If you are a Board Member, the amendment to the Commercial Companies Code, which has been planned for several months, should be in the centre of your interest. It assumes obligations that you will have to fulfil if you decide to implement new solutions in your company.

We invite you to read the first article of the series concerning the amendment of the Commercial Companies Code!

Binding order for specific management of company matters

In connection with the planned change in the holding law, the parent company is granted new powers in the process of shaping the policy of company groups. The legislator proposes a solution in which the parent company may issue a binding order to a subsidiary to conduct the affairs of that company in a specific manner if this is justified by the interest of the capital group.

If you want to issue binding instructions to the subsidiary – change the articles of association

The Subsidiary and Parent Company Agreement should be adapted to the new rules, i.e. it should specify the interest of the group of companies with a commitment of the Management Board to be guided in its actions. Such a provision will be the basis for issuing binding instructions.

So if you are a Member of the Management Board, verify the need to adapt the articles of association in your company.

Obligation to adopt resolutions in a subsidiary

In case of a subsidiary, you must remember that in order to carry out a binding order, the Management Board must adopt an appropriate resolution.

Of course, a subsidiary may refuse to carry out an order of the parent company if its execution will lead to or threaten the insolvency of the company (and in the case of a subsidiary in which the parent company holds less than 75% of the share capital additionally – if there is a justified fear that the order is contrary to the interest of the subsidiary and will damage it). Remember that refusal to execute a binding order also requires the adoption of an appropriate resolution.

Works on the amendment described have not yet been completed. Our Law Firm will inform you about any changes in our social media – on LinkedIn and Facebook!

Author: Oliwia Kruczyńska, Junior Associate at Kołecka Law Firm