is subject to determination under general rules—specifically, under the Civil Procedure Code, by way of an action seeking a declaratory judgment on the existence or non-existence of a legal relationship or right.

This ruling is important for all capital companies, especially in terms of corporate governance standards within public companies.