Can another member of the Management Board be the proxy of a limited liability company to conclude an agreement with a member of the Management Board?
Limited liability companies often enter into agreements with individuals who are members of their management boards. These agreements include, in particular, management contracts or employment contracts, under which management board members provide services or work to the company that falls outside the scope of the Management Board’s duties and responsibilities.
Furthermore, shareholders are often members of the Management Board – this arrangement is particularly common in companies at a very early stage of development, when the team is just beginning to develop the company. A popular way to recapitalize a company is for a shareholder (in this case, a member of the Management Board) to grant the company a loan.
Required Representation by Proxy
If the Commercial Companies Code did not regulate this issue and it were possible for a Management Board member to represent the company when entering into a contract with that Management Board member, the Management Board member would be operating in a “conflict of interest” situation. To avoid this conflict, the legislature has transferred the authority to represent companies to shareholders or the supervisory board under Article 210 of the Commercial Companies Code. This provision requires that “in contracts between the company and a Management Board member, and in any dispute with them, the company be represented by the supervisory board or a proxy appointed by a resolution of the shareholders’ meeting.”
This provision allows for broader oversight of contracts entered into by the company with the individuals representing the company. This oversight is exercised by the supervisory board, if one has been appointed in the company, or by the shareholders’ meeting, as a body with, as a rule, a different composition from the Management Board.
A power of attorney granted under Article Article 210 of the Commercial Companies Code is not a classic power of attorney, to which the provisions of the Civil Code apply (Article 95 et seq. of the Civil Code). Such an attorney is a corporate attorney – their authority is not based on the will of the management board, the body primarily representing the company, but on the will of the decision-making body, which, independently, does not otherwise have the authority to represent the company. The nature of this power of attorney and the purposive interpretation of Article 210 of the Commercial Companies Code have forced legal scholars and courts to impose restrictions on the identity of the attorney. However, doctrinal views and case law in this area are not fully consistent as to who may be an attorney under Article 210 of the Commercial Companies Code.
Who cannot be an attorney-in-fact?
The dominant view in legal literature and the subject is to limit the group of individuals who can be an attorney-in-fact. This is argued, in particular, that Article 210 of the Commercial Companies Code is intended to protect a company from making unfavorable dispositions of assets and incurring unfavorable liabilities in relations with persons exercising operational control over it.
This view is presented, among others, by Professor Adam Opalski in his commentary on Article 210 of the Commercial Companies Code. He points out that “both the wording of Article 210 § 1 and its ratio preclude the appointment of a management board member as an attorney-in-fact, even if they are not a party to a contract or dispute with the company.” (A. Opalski (ed.), Commercial Companies Code. Volume IIA. Limited Liability Company. Commentary. Art. 151–226, 1st ed., 2018). Professor Adam Opalski also points out similarly. Janusz A. Strzępka, pointing out that “The literature on the subject assumes that granting a power of attorney to a management board member is inadmissible because it circumvents the provision of Article 210 § 1 of the Commercial Companies Code” (P. Pinior, J. A. Strzępka (eds.), Commercial Companies Code. Commentary, 1st ed., 2024).
The legal literature argues that “Granting a power of attorney to a manager is not so much an act in fraudem legis (as assumed by Litwińska-Werner, Commentary on the Commercial Companies Code, 2007, p. 590), but is directly contrary to the law.” (A. Opalski (ed.), Commercial Companies Code. Volume IIA. Limited Liability Company. Commentary. Art. 151–226, 1st ed., 2018). The consequence of this view is that a legal act performed by an attorney-in-fact pursuant to Article 210 § 1 of the Commercial Companies Code is unlawful. 210 of the Commercial Companies Code, who is also a member of the Management Board, constitutes an act performed by a falsus procurator. While incorrect authorization does not invalidate the legal act, it is a defective—incomplete—act. This act remains ineffectively suspended and may be confirmed under Article 103 of the Civil Code by a duly authorized attorney-in-fact selected under Article 210 of the Commercial Companies Code from outside the group of excluded persons.
There are also liberal views
Despite the dominant viewpoint, there are opposing voices. Some commentators maintain that there are no restrictions on the identity of a company’s proxy appointed under Article 210 of the Commercial Companies Code. For example, Zbigniew Jara points out that “One should support the admissibility of granting a power of attorney to another member of the management board. The provision of Article 210 § 1 of the Commercial Companies Code does not limit the group of entities authorized to act as a special proxy. A proxy appointed by a resolution of the shareholders’ meeting may be a member of the company’s management board, as Article 210 § 1 of the Commercial Companies Code does not prohibit this, as does Article 243 § 3 of the Commercial Companies Code (see Z. Kuniewicz, Selected Issues…, pp. 78-79), thus leaving the shareholders’ meeting free to decide in this regard” (Z. Jara (ed.), Commercial Companies Code. Commentary, 30th ed., 2025). This is not the most liberal view, however, as Zbigniew Jara opposes the granting of a power of attorney under Article 210 of the Commercial Companies Code to a Management Board member who is the other party to the contract with the company, arguing that this would be inconsistent with this provision. A similar position is presented in a commentary edited by Prof. Dr. hab. Andrzej Kidyba.
As cited by Prof. Dr. hab. Adam Opalski, the most liberal approach to the group of entities that may act as a proxy under Article 210 of the Commercial Companies Code was presented by Prof. Dr. hab. Zbigniew Kuniewicz “(Selected Issues Regarding Power of Attorney, pp. 78-79), who argues that even an interested administrator may be a proxy, and in such a case, the justification for applying Article 108 of the Civil Code to that administrator as a proxy should only be considered (A. Opalski (ed.), Commercial Companies Code. Volume IIA. Limited Liability Company. Commentary. Art. 151–226, 1st ed., 2018).
This minority view was reflected in the case law of the Supreme Court, namely in the Resolution of the Supreme Court – Chamber of Labor, Social Security and Public Affairs of April 7, 2010, in case reference II UZP 5/10. In this resolution, the Supreme Court stated that “Both the Supreme Court and the Supreme Administrative Court hold the position that another member of the management board may be appointed by a resolution of the shareholders as the company’s attorney-in-fact to conclude an agreement between the company and a member of the management board.” A similar view was also expressed by the Supreme Court in its judgment of February 22, 2023, in case reference II CSKP 785/22.
Summary
As indicated above, there is a dispute over whether a member of the company’s Management Board may act as a proxy under Article 210 of the Commercial Companies Code. Supreme Court case law and a smaller portion of the legal literature support this view. However, most of the literature on the subject considers this view to be incorrect. Furthermore, no Supreme Court ruling has been issued in this case that would have the force of a legal principle.
The author of this article agrees with the view that excluding the possibility of granting a power of attorney under Article 210 of the Commercial Companies Code to a member of the Management Board. Such a power of attorney would be inconsistent with the purposive interpretation of Article 210 of the Commercial Companies Code, which is intended to provide broader control over contracts entered into by persons controlling the company. If the legislator’s intention was to allow such a power of attorney to be granted to a member of the Management Board, it would have taken this into account in the wording of the provision in question – in such a situation, the provision would have included an additional sentence or paragraph stating that in the case of companies with a multi-person management board, the company may be represented by a second member of the management board if he or she is authorized to represent the company independently, or the second member of the management board may obtain such authorization granted to him or her by a resolution of the shareholders if the company agreement does not authorize him or her to represent the company independently.