Shareholders' meeting in a Polish limited liability company – types, resolutions and crucial obligations

This article addresses the following matters:

• What is a shareholders' meeting?
• What types of meetings are stated in the Commercial Companies Code (CCC)?
• Who can convene a shareholders' meeting?

The shareholders' meeting is the most important management body in a Polish limited liability company (sp. z o. o.). It's responsible for strategic decisions regarding the entity's development direction, profit distribution, and management changes – thus it is essential to have a deep understanding of its operating principles. In this article, we explain the types of meetings provided for in Polish law, how to properly convene them, and the rights and obligations of shareholders in a Polish limited liability company.

What is the role of the shareholders' meeting and why is it so important?

The shareholders' meeting in a limited liability company serves a supervisory and decision-making function. It is the forum where the company's owners adopt resolutions concerning the most important areas of its operations (including approval of financial statements and adoption of resolutions required by law in the event of a significant deterioration in the company's financial standings, capital changes, and amendments to the company's articles of association). 

The legal security of every Polish company depends on the proper conduct of meetings (and the proper adoption of resolutions).

Company shareholders’ meetings

The Commercial Companies Code specifies two types of meetings:

• The Annual General Meeting (Polish: Zwyczajne Zgromadzenie Wspólników)
  is mandatory for every Polish limited liability company and is held once a year. It is convened within the statutory timeframe – i.e. no later than six months after the end of the company's financial year. The agenda is predetermined by the provisions of the Commercial Companies Code. The Annual General Meeting:
  • approves financial statements,
  • accounts for the operating result,
  • makes decisions on the distribution of profit or loss,
  • grants discharge to members of the company's governing bodies.
• An Extraordinary General Meeting (Polish: Nadzwyczajne Zgromadzenie Wspólników) 
  may be convened at any time in situations requiring urgent decisions (e.g. due to the need to make a change in the management board, exceeding statutory loss thresholds, or other events affecting the company's operations). The EGM has no predetermined frequency, and its agenda depends on the company’s situation.

The exclusive competences of the shareholders’ meeting include, among others:

• granting discharge to members of governing bodies,
• adopting resolutions on the sale of an enterprise or real estate,
• deciding on the continued operations of the company in the event of a deterioration of the financial situation, if the balance sheet generated by the management board shows a loss exceeding the sum of the supplementary and reserve capitals and half of the company's share capital,
• deciding on changes to the company articles of association and the transformation, merger or demerger of the company,
• deciding on the increase or decrease of the share capital,
• appointing and dismissing members of the management board, supervisory board or audit committee – unless the articles of association provide otherwise.

In summary, the powers of the shareholders' meeting cover all key financial, organisational and strategic decisions.

How to properly convene a shareholders' meeting?

Correctly convening the shareholders' meeting is crucial, as formal errors may lead to the invalidation of resolutions adopted at the meeting.

Formal errors in convening or conducting a meeting may lead not only to appeals against resolutions, but also to liability for damages of management board members.

Most often, the shareholders' meeting is convened by the management board, but in certain cases, the supervisory board or audit committee are also permitted to do so. With the consent of the company's management board, minority shareholders holding at least one-tenth of the share capital may also request a shareholders' meeting. In the absence of a response (inaction) or a negative decision by the management board, the meeting may only be convened after securing court approval.

Under Polish law, an invitation must be sent to shareholders at least two weeks before the planned shareholders' meeting (by registered mail, courier, or – with the shareholder's consent – electronically). The invitation must include the date, time, and place of the meeting, as well as the agenda. Importantly, a quorum is not always essential. A shareholders' meeting is valid regardless of the number of shares represented, unless the company articles of association provide otherwise. An exception to this rule are resolutions requiring a specific representation of capital (e.g. those accompanying a decision to transform the company).

What if a shareholder can't show up?

A shareholder may participate in the shareholders' meeting (and exercise voting rights) through a proxy. The proxy form must be in writing and attached to the minutes of the meeting. Importantly, as a general rule, a management board member or a company employee cannot act as a proxy for a shareholder.

Minutes of the shareholders' meeting

Properly conducting a meeting involves not only convening it, but also properly documenting its course.

The course of a shareholders' meeting should be documented in the form of minutes. For resolutions amending the company's articles of association, increasing or decreasing the share capital, or for transformations or mergers, the minutes must be drafted by a notary public. Correct drafting of the minutes is crucial to the effectiveness of the resolutions adopted.

How does the limited liability company articles of association affect the organisation of shareholders' meetings?

Articles of association are a key document regulating the operation of the company and can modify many rules governing meetings. Their provisions may, for example:

• indicate alternative meeting venues,
• introduce a quorum requirement,
• raise (compared to the statutory) majority requirements,
• enable shareholders to participate in meetings online.

Amendments to the articles of association generally require a resolution adopted by a two-thirds majority, unless the law or the articles of association provide for stricter requirements or the form of a notarial deed. Shareholders may increase the resolution requirements, but they cannot relax them below the statutory minimum.

Holding shareholders' meetings electronically

Increasingly, shareholders' meetings in limited liability companies are being held using electronic means of communication, such as videoconferencing. The Polish Commercial Companies Code permits this form of meeting, unless the articles of association exclude this possibility.

Remote participation in the meeting should ensure that, in particular:

• there is two-way communication in real time,
• participants have the chance to speak during the meeting,
• participants can exercise voting rights in person or by proxy.

Importantly, the company articles of association may specify detailed rules for participating in a meeting using electronic means of communication – including technical requirements, the method of confirming shareholder identity and the voting procedure. However, the absence of appropriate provisions in the articles of association does not preclude conducting a meeting online, provided the statutory conditions for proper shareholder participation are met.

Meetings held remotely are subject to the same formal requirements as traditional meetings (in particular, in terms of drafting minutes and – in the case of certain resolutions – maintaining the form of a notarial deed).

Shareholder resolutions – how are decisions made?

Shareholders' decisions take the form of resolutions adopted:

• by a simple majority of votes – on regular matters,
• by a qualified majority of votes (2/3 or 3/4) – on key business matters affecting the structure, capital and future of the company, such as:
  • increase or decrease in share capital,
  • transformation, merger or demerger of a company,
  • consent to the sale of shares,
  • a significant change in the company's business activity.

It is also possible to adopt resolutions without a formal meeting – in writing – provided that all shareholders consent to such a procedure for passing resolutions (and the resolution itself is adopted in accordance with the majority rule).

Resolutions of the meeting and entry in the National Court Register

It's worth remembering that, as a rule, resolutions of the shareholders' meeting are effective upon their adoption. However, some resolutions require notification to the National Court Register, and in certain cases, a constitutive entry (i.e. an entry in the register) for the amendment to take effect (such as a resolution amending the company's articles of association). Failure to timely notify may result in liability for management board members.

Challenging resolutions – when and how can it be done?

The law protects shareholders against faulty decisions in two situations:

• when the resolution is contrary to the company articles of association or good practices (then we are dealing with an action to revoke the resolution),
• when the resolution violates the provisions of the law (then we are dealing with an action for declaration of invalidity).

The deadlines for challenging resolutions depend on the type of action – from one month to three years from the date of their adoption.

Rights and obligations of shareholders during the meeting

Each shareholder has the right to vote (in principle, one vote per share, unless the company articles of association provide for preference of shares in terms of voting rights), to participate in discussions and to raise objections. Generally, voting at the shareholders' meeting is open. However, secret voting is mandatory in personnel matters (e.g. when appointing or dismissing members of governing bodies), as well as at the request of at least one shareholder.

An objection to a resolution must be recorded in the minutes immediately after the voting result is announced – only then does the shareholder retain the right to challenge the resolution in the future.

Shareholders have the right to review financial documents and shareholder materials which should be made available at least 15 days before the meeting. Informed decision-making minimises the risk of errors or disputes.

When electing company bodies (e.g. members of the management board or supervisory board), shareholders should adhere to the obligation to maintain the secrecy of the vote to ensure impartiality of the election. Of course, the primary obligation of shareholders is to act in good faith and make decisions in accordance with good practice, in a manner that does not prejudice the interests of other shareholders.

Summary – why are procedures crucial to company security?

The shareholders' meeting is a key corporate governance body in a Polish limited liability company. Compliance with procedures, deadlines, and voting rules is essential for the company's legal security. It should also be remembered that while simplified meeting formats are permissible in small companies, they require unanimous approval from all shareholders.

The most common errors when arranging shareholders' meetings include:

• failure to meet the statutory deadlines for convening the meeting,
• incorrectly drafted agenda,
• lack of minutes of the meeting or required notarial form,
• adopting resolutions without the required majority,
• failure to take into account the provisions of the articles of association.

Any questions as to the organisation of a shareholders' meeting? Contact our expert team providing professional corporate services to gain certainty that your company is legally secured.

The above article is for informational purposes only and does not constitute legal advice. The company's unique situation should each time be analysed individually.