The parent company shall be liable for damages on the basis of fault for damage caused as a result of execution of a binding order by the Management Board of the subsidiary.
In the event of such damage, a Member of the Management Board of a subsidiary (as well as the parent company if he acts in the interest of a group of companies – see our latest post) may be neither criminally nor civilly liable, except for subsidiary liability under article 299 of the Commercial Companies Code. This means that as a result of recognizing the execution of a subsidiary as ineffective, the MB Member is liable instead of the company.
The MB Member may relieve themself of this liability in case of a sole proprietorship subsidiary and, to this end, they must prove that:
- the sole cause of the company’s insolvency was the execution of a binding order, and
- indicate that the property of the parent company allowing the claim to be satisfied.
The described Amendment secures the interests of creditors because if the enforcement against the subsidiary proves ineffective, the parent company is liable for the damage caused to the creditor of the subsidiary, if the damage resulted from the execution of a binding order by the subsidiary.
It is worth remembering that the parent company may relieve itself of this liability, inter alia, if it proves that the ineffectiveness of the execution against the subsidiary was not caused by the execution of a binding order.
If you are a MB Member of parent or subsidiary company, remember to:
- adjust the “interest of the group of companies” in the Articles of Association/statutes of the company and follow it in your actions;
- adopt appropriate resolutions to carry out or refuse to carry out a binding order;
- collect documentation in form of information, opinions or analyses to prove your actions in face of a possible dispute with another group company, other MB Members, shareholders or creditors.
*Described solutions are still at the stage of arrangements and may be changed.
Author: Oliwia Kruczyńska, Junior Associate at Kołecka Law Firm