Commercial and ordinary power of attorney

This article answers the following questions:

• What are the powers of a commercial attorney?
• What is an individual commercial power of attorney?
• When to appoint a commercial attorney and when an ordinary attorney?

Powers of attorney is a useful tool in effective management of business affairs in Poland. Local and international entrepreneurs may, however, be uncertain as to the proper type of representation and the exact scope of powers to be granted to the person appointed to act on behalf of the enterprise. To avoid confusion, it is a good idea to understand the fundamental rules governing these issues.

What are the similarities and differences between a commercial and ordinary power of attorney?

Polish law regulates two concepts: prokura (a commercial power of attorney) and pełnomocnictwo (an ordinary power of attorney), which are closely related, but differ in terms of characteristics and scope of granted authority.

Prokura is a special type of a commercial power of attorney which is granted by enterprises entered into the National Court Register (Polish: Krajowy Rejestr Sądowy – KRS) and the Central Register and Information of Business Activities (Polish: Centralna Ewidencja i Informacja o Działalności Gospodarczej – CEIDG) and applies exclusively to business matters. A commercial attorney has extensive powers to act on behalf of the grantor, but only within the scope of the business activity of the represented enterprise. The actions of the commercial attorney may not go beyond that scope.

Pełnomocnictwo is a broader term and may cover basically all legal transactions and acting on behalf of other persons than entrepreneurs. An appointed attorney may deal with a number of different matters – from civil procedures to judicial and administrative cases. In short, pełnomocnictwo is more universal than prokura, which is a special power of attorney type reserved to corporate matters.

Does a commercial attorney also need to be granted an ordinary power of attorney?

Whether a commercial attorney needs to be given a separate power of attorney depends on the type of activity to be undertaken on behalf of the entity.

If it concerns the business activity of the grantor, the commercial attorney does not need a separate power of attorney. The latter is required for an activity which is not related to business affairs. In addition, a separate power of attorney may be also required by law. It means that a holder of a commercial power of attorney (prokura) has full authority to represent the grantor within the scope of the grantor's business activities without the necessity to create an additional power of attorney.

It is important to remember that prokura is a special commercial power of attorney, the scope and purpose of which are closely regulated in the Polish Civil Code.

What is the authority of an ordinary attorney?

An attorney's authority depends on the scope of the granted power of attorney. The attorney is authorised to act on behalf of the grantor, but only within the limits stated in the power of attorney and provided for by the law. Under a general power of attorney, the attorney can act in a number of legal matters (e.g. signing all kinds of contracts on behalf of the grantor), while a special power of attorney gives the attorney the authorisation to conduct only specific legal transactions (e.g. entering into one particular contract).

The attorney's authorisation is, therefore, directly related to the type of the power of attorney granted, which specifies what the attorney can and cannot do on behalf of the grantor.

What does a power of attorney authorise to?

A power of attorney authorises the attorney to carry out specific legal transactions on behalf of the grantor. The scope of this authority depends on the type of the power of attorney.

The attorney can represent the grantor in court, execute contracts, submit declarations, make administrative decisions, or carry out other legal transactions within the scope of the granted the power of attorney.

A power of attorney can be general, which vests broad powers in the attorney, or special, which is limited to one particular activity.

Which activities are not allowed for a commercial attorney?

Despite having broad powers, a commercial attorney cannot act in all matters. A commercial power of attorney does not authorise commercial attorney to carry out certain activities, for example:

• convening meetings of corporate governing bodies
• selling the company without a special power of attorney
• selling or encumbering real estate without a special power of attorney
• granting a commercial power of attorney to others on behalf of the enterprise

These limitations arise from the fact that the purpose of a commercial power of attorney is, most of all, acting on behalf of the grantor in day-to-day business matters, and not making crucial decisions which have a significant impact on the enterprise.

What are the types of a power of attorney?

The Polish legal system distinguishes several power of attorney types, depending on the scope of powers:

• General power of attorney – the broadest type of a power of attorney covering only the authorisation to perform acts of regular management.
• Limited power of attorney – performing particular types of actions on behalf of the grantor (e.g. receiving correspondence).
• Special power of attorney – the authority of the attorney is limited to specific actions (e.g. selling real estate).
• Power of attorney for representation in court proceedings – empowers the attorney to represent the grantor in court.

In choosing the right power of attorney type, it is necessary to consider the grantor's needs and the scope of actions to be performed by the attorney.

What are the types of a commercial power of attorney?

There are three commercial power of attorney types:

• Individual (independent) – empowers one commercial attorney to act in and out of court independently.
• Joint clear – empowers the commercial attorney to act on behalf of the grantor jointly with another commercial attorney.
• Joint mixed – empowers the commercial attorney to act jointly with a board member of a company or a partner who has the right to represent a partnership.

Are prokura and prokurent the same concepts?

No – prokura and prokurent are two different terms.

Prokura is a legal mechanism, i.e. a special type of a power of attorney which may be granted exclusively by an enterprise. Prokurent is an individual who is granted the prokura and on its basis may act on behalf of the enterprise within the scope of its business activity.

Prokura is a power of attorney while prokurent is the holder of that power of attorney. Both terms are closely connected, but they refer to different aspects of representation.

Authorisations granted under ordinary and commercial powers of attorney are very important for the functioning of businesses

The differences between a commercial power of attorney (prokura) and ordinary power of attorney (pełnomocnictwo) in the Polish legal system are crucial in effective management of business affairs. Prokura is a special type of a power of attorney – granted exclusively by enterprises – and concerns only matters related to business activity. Pełnomocnictwo, on the other hand, is a broader concept encompassing various legal situations.

Understanding these differences plays a key part in proper assignment of powers and liability, both in the context of business operations as well as matters related to corporate or personal affairs.