The incomplete regulation of the manner of representation in the company’s article of association may give rise to certain problems of interpretation. Pursuant to the Commercial Companies Code (“Code”), Management Board of a capital company may consist of one person, while the Code does not regulate manner of representation in such case.

Thus, for joint-stock companies, Article 368 of the Code indicates in § 1 that the Management Board is the competent body to manage the company’s affairs and represent it, while § 2 further specifies that the Management Board may consist of either only one or more members. The commercial law introduces two regimes of company representation: statutory and contractual.  Regarding joint-stock companies it was clearly specified in Article 373 § 1 of the Code that if the Management Board is composed of more than one person, the manner of representation of the company shall be specified in the articles of association. In the absence of statutory provisions on the subject, the joint action of two members of the management board or one member of the management board together with another person, i.e. a proxy, is required to make statements on behalf of the company.

Given the above, an interesting question arises. When a joint-stock company has only one board member and, at the same time, the manner of representation has not been specified in the articles of association, are the actions performed by the only board member effective?

The problem was considered by the Supreme Administrative Court (Naczelny Sąd Administracyjny) when examining a complaint against a decision of the Voivodship Administrative Court (Wojewódzki Sąd Administracyjny) rejecting a cassation appeal against a decision of the Chief Pharmaceutical Inspector.

The Voivodship Administrative Court held that the power of attorney granted to the attorney by one and at the same time the only member of the management board is inconsistent with the manner indicated in the National Court Register (Krajowy Rejestr Sądowy), which indicates the manner of representation defined by law as in Article 373 of the Code. The appealing company alleged, inter alia, that the aforementioned Article 373 was incorrectly applied.

The Supreme Administrative Court acknowledged the reasoning of the appealing company and upheld the complaint. The Court held that the provision of Article 373 § 1 of the Code would only apply to a multi-member Management Board. When the Management Board of a joint-stock company consists of only one person, then pursuant to Article 368 § 1 of the Code, this person will be authorised, acting as the company’s Management Board, to make declarations of intent on behalf of the company, including signing powers of attorney. In such situation, the entries in the National Court Register concerning the manner of representation of the company are of no significance, as they cannot limit the basic rule of representation of a joint-stock company by the Management Board.

The view presented by the Supreme Administrative Court in the commented ruling confirms the views previously expressed in the doctrine and the judicature. The position of the Supreme Administrative Court expressed in the discussed decision should be agreed with. Adoption of a different view would lead to limitation of the rule of representation of the company by its Management Board and actual paralysis of the company’s activity, which – due to the inability of its Management Board to represent the company – would not be able to perform any actions. In view of the analogous provisions of the Code with respect to a limited liability company, it should be held that the interpretation should be the same for this company.

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Our law firm is experienced in providing services to companies, including participation in complex transactions, and this experience stems, among other things, from holding managerial positions in companies of Bank Zachodni WBK S.A. Group (currently Santander Bank Polska S.A.).