2.1. Background

The financial structure of the P.S.A. represents the most significant and complex innovation introduced into Polish law by the reform. The model adopted for the P.S.A. must be presented in the wider context of developments of Polish company law, as well as in relation to the solutions existing in other types of Polish companies.

Since the pre-war time and the adoption of the Commercial Code of 1934, Polish law adhered strongly to the German-styled concept of the minimum share capital. The amount of capital determined in a company’s articles of association had to be paid by shareholders in cash or through in-kind contributions. The assets representing this capital could not be distributed to shareholders unless the capital amount was decreased by an amendment of the articles of association, a formal procedure that requires securing the rights of the company’s creditors^[25]. The concept was strengthened with the adoption of the Commercial Companies Code in 2000. One of the primary objectives of the new Code was the adaptation of Polish law to EU standards, including compliance with the 2^nd Company Law Directive^[26]. Strict rules on share capital 612existed also in the sp. z o.o., with only some minor deviations from the standards in the spółka akcyjna. The concept was consolidated in the Commercial Companies Code as an element of filling of alleged legislative ‘gaps’ in the rules on the sp. z o.o., while continuing the process of shaping the sp. z o.o. as a “small joint stock company”^[27].

However, in the years immediately following the enactment of the Commercial Companies Code, questions were raised in the Polish literature regarding the ratio and efficacy of the share capital system^[28]. These concerns were influenced by the emergence of an international debate^[29] and Anglo-American solutions, which provided a new context for evaluating the Polish system. In 2008, the statutory minimum share capital for both types of Polish companies was significantly reduced: in the sp. z o.o. from 50.000 PLN to 5.000 PLN^[30] and in the spółka akcyjna from 500.000 PLN to 100.000 PLN^[31]. At the same time, the very concept of legal capital was preserved without further reform. This decision was neither discussed with academia nor the business commu613nity; it was part of an incidental governmental reform bill aimed at reducing the burdens faced by entrepreneurs^[32]. The reform sparked an intense discussion on the future of the legal capital rules and possible alternatives. This resulted in the formulation of a draft bill on the reform of the financial structure of the sp. z o.o., which was developed by the Codification Commission at the Ministry of Justice^[33].

The objective of the draft was to pursue an approach that would result in a significant increase in the flexibility of the financial structure of sp. z o.o. and a corresponding broadening of the autonomy of its members. The proposal put forth a selection of three models for consideration: 1) the traditional model with par value shares and share capital; 2) the new model with real no par value shares and the share fund (kapitał udziałowy) as an alternative to the share capital and 3) the ‘mixed model’ being a combination of the two systems. The main advantage of the new model lay in the admissibility of withdrawing funds contributed in exchange for shares in the form of dividends or redemption payments, without the need to apply the rigorous rules on a decrease of the share capital. A technical minimum of 1 PLN for the share capital was foreseen in the traditional model. In each model of the sp. z o.o.’s financial structure all corporate payments to the shareholders were to be subject to a solvency test. The ‘mixed model’ was supposed to be attractive for existing companies who could take advantage of the flexible capitalization rules while retaining their share capital, without undergoing costly and time-consuming restructuring measures. However, due to the lack of political will in the government coalition ruling in Poland between 2007–2015, the reform was not enacted, despite a stable majority in Parliament^[34].

614The legislative works on the P.S.A. were heavily influenced by the previous efforts to reform the financial structure of the sp. z o.o.^[35]. There was no doubt that the P.S.A., as a separate company type designed to fulfil the needs of start-ups and innovative businesses, required a modern financial structure that did not rely on the traditional share capital concept. The rules on the financial structure of the P.S.A. are driven by three main objectives:

1. shareholders should be able to withdraw capital from the company without facing burdensome restrictions;

2. shareholders contributing work and services to the company should be able to enjoy the same status as shareholders subscribing to their shares in return for cash or “traditional” in-kind contributions;

3. the protection of the company’s creditors should be ensured by a ‘modified’ balance sheet test and a solvency test.

2.2. Shares in the P.S.A. and the share fund

Shares in the P.S.A. have no par value and do not represent a fraction of the share fund; thus, they are entirely detached from that fund (Art. 300² § 3 CCC). This principle allows for contributions in the form of work and services as there is no obligation to cover any nominal value of a share. Moreover, it mitigates obstacles in restructuring companies in crisis, as shares can be subscribed for any amount. There is no necessity to reduce the nominal value of shares, and no impediment exists if the minimum nominal amount has already been achieved. Share fund alterations do not affect the number of issued shares, as they do not constitute a fraction of that fund.

The default rule stipulates that each share, regardless of the nature of the contribution made to subscribe for it (cash, capital in-kind contributions, work or services), carries equal rights: the right to receive dividends, to vote and to participate in the liquidation proceeds (Art. 300¹⁵ § 3, Art. 300²³ § 1, Art. 300¹²¹ § 4 CCC). However, the articles of association can deviate from this rule by establishing classes of shares with varying rights.

Understanding the legal nature of the share fund (kapitał akcyjny) is critical for the comprehension of the financial structure of the P.S.A. The share fund constitutes the company’s basic fund (kapitał podstawowy) as defined by accounting rules. Although it is classified as a capital fund, it is treated similarly to the 615company’s earned profits because it can be distributed to shareholders through dividends, share repurchases and redemptions of shares (art. 300¹⁵ § 2 CCC).

Essentially, the rules on the P.S.A. do not prescribe a statutory minimum for the share fund, as minimum capital requirements for establishing a company have been perceived as arbitrary and ineffective. Shareholders can agree to contribute only work and services to the company and meet the company’s capital needs by extending loans. However, to ensure that the share fund is recorded as a positive value in the company’s accounts, a requirement was introduced mandating that all P.S.A.s must have a share fund with a technical minimum of 1 PLN (Art. 300³ § 1, 2^nd sentence CCC).

In contrast to the share capital of the sp. z o.o. and the S.A., which is specified in the articles of association as a result of the original agreement between the company’s founders and the product of later amendments thereto, the amount of the share fund of the P.S.A. is the result of capital contributions made to the company by its shareholders as well as subsequent corporate distributions or internal reallocations of equity. The share fund figure only reflects the contributions made to the company and therefore must not be determined in the articles of association. Consequently, changes to the share fund (whether increases or reductions) do not require an amendment of the articles of association. There exists no formal procedure for adjusting the share fund similar to the procedures for amending share capital in the sp. z o.o. and the S.A. If shareholders decide on the issuance of new shares, which does entail an amendment to the articles of association, the share fund is increased as the result of new capital contributions made to the company. Similarly, the reduction of the share fund requires a simple resolution of the general meeting and does not constitute an amendment to the articles of association.

However, the amount of the share fund is recorded in the register of the P.S.A., making it publicly accessible to third parties. As a result, third parties can rely on the share fund amount as a reference for estimating the original capital investment made by the shareholders that has not been withdrawn. Nevertheless, it is important to note that if the company has incurred losses, its actual assets may no longer reflect the share fund amount.

2.3. Shareholders’ contributions to the P.S.A.

Allowing the subscription of shares in the P.S.A. for work and services facilitates the integration of intellectual and operational input of inventors with the capital of financial investors, while excluding the personal liability of all shareholders. Traditionally, under Polish law, work and services could only be contributed to civil and commercial partnerships (Art. 48 § 2 CCC), but not to 616companies. Excluding personal liability in Polish partnerships typically requires special arrangements, such as granting the status of a general partner in a limited partnership to a sp. z o.o. (the equivalent of the German GmbH&Co. KG). The new law includes a general provision permitting any contribution with a determinable monetary value to be offered in exchange for shares, in particular work and services (Art. 300² § 2 CCC). Consequently, two basic types of contributions can be distinguished:

1. “capital contributions”, which include cash contributions and “traditional” in-kind contributions under the EU capital regime (Art. 46 Directive 2017/1132) and the concept of share capital in the S.A. and in the sp. z o.o.

2. “non-capital contributions”, which are work and services and other in-kind contributions not falling into the scope of work and services which are not permitted in the S.A. and the sp. z o.o.

Capital contributions increase the amount of the share fund (Art. 300³ § 1, 1^st sentence CCC). Non-capital contributions are not attributed to the share fund as they are usually not recognised as assets in the balance sheet of the company. Increasing the share fund by the value of non-capital contributions would be problematic, as it could lead to an overstatement of the company’s financial health.

The rules on the P.S.A. grant wide discretion regarding the valuation of contributions. This flexibility is enabled by the model of no par value shares, as the par value does not impede the process of issuing shares. There is no requirement for even a symbolic cash contribution for shares subscribed in exchange for work or services, unlike scenarios where low par value shares might entail an obligation to provide work or services. Moreover, determining the value of work and services is inherently relative, as their worth largely depends on the company’s prospects for generating revenue on the basis of these contributions in the context of the planned business venture.

In internal relations the valuation of contributions, as reflected in the number of shares allocated to every subscriber, is entirely left to the autonomous decisions of shareholders, irrespective of the type of the contribution.

In external relations, to protect the company’s creditors, the valuation of in-kind capital contributions (and only this type of contributions) must be based on their fair value. This fair value should be disclosed in the company’s financial statements. The rule ensures that the share fund does not become a ‘fictive’ figure that does not accurately reflect the ‘real’ value of the assets transferred to the P.S.A. Under Art. 300¹⁰ CCC, if the value of the in-kind contribution allocated to the share capital is significantly overstated compared to its fair value on the day of taking up the shares, the shareholder who made such contribution is obliged to compensate the company for the shortfall. Members of the 617management board (or board of directors) are jointly and severally liable with the shareholder, unless they are not at fault. However, this liability for the ‘missing value’ of the contribution (German: Differenzhaftung), inherited from the rules on the sp. z o.o. (Art. 175 CCC), does not interfere with the shareholders’ discretion regarding the number of shares allocated for an in-kind capital contribution, and, consequently, does not limit the freedom of valuation in internal relations.

The decision to permit the contribution of work and services in exchange for shares was accompanied by new safeguards. Firstly, a maximum period of three years was established for fully paying up the shares, starting from the registration of the company or the registration of the new share issuance (Art. 300⁹ § 1 and Art. 300¹⁰⁴ § 2 CCC). Secondly, a statutory restriction related to the transfer of shares which are not fully paid-up applies: such transfer requires the consent of the company (Art. 300⁴⁰ § 1 CCC). Even though these rules apply to all shares, regardless of the type of contribution for which they were issued, their primary purpose is to ensure the proper and effective performance of non-capital contributions for the company.

2.4. Distributions to shareholders and protection of creditors

3.1. Freedom in shaping the rights of shareholders

Broad autonomy in determining the company’s governance framework and shaping shareholder rights is crucial for start-ups, where balancing the contributions of founders and key employees with the influence of financial investors is paramount. The internal relationships within these companies are often marked by conflicts of interest, leading to agency costs between founders and venture capital firms, as well as among financial investors participating in different financing rounds. These dynamics necessitate flexible contractual arrangements that are tailored to the specific interests of the parties involved^[38]. The rigid internal governance structures of the sp. z o.o. and the S.A. often necessitate extensive and complex contracting outside the articles of association, primarily through shareholder agreements. However, this approach remains an imperfect solution, introducing potential legal risks.

Taking these considerations into account, the rules on the P.S.A. provide significant flexibility in relation to preferred shares and individual rights of shareholders (named, under Polish law, also as “personal” rights of shareholders). Under Art. 300²⁵ § 1 and Art. 300²⁸ § 1 CCC, preferred shares and individual shareholders’ rights must be specified in the company’s articles of association. Another admissible method of balancing the powers of shareholders in the P.S.A. are voting caps. The statutory framework does not, however, prescribe explicit constraints on the characteristics of preferred shares, individual rights or other instruments deviating from the standard model, nor does it precisely delineate the permissible extent of deviations from the principle of proportionality. Shareholder autonomy in shaping exceptions to the one-share-one-vote principle is a necessary consequence of the considerable freedom related to the shareholders’ contributions admitted to the P.S.A. The possibility to combine capital and labour contributions makes it desirable to allow for substantial differentiation in the rights of shareholders.

The freedom of shareholders to depart from the one-share-one-vote principle is primarily constrained by the overarching concept of the nature of the P.S.A. and general restrictions on contractual freedom within Polish private law, notably including provisions on good commercial practices (Art. 353¹ of the Civil Code). While affording considerable leeway for deviations from the statutory default rule, this framework nonetheless serves as a safeguard against adopting extreme measures that could, for instance, unduly infringe upon a 621shareholders’ fundamental corporate rights, such as the right to share in profits or the voting right.

In these circumstances, the principle of equal treatment of shareholders and the duty of loyalty among shareholders is of vital importance. Both concepts allow for individual assessment of the legality of interfering with shareholders’ membership rights by introducing deviations from the one-share-one-vote principle and thereby restrain the power of the majority shareholder to amend the articles of association of an existing company. Polish law foresees a general clause obliging all types of companies to treat their shareholders equally in the same circumstances (Art. 20 CCC), patterned after the German § 53 a Aktiengesetz. The P.S.A. can serve as a useful laboratory to develop flexible constraints on the allocation of corporate power in the company when fixed caps on establishing share preferences and individual rights of shareholders are not existing. Moreover, the increased freedom to shape the internal relations in the P.S.A. has been correlated with a new protection instrument, discussed below.

3.2. Shareholders’ right of withdrawal from the company

Given the legal prohibition on trading shares of a P.S.A. on organised capital markets, the typical vertical agency problems inherent in public companies with dispersed shareholding are of diminished significance^[39]. However, the P.S.A., as a non-public and closely held entity, remains particularly vulnerable to horizontal agency conflicts among distinct shareholder groups, most notably between majority and minority shareholders^[40].

As stipulated in Art. 300⁴⁹ § 1 and Art. 300¹²⁰ § 1 item 3 CCC^[41] the instruments for resolving shareholder conflicts in the sp. z o.o. can be applied in the P.S.A. First, the expulsion of minority shareholders allows majority share622holders to seek court intervention, if a minority shareholder acts against the company’s interest (Articles 266–269 CCC). Second, the shareholder may request a court-ordered dissolution of the company based on compelling reasons (Art. 271 CCC), which, however, is an instrument barely used in the Polish corporate practice.

A significant innovation introduced by the rules on the P.S.A. is the shareholder’s right of withdrawal from the company. The court may order a shareholder’s withdrawal upon their request if there exists a compelling reason justified by the relations among shareholders or between the company and the specific shareholder, resulting in substantial harm to the latter (Art. 300⁵⁰ § 1 CCC)^[42]. Due to the closed nature of the company, such a shareholder (typically a minority shareholder) cannot “exit” the company by selling shares in a liquid market. This circumstance can lead to the “imprisonment” of minority shareholders within the company, while their shares’ value potentially diminishes over time. An example of prejudice to minority shareholders that could warrant withdrawal involves the unjustified, prolonged retention of profits, primarily orchestrated by the majority shareholder. This situation often entails the covert transfer of these profits to majority shareholders through non-corporate transactions with the company, a practice commonly referred to as “tunnelling.”

In cases of court-ordered withdrawal of a shareholder, their shares must be acquired by the remaining shareholders in proportion to their ownership stakes, at a value deemed fair under Art. 300⁵⁰ § 3 CCC. It is therefore the majority shareholder (shareholders) who are bound to finance the judicially enforced exit of the minority shareholder. In this buy-out process, the company acts as an intermediary, facilitating the acquisition of the withdrawing shareholder’s shares. Additionally, the company, along with the remaining shareholders, assumes joint and several liability for the payment of the buy-out price (Art. 300⁵⁰ § 4 CCC).

The rules on a shareholder’s withdrawal from the P.S.A. respond to the lack of a comprehensive and balanced system for minority shareholder protection in the sp. z o.o.^[43]. The right of withdrawal serves as a remedy for shareholder conflicts arising from severe abuses of majority principles, where the minority shareholder’s voice effectively loses its practical significance, making exit from 623the corporation the only viable option^[44]. It is posited that granting oppressed minority shareholders the right to withdraw, coupled with the entitlement to fair compensation, serves as a potent incentive for majority shareholders to uphold the fundamental economic rights of minorities. This mechanism is designed to deter the majority from unfairly appropriating corporate value at the expense of minority interests^[45].

Given the novelty of the shareholder’s right of withdrawal, there is currently a dearth of court decisions elucidating the proper reasons justifying such a measure. Nonetheless, an established judicial doctrine on minority shareholder oppression provides a valuable framework for interpretation. Polish company law recognises a duty of loyalty among shareholders, particularly in closed corporations^[46]. This principle has been consistently applied by the courts, which have invoked it along with the notion of good morals and shareholder harm for the purpose of setting aside resolutions concerning, inter alia:

1. persistent exclusion of distribution of company profits over many years, despite no investment needs existed in the company^[47];

2. dilution of corporate rights of a minority shareholder, wrongly prevented from participation in the decision making on the reform of the articles of association^[48];

3. depriving the minority shareholders of their influence on the composition of the board^[49].

These judicial precedents may offer guidance in interpreting and applying the new shareholder withdrawal provisions in the P.S.A.

3.3. 624Simplified winding-up procedure

The dissolution of a company, which entails selling its assets, settling the company’s debts, and distributing the remaining funds to shareholders, is a time-consuming and bureaucratic process that incurs transaction costs for both the company and its shareholders. The dissolution of a company can lead to the destruction of economic value if individual assets are sold during the liquidation process instead of the entire operating enterprise. Consequently, there have been calls in Polish corporate practice for the introduction of a legal framework for simplified liquidation, allowing shareholders to acquire all of the company’s assets—including the operating enterprise—without undergoing a formal liquidation procedure. This simplified liquidation procedure addresses in particular the needs of start-up ventures, which face an increased risk of failure. It offers an appealing alternative to the lengthy and costly “ordinary” liquidation, especially when the company’s assets constitute a functioning enterprise whose operations can continue under the ownership of one of the shareholders. The simplified winding-up procedure may also serve as an expedient dissolution method for sole shareholders of single-member companies, including Special Purpose Vehicles (SPVs), seeking a quick wind-up. Moreover, it can facilitate liquidation, in which the assets and operations of the company are transferred to one shareholder with the consent of the others.

The simplified liquidation procedure of a P.S.A. provided for in Art. 300¹²² § 1–9 CCC substantially enhances the shareholder freedom related to the modalities of ending the business venture conducted in the legal form of an P.S.A. The simplified liquidation involves the transfer of all the company’s assets, including its rights and obligations, to a single shareholder (referred to as the “acquiring shareholder”) by means of universal succession. The acquiring shareholder is legally obligated to satisfy the creditors and other shareholders. This process requires two key approvals. First, a resolution must be passed by the general meeting, with a qualified majority of 3/4 of the votes cast, provided that shareholders representing at least half of the total shares are present. Second, the acquisition must be approved by the registry court. The court may grant its consent upon the company’s request if it is demonstrated that the acquisition will not cause harm to the creditors or shareholders. Additionally, the court may impose certain conditions, such as requiring security for the company’s creditors. Creditors who oppose the acquisition may submit a substantiated objection to the registry court. Shareholders opposing the simplified liquidation and its terms, particularly with respect to the remuneration for their shares as determined by the acquiring shareholder, may contest the resolution adopted by the general meeting.

625It should be emphasized that the simplified liquidation of P.S.A. does not constitute a separate restructuring or insolvency procedure^[50], rather, it is a special, optional form of company liquidation. Consequently, the initiation of simplified liquidation does not absolve the company’s board members from their obligation to file for insolvency if the company becomes insolvent in the course of such liquidation proceedings.

4.1. General remarks

A key feature and a manifestation of shareholder autonomy typical of the P.S.A. is that it allows shareholders to select between the two-tier (management board and supervisory board) and the one-tier governance model (board of directors). The newly implemented statutory provisions on the board of directors in the P.S.A. mark a significant departure from Poland’s historically entrenched dualistic model, dating back to the Commercial Code of 1934, which draws from German corporate governance traditions. The rules on the P.S.A. remain in opposition to the legal framework of the S.A. which still firmly adheres to a conservative version of the two-tier model. A Polish joint stock company must have a supervisory board and the establishment of a board of directors is not permitted. The involvement of the supervisory board in strategic decision-making process is limited. In contrast to German law (cf. § 111 para 4, 2^nd sentence Aktiengesetz), the CCC does not allow the supervisory board to determine which actions of the management board require its consent. Except for related party transactions Polish law does not grant the supervisory board any significant statutory decision rights. It is the articles of association of a joint stock company (and only the articles of association) which can provide for acts requiring prior consent of the supervisory board. Even though many companies formulate extensive lists of actions (transactions) that are subject of the supervisory board’s veto right, the statutory model in the Polish the joint stock company does not allow for quick adjustment of the internal corporate governance to changing market conditions or evolving company needs^[51].

626The same conclusion applies to the Polish limited liability company. Although the supervisory board in the sp. z o.o. is almost always optional, the establishment of a one-tier system would contradict the mandatory division of powers between the management board and the supervisory board and is therefore considered to go beyond the scope of shareholder autonomy. Hence, in the Commission responsible for the draft act on the P.S.A. there was no doubt that the governance model in the P.S.A. must be significantly modernised in relation to the status quo in existing Polish companies. This was facilitated by the fact that, apart from companies with State Treasury shareholding established as a result of transformations of state-owned enterprises, Polish law does not provide for mandatory employee participation, which would require the establishment of a supervisory board.

The governance system of the P.S.A. can be described as “double optional”. Shareholders drawing up the articles of association of a P.S.A. have a choice between appointing a management board or a board of directors (Art. 300⁵² § 1 CCC). If the management board has been chosen, the company may have a supervisory board as an additional, optional corporate body (Art. 300⁵² § 2 CCC)^[52].

The governance structure of the P.S.A. is typical for a closed company: shareholders can influence the management of the company, regardless of the board model adopted, through both formal and informal instruments. Matters included in the company’s articles of association require prior shareholder approval. Binding instructions can be issued by ad hoc resolutions of shareholders unless the company’s articles of association explicitly prohibit this. Management board members and directors can be dismissed by shareholders at any time without having to state a reason (ad nutum). The legal framework 627makes the P.S.A. well suited for use as a subsidiary within a corporate group or as a vehicle for joint ventures.

4.2. Board of directors

The legal framework of the P.S.A’s board of directors is characterized by the flexibility in allocating managerial and supervisory duties and powers, which allows the board’s organisational structure to be adapted to the specific circumstances of a given company, even without the need to amend its articles of association^[53]. The board of directors may consist of one or more directors, who are appointed and dismissed by the shareholders.

In a multi-person board, the default statutory rule is that all directors are both obliged and entitled to manage the affairs of the company collectively (Art. 300⁷⁵ CCC). However, from among the directors, the running of the company’s enterprise (company’s business) can be delegated to some of them. This delegation results in the appointment of such directors as executive directors. Directors who have not been entrusted with managerial functions act as non-executive directors whose task is to exercise ongoing supervision over the company’s activities (Art. 300⁷⁶ § 1 CCC). However, delegation cannot concern decisions on important business matters of the company, the list of which is provided for in the CCC. These include making decisions of strategic importance for the company, establishing business plans and the organisational structure of the company’s enterprise, and appointing commercial proxies (Art. 300⁷⁵ § 2 and 3 CCC). The board should decide on these matters collectively, by way of a resolution adopted by all its members. The articles of association may provide for further matters requiring a joint decision of all directors. All board members, both executive and non-executive, retain the non-transferable power to represent the company with an unlimited scope of representation (Art. 300⁷⁷ CCC).

The legal basis for allocating management responsibilities to particular board members (and thus appointing executive and non-executive directors) may be the provisions of the P.S.A.’s articles of association, the board’s bylaws, or even an ordinary (ad hoc) resolution of the board (Art. 300⁷⁶ § 1 CCC). Hence, the division of powers within the board may be a permanent solution approved by 628shareholders as part of the company’s governance structure or a model adopted in response to the current needs without the need to amend the articles of association. The power to amend the board’s bylaws can be vested with shareholders or the board itself. At the same time, the articles of association can exclude or limit the board’s freedom in deciding on its internal structure and the division of powers, and thus fix the governance model in the company’s articles of association.

The presented model reflects a key feature of the one-tier system, which is the involvement of the non-executive directors in making important management decisions. This facilitates effective supervision of the company’s management due to the greater involvement of non-executive directors in decision-making processes and better information flow compared to the situation in the two-tier system, in which the supervisory board – as a separate corporate body – can only approve certain management actions and exercise ex post supervision. In turn, the price for assigning to all directors the non-transferable power to manage the company’s affairs and represent the company is that non-executive directors are also liable for failure to file a motion for insolvency of the company (cf. Article 20(2)(2) of the Polish Insolvency Law). Similar liability is not borne by members of the supervisory board in the Polish two-tier model.

The one-tier system increases the likelihood of conflicts of interest due to the combination of management and supervisory functions by members of the same body. These conflicts can be mitigated by the possibility of establishing board committees: those exercising permanent supervision over the conduct of the company’s affairs, consisting exclusively of non-executive directors (Art. 300⁷⁶ § 4 CCC) and those performing the activities related to running the company’s enterprise (business), consisting exclusively of executive directors (Art. 300⁷⁶ § 2 CCC). The adoption of a committee-based structure may also be considered beneficial in contexts involving a larger board number of board members or where the company’s operations are particularly complex. However, the committees primarily perform executive and preparatory functions in relation to decisions ultimately ratified by the entire board. It should be noted that the delegating decision-making powers to these committees is inadmissible in matters that, under the CCC or the articles of association, require a collective resolution by the board acting in gremio (Art. 300⁵⁷ § 2 CCC).

4.3. The business judgement rule

According to Art. 300¹²⁵ § 2 CCC, a board member of the P.S.A. does not breach their duty of care if they act loyally to the company within the bounds of justified economic risk, considering information, analyses, and opinions that should reasonably be taken into account in making a careful assessment. Be629fore the enactment of the provisions on the P.S.A., the business judgment rule (BJR) was accepted in some decisions of Polish civil courts. However, concurrently, criminal courts developed the concept of “justified economic risk” which showed points of contact with the BJR. Therefore, there was a significant legal risk whether the courts would exclude or reasonably mitigate the liability of board members for erroneous business decisions. The introduction of the BJR aligns with one of the objectives underlying the P.S.A., which is to facilitate the operation of start-up companies being entities perceived as having a particularly high risk of business failure. Board members’ liability in the P.S.A. should not have a “chilling effect”, i. e. discourage them from making business decisions that may prove beneficial for the company and provide it with a competitive advantage.

At the same time as the BJR was adopted in Polish law, the Polish legislator decided to introduce a general clause obliging board members to exercise due care and loyalty towards the P.S.A. (Art. 300⁵⁴ CCC). A wide-ranging loyalty clause is a novelty in Polish company law: before introducing the provisions on the P.S.A., the CCC only expressed certain specific obligations resulting from the duty of loyalty, such as the obligation to refrain from making decision in conflict of interest situations or the prohibition to engage in competitive activities. Article 300⁵⁴ CCC may stimulate courts and legal literature to develop more complex manifestations of the duty of loyalty (e. g. the corporate opportunity doctrine).

The newly adopted rules on the P.S.A. triggered important reforms related to other Polish company forms. In 2022, shortly after the rules on the P.S.A. entered into force, the BJR and the due care and loyalty clause were implemented in other types of Polish companies, i. e. the sp. z o.o. and the S.A. (Art. 209¹ § 1, Art. 214¹ § 1, Art. 293 § 3, Art. 377¹ § 1, Art. 387¹ § 1 and Art. 483 § 3 CCC).

The Polish legislator tried to find a balance between, on the one hand, appropriately shaping the premises of board members’ liability in order to protect the company’s interests and, on the other hand, creating a reasonable safe harbour for them. The question remains how the case law on the civil liability of board members of Polish companies will develop in the future.

5.1. Dematerialised shares

Physical share certificates have long been obsolete in organised capital markets. The settlement of transactions using share certificates was cumbersome and problematic, which prompted the adoption of legal frameworks for their de630materialisation or the elimination of the need for the physical transfer of share documents^[54]. In the current era of digitalisation, there is fertile ground for extending the principles of dematerialisation to shares issued by private companies, such as the P.S.A.

Another impetus for the dematerialisation of shares in the P.S.A. was provided by OECD requirements^[55] aimed at curbing money laundering, coupled with the premise that companies in the start-up sector must be equipped with a modern system of membership rights. Historically, numerous fraudulent tax evasion schemes in Poland were executed through companies with certificated bearer shares, which allowed their beneficial owners to remain undisclosed. As a result, there is a strong legislative trend in Poland toward the abolition of paper-based financial instruments, including not only shares but also bonds^[56]. This has led to the simultaneous introduction into Polish law of rules providing for full dematerialisation of shares both in the non-public S.A. and in the P.S.A.

The legal status of shares adopted in the P.S.A. remains in strong opposition to that in the sp. z o.o. Shares in the sp. z o.o. do not fall within the scope of the cathegory of negotiable instruments as they represent a mere conglomerate of rights (and attached obligations), similar to the participation rights in Polish partnerships. This status creates significant problems, including the application mutatis mutandis of the rules on the assignment of claims to the transfer of the 631shares, the lack of individualisation of shares and the lack of protection for bona fide purchasers.

The closed nature of the P.S.A. justifies the statutory prohibition against admitting its shares for trading on a regulated market or multilateral trading facility (Article 300³⁶ § 2 CCC). Due to the absence of any limitations on the structure of preferred shareholders’ rights, a P.S.A.’s shares are not sufficiently standardised. Consequently, it is assumed that investing in P.S.A. shares would not provide sufficient protection for ordinary, unsophisticated investors in public markets.

Shares in the P.S.A. are dematerialised and take the form of entries in an electronic register (the shareholders’ register). The shareholders’ register plays an essential role in the P.S.A.’s conceptual framework for dematerialised shares. Only persons listed in the register are considered shareholders of the company (Art. 300³⁷–300³⁸ CCC). In most cases, the transfer of shares becomes effective upon the acquirer’s entry into the register, i. e. the entry has a constitutive effect (Art. 300³⁷ § 4 CCC). The requirements for the share transfer agreement are relatively flexible, as only a simple ‘documentary form’ is necessary (Art. 300³⁶ § 4 CCC), which allows the contract to be concluded through the exchange of electronic statements (e. g., via email).

The primary function of the register is to identify the company, the number of shares, and the identity of the shareholders (Art. 300³³ CCC). As a result, the register serves as both the depository for all shares issued by the company and the account holder for each shareholder. Due to the legal significance of entries in the shareholders’ register and the potential risk of bias in cases of shareholder disputes, the authority to maintain the register has been entrusted to independent entities being public trust bodies – either investment firms or notaries.

The entity responsible for maintaining the shareholders’ register is required to ensure the security and integrity of the registered data (Art. 300³¹ § 4 CCC), which includes preventing the unlawful duplication of shares (Art. 300³¹ § 2 CCC). Consequently, the entity must verify whether a particular entry is warranted by a corresponding legal event, such as a share purchase agreement. However, under Art. 300³⁴ § 5 CCC, the entity maintaining the register is not obliged to examine the legality or authenticity of the documents supporting the entry, including the seller’s signature, unless there are reasonable grounds for doubt.

The model of the shareholders’ register adopted for the P.S.A. creates a situation in which disputes over the validity or effectiveness of share transfer agreements are resolved by the entity responsible for maintaining the register. Its decision to either execute or deny an entry in the register directly impacts the 632legal and procedural standing of the parties involved in such disputes. Consequently, the entity maintaining the register frequently becomes a central party to litigation in share transfer disputes. This adds complexity and new challenges in comparison with the traditional model of Polish law in which the company’s board was responsible for keeping the shareholder book as an internal instrument of shareholders’ recognition.

The shareholders’ register can be structured as a decentralised, distributed ledger utilizing blockchain technology (Article 300³¹ § 3 CCC)^[57]. As a result, share transfers can be executed via smart contracts. Despite the use of a decentralised ledger, a central entity must still oversee the shareholders’ register as a trusted third party. Additionally, within a distributed and decentralised database, the entity responsible for maintaining the shareholder register remains subject to certain obligations that are not waived by this method of register maintenance. For instance, it must uphold any restrictions on the transferability of shares that may arise from the company’s articles of association, such as the requirement for the seller to obtain the company’s board’s consent before transferring shares (Article 300³⁴ § 6 CCC)^[58].

There is an ongoing debate in Polish legal literature regarding the protection of individuals who acquire P.S.A. shares in good faith from an illegitimate seller. Some commentators hold the view that the traditional rules applicable to bearer securities in physical form foreseeing the transfer of legal title and therefore constituting an exemption from the nemo plus iuris... rule (Art. 169 Civil Code) can be applied mutatis mutandis to dematerialised shares. Others, however, contend that such a flexible interpretation is inappropriate, asserting that the protection of bona fide acquirers requires explicit legislative reform. This debate highlights that the transition to fully dematerialised securities calls for more than just technical adjustments tailored to specific types of securities (e. g., shares); it also necessitates significant revisions to the general provisions of civil law governing negotiable instruments^[59].

5.2. Online formation

The P.S.A. can be incorporated via the process of simplified online formation according to the system which was initially introduced in 2011 for the sp. z o.o. 633and subsequently extended to the general partnership and the limited partnership.

Establishing a company online requires the use of a standardized official template for the company’s articles of association, which is basic, even rudimentary^[60]. The primary advantages of online formation are the expediated registration process – whereby the registry court is required to render a decision within one day – and the reduced costs, as notarial fees are eliminated. A significant disadvantage, however, is the inability to tailor the company’s articles of association to meet the founders’ specific needs. Nevertheless, once the company is established online, customized provisions can be incorporated by means of an amendment of the articles of association executed in traditional form, i. e. by a notarial deed.

5.3. Shareholders’ resolutions

Shareholders’ resolutions in the P.S.A. may be adopted at the general meeting or outside the meeting, in writing or by means of electronic communication (Art. 300⁸⁰ § 1 and 2 CCC). The articles of association of the P.S.A. or an unanimous decision of all shareholders may allow the application of electronic communication at the general meeting, which is understood as the right of shareholders to participate in the meetings, communicate and vote online (Art. 300⁸⁰ § 2 and Art. 300⁹² § 1 CCC). Shareholders’ participation in the general meeting by means of electronic communication may only be subject to requirements and restrictions that are necessary to identify shareholders and ensure the security of electronic communications (Art. 300⁹² § 2 1^st sentence CCC). Entirely virtual shareholder meetings are not permitted, neither in the P.S.A. nor in other types of commercial companies or partnerships.

A novel concept to Polish company law is the option for the general meeting of the P.S.A. to be held outside the territory of Poland (Art. 300⁸⁸ § 1 CCC). The articles of association must specify the location of the general meeting abroad and indicate at least one alternative location in Poland (Art. 300⁸⁸ § 1 CCC). An amendment to the articles of association to specify a location for the general meeting outside of Poland requires an unanimous resolution of the general meeting (Art. 300⁸⁸ § 1 CCC). Shareholders can participate in the general 634meeting held outside of Poland by means of electronic communication according to the general rules presented above.