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Shareholder and Creditor Protection in Company Groups under Polish Law

Published online by Cambridge University Press:  17 February 2009

Stanisław Sołtysiński  and
Andrzej Szumański
Stanisław Sołtysiński
Affiliation:
Professor of Law, Adam Mickiewicz University, Poznań (LLM Columbia), Member of Poland's Codification Commission.
Andrzej Szumański
Affiliation:
Professor of Law, Jagiellonian University in Cracow, Poland.
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Extract

This paper analyzes the emergence and practice of company groups as well as other legal institutions aimed at protecting creditors and minority shareholders of controlled companies in Polish law. To avoid misunderstandings, the concept of groups of companies is defined as an association of two or more companies dominated by a single entity (dominant firm). In principle, it is assumed that such groups of companies consist of companies possessing independent legal personality. However, participation of other legal entities in the group should also be considered. In particular, the classical narrow definition of a group of companies, if adopted by a given statute for the purpose of protecting creditors or minority shareholders, makes the task of circumventing the law rather easy. Thus, it should be sufficient if a group is dominated by a partnership or a cooperative organization. For similar reasons, a requirement that a “group” shall consist of at least three companies seems to be too formalistic and imperfect. Hence, the definition of a “group” or “dominance” may be given different meanings for various purposes. In this paper the notion of “dominance” is patterned after the seventh EU Directive, unless defined otherwise.

Type
Articles
Information
European Business Organization Law Review (EBOR) , Volume 2 , Issue 2 , June 2001 , pp. 245 - 261
Copyright
Copyright © T.M.C. Asser Press and the Authors 2001

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References

1 See, for instance, Lutter, M., “The Law of Groups of Companies in Europe: A Challenge for Jurisprudence”, Forum Internationale (1995) 11Google Scholar. “Company” is understood to mean a joint stock company or a limited liability company GmbH.

2 See Art. 1 1 of E.U. Directive No. 83/349.

3 Mestmäcker, , Verwaltung, Konzerngewalt und Rechte der Aktionäre (Karlsruhe 1958) pp. 303Google Scholar et seq. The foregoing characteristics of “group of companies” are quoted with approval by Lutter, note supra, p. 11.

4 The Draft of the Code has been presented to the Parliament by the Government this year and met with positive comments by all political parties except for KPN Ojczyzna, a small right-wing party, which considers harmonization of Polish law with the EU legal standards as an act of high treason and abandonment of Polish legal traditions. It is worth mentioning that the current Polish Commercial Code of 1934 represents an example of slavish imitation of German company laws of the 1920s to a much larger degree than the current draft of the New Code of Commercial Companies. For more on the main sources of inspiration, and the main directions of the reform of Polish company law see Sołtysiński, , “Reform of Polish Company Law”, Festschrift für W. Fikentscher (Tübingen 1998) pp. 419 et seq.Google Scholar

5 For instance, the French Rozenblum precedent seems to strike the best balance between the conflicting objectives of the autonomy of each constituent company and the modern requirements of uniform management within the group. English concepts of “wrongful trading” and “shadow director” are also worth considering while modernizing Polish bankruptcy laws.

6 Dz.U. No. 118, item 561 as amended.

7 See Szumański, A., “Spółki z udziałem zagranicznym” [“Companies with foreign participation”] in: Włodyka, St. (ed.), Prawo Spóiek (Kraków 1996) pp. 573–589Google Scholar; this has been changed by the Act of 19 November 1999 on the law on business operations. The draft Commercial Company Code stipulates that limited liability companies and joint stock companies “with their registered seat abroad may establish branches on the territory of the Republic of Poland. The requirements for establishing such branches shall be set forth in a separate act.” Art. 155 and Art. 307 of the draft Commercial Company Code.

8 Dz.U. No. 44, item 202, as amended in 1994, No. 84, item 385; 1994, No. 84, item 386; 1997 No. 30, item 164, and No. 47, item 298.

9 Zdebel, M., Ustawa o narodowych funduszach inwestycyjnych i ich prywatyzacji, Komentarz [The act on the national investment funds and their privatization, a commentary] (Bielsko-Biala 1995) pp. 19–22.Google Scholar

10 Art. 3531 of the Polish Civil Code.

11 EU Directive 89/667/EEC OJ [1989] L 395/40-42 (30.12.89).

12 Ruling of 28 April 1997, II CKN 133/97, Orzecznictwo Sądu Najwyisżego – lzby Cywilnej OSN CP [Case law of the Supreme Court – Civil Chamber] 1997 book 10, item 154; with an approving gloss by Szumański, A., Przegląd Sądowy (1998) no. 1, pp. 68–74Google Scholar, and a critical gloss by Fraąckowiak, J., Orzecznictwo Sądów polskich [Case law of Polish courts] 1998, no. 4, p. 220–222.Google Scholar

13 Dziennik Ustaw No. 57, item 502 of 1934, as amended.

14 Members of the Polish two-tier boards are called “directors” throughout this paper.

15 The existence of groups of companies has been recently recognized, inter alia, by tax and accounting laws. See section 3 of this paper for further detail.

16 It is interesting to note that the Commercial Code provides for a derivative action against directors of the company, liquidators, promoters, and certified accountants: Art. 477.

17 Szajkowski, in: Sołtsiński, /Szajkowski, /Szwaja, , Kodeks Handlowy, Komentarz, vol. 2, 2nd ed. (Warsaw 1998) pp. 1258–1259.Google Scholar

18 Art. 5 and Art. 415 et seq. of the Civil Code; Włodyka, , Prawo Spółek (Kraków 1991) p. 149.Google Scholar

19 Art. 474 of the Commercial Code.

20 Compare: Sołtysiński, S., “Zgrupowanie Spółek, Zarys problematyki prawnej”, KwArtalnik Prawa Prywatnego (1993) No. 3, pp. 224–243Google Scholar; Szymański, A., “Regulacja prawna holdingu w polskim i europejskim prawie spółek zagadnienia pojêciowe”, Przegląd Prawa Handlowego (1996) No. 8, pp. 1–11.Google Scholar

21 See further Forum Europaeum Corporate Group Law, “Corporate Group Law for Europe”, 1 European Business Organization Law Review (2000) 167, at pp. 167–185Google Scholar (in German: Zeitschrift für Unternehmens- und Gesellschaftsrecht [1998] 674, at pp. 674-691).Google Scholar

22 Hereinafter the New Code.

23 Art. 15 New Code.

24 Art. 365 § 2 New Code.

25 Art. 366 § 1 New Code.

26 Art. 428 New Code.

27 Art. 356 §§ 2-3 and Art. 456 New Code.

28 See comments in Section 3.1, infra.

29 Compare the Act of 14 June 1996 on merging and grouping of certain banks in the form of joint-stock companies Dz.U. No. 90, item 406 as amended, in particular Art. 1-12 of this act. These provisions were incorporated without change into the Act of 29 July 1997 on Banking Law Dz.U. No. 140, item 939, Arts. 113-120 Chapter 9 – Groups and mergers of banks.

30 Art. 113 sec. 1-3 Banking Law.

31 Art. 113 sec. 4-6 Banking Law.

32 Art. 113 point 7 Banking Law.

33 Art. 117 sec. 1 Banking Law.

34 Art. 115 sec. 1 Banking Law.

35 Art. 115 sec. 2 Banking Law.

36 Art. 114 sec. 3 Banking Law.

37 Art. 119 sec. 2 Banking Law.

38 Art. 116 Banking Law.

39 Art. 117 sec. 3 Banking Law.

40 Art. 147-148 Securities Law.

41 Art. 151-153 Securities Law.

42 Art. 154-158 Securities Law.

43 Art. 147-148 Securities Law.

44 The Law on Accounting uses the term “capital group”.

45 Art. 55 Accountancy Law.

46 Dziennik Ustaw No. 93, item 834, of 1934, as amended.

47 Art. 6 and 428-429 New Code.