Commercial Company Law in Poland – Remuneration in a Polish Limited Liability Company for Management Board Members and Shareholders – Remuneration for Participation in Shareholders’ Meetings of a Polish Limited Liability Company.

Can a Management Board member in Poland receive remuneration from a Polish limited liability company (sp. z o.o.) for attending Management Board meetings? Can a shareholder (stakeholder) of a Polish limited liability company receive remuneration for attending shareholders’ meetings of this company?

Management Board members in Polish limited liability companies can receive remuneration for activities related to managing the company (as members of the Management Board of a Polish limited liability company) based on an employment contract or another civil law contract. Can they receive such remuneration without an employment contract or another civil law contract just for attending Management Board meetings of a Polish limited liability company?

In answering this question, it should be noted that yes, they can. This solution is often used in Polish limited liability companies. Such payments are one of the forms of establishing and settling remuneration for strategic management activities in a limited liability company, for simply holding the position of a Management Board member. This remuneration results from the relationship created by the appointment to the body (to the Board) and the acceptance of such an appointment, not from a contract connecting the Management Board member with the limited liability company (employment contract or otherwise). The amount of such compensation is determined by the shareholders’ meeting of the limited liability company (or a resolution of the shareholders adopted outside the meeting).

Can a shareholder of a Polish limited liability company (not being a Management Board member) receive remuneration for attending the shareholders’ meeting of the limited liability company?

In practice, this solution is encountered but, under the current Polish regulations, it is inadmissible. Under Polish commercial company law, the principle of a closed catalog of legal titles under which a shareholder can receive funds from a Polish limited liability company due to the membership relationship in the company is observed. In other words, a shareholder can receive from a limited liability company, within the framework of the membership relationship (excluding remuneration for services provided to the company based on civil law contracts or employment contracts), only such benefits explicitly provided for by Polish company law – only benefits based on a legal title provided for by law. Such a title for payment cannot be created by a legal act.

The mentioned catalog of legal titles under which it is possible to make payments from the assets of a Polish limited liability company to shareholders includes payments in the form of dividends, advances on dividends, remuneration due in connection with the redemption of shares, as well as the right to amounts obtained from the distribution among shareholders of assets remaining after the liquidation of the limited liability company. However, it does not include payments for participation in shareholders’ meetings of a Polish limited liability company. The right and duty of a shareholder of a limited liability company to participate in shareholders’ meetings are undoubtedly related to the membership relationship in the company, and the legislator has not provided for the possibility of the company making payments for their fulfillment.

Paying a shareholder of a Polish limited liability company remuneration for merely participating in a shareholders’ meeting constitutes a violation of the prohibition on the return of contributions resulting from the provision of Article 189 § 1 of the Polish Commercial Companies Code and, in principle, will result in the obligation to return such remuneration to the limited liability company. The members of the company’s bodies responsible for making such a payment are also responsible for its return to the company. This responsibility is of a joint nature. In some cases, such responsibility (for the return of an unlawful payment made to a shareholder) may also be borne by the other shareholders of the company. Therefore, ensuring compliance with the rules regarding the establishment of the admissibility, as well as the conditions and amounts of payments made by the Management Board to shareholders of a Polish limited liability company, is in the interest not only of the Management Board members but also of the other shareholders. “Turning a blind eye” to violations may result in financial liability, especially in situations of conflict of interest between shareholders.

Of course, in certain situations, a Polish limited liability company can make payments to a shareholder constituting their remuneration for activities related to the course of the shareholders’ meeting of the limited liability company. However, these are isolated cases – when the remuneration is due to the shareholder for services provided to the company during the meeting (and not for mere participation), particularly advisory services on matters essential to the consideration of the agenda.

If you have a problem in this area with your Polish limited liability company, if you are unsure whether the remuneration for Management Board members and shareholders is being paid correctly, or if you are generally considering how such remuneration can be paid in the future (e.g., you are setting up a new limited liability company in Poland or want to establish one), please contact us.

Our company PRWT Accounting and Business Services sp. z o.o. specializes in Poland in handling limited liability companies, providing full accounting, payroll, and legal services in company law (lawyers specialized in company law).

We provide services in Poland in Krakow and Warsaw.

Accounting in Poland, Kraków:

TEL. +48 12 345 21 06
EMAIL: biuro.krakow@prwt.pl

Accounting in Poland, Warsaw:

TEL. +48 22 292 47 21
EMAIL: biuro.warszawa@prwt.pl