New provisions on supervisory board under Polish Commercial Companies Code

The supervisory board of a joint-stock company plays a pivotal role in the corporate supervisory system. Under the provision of Art. 382 § 1 CCC, the supervisory board exercises permanent supervision over the company's activities in all aspects of its business. The competence allows for the influence of the supervisory board in joint-stock companies over the management board (appointment, removal, suspension of the management board, the power of representation in contracts and disputes with the management board, settling the remuneration of the management board members, giving consent for company operations where the law or the company's by-laws so provide). The powers of the supervisory board also include reviewing the financial statements and the report of the management board in terms of their compliance with the books, documents, and facts, reviewing the proposals of the management board concerning the distribution of profits or coverage of losses and drawing up and submitting to the general meeting an annual written report for the previous financial year (report of the supervisory board).

Additional powers may result from other provisions, in particular from the Act of 29 July 2005 on Public Offering, Conditions Governing the Introduction of Financial Instruments to Organized Trading and Listed Companies ⁵⁾ . In listed companies, pursuant to Art. 90g sec. 1 POA, the supervisory board of a company draws up an annual remuneration report presenting a comprehensive review of remuneration, including all benefits, regardless of their form, received by individual members of the management board and supervisory board in the last financial year. Moreover, under Art. 90i sec. 3 POA, the conclusion of a significant transaction requires the consent of the company's supervisory board (related-party transactions).

The new provisions introduced the possibility to nominate a supervisory board advisor, linked with the right to represent the company in a contract with the advisor, along with the right to determine the remuneration for the advisory activity. Further, the approval of transactions with a dominant company, a dependent company, or an associated company is now introduced. Apart from the said powers, the manner of exercising supervision was changed, including the right to information, document inspection, and supervision by nominated supervisory committees. Finally, regardless of the amendment to the supervisory system, the duty of loyalty and due care of the board members, the duty of confidentiality, together with the business judgment rule, were incorporated.