Contracts Between a Company and Its Board Members Under Polish Law
Representation, Validity, and the Architecture of Conflict-of-Interest Protection
I. Introduction: The Structural Imperative of Disinterested Representation
When a Polish limited liability company (spółka z ograniczoną odpowiedzialnością, hereinafter sp. z o.o.) enters into a contract with a member of its own management board, a fundamental tension emerges at the intersection of agency law and corporate governance. The board member who ordinarily acts for the company is now simultaneously positioned against it—negotiating terms from which he or she stands to benefit personally. Article 210 of the Polish Code of Commercial Partnerships and Companies (Kodeks spółek handlowych, hereinafter KSH) addresses this structural conflict by stripping the management board of its representational authority and transferring it to organs presumptively free from self-interest: the supervisory board or a special proxy appointed by the shareholders’ meeting.
The provision, though concise in its drafting, has generated one of the most voluminous bodies of case law and scholarly commentary in Polish commercial law. Its practical consequences extend far beyond formal corporate governance: contracts executed in violation of Article 210 are, under the prevailing judicial view, void ab initio—a determination that cascades into labor law (where the Social Insurance Institution routinely challenges employment contracts with directors), tax law (where revenue authorities deny deductibility of remuneration paid under void agreements), and civil litigation (where board members face personal liability for obligations incurred without proper authorization).
This Article examines the mechanism of Article 210 KSH in its doctrinal and jurisprudential dimensions, synthesizing the leading scholarly commentaries and identifying the principal controversies that continue to shape its application.
II. Rationale and Normative Character: Why the Board Cannot Contract with Itself
Article 210 § 1 KSH constitutes a lex specialis derogation from the general principle of Article 201 § 1 KSH, under which the management board possesses plenary authority to conduct the company’s affairs and represent it in all judicial and extrajudicial matters. The derogation is mandatory and non-derogable: it may not be modified, restricted, or circumvented by provisions in the articles of association, internal regulations, or shareholder resolutions. Any contractual arrangement purporting to confer representational authority upon the management board in transactions with its own members is ipso iure void.
The doctrinal justification rests on what may be characterized as an irrebuttable presumption of conflict of interest. Unlike Article 209 KSH—which requires a case-by-case assessment of whether a director’s personal interests actually conflict with those of the company—Article 210 operates prophylactically. The Supreme Court confirmed in its order of 11 March 2010 (IV CSK 413/09) that the provision protects against the abstract possibility of a conflict, irrespective of whether one materializes in any given transaction. It is immaterial that the contract in question may be entirely favorable to the company, or that the board member in question might act with perfect probity. The legislator has determined, ex ante, that the structural position of the board precludes disinterested decision-making in all cases.
Critically, the displacement of board authority extends beyond the sphere of external representation to encompass the internal domain of business management (prowadzenie spraw spółki). The board is thus divested not merely of the power to sign, but of the power to decide—to determine the terms, scope, and conditions of the contractual relationship with its members. Decision-making authority devolves entirely upon the supervisory board or the shareholders’ meeting. This principle extends, by analogy, to transactions with related parties, where the board member’s dual position creates a structural equivalence with connected-party dealings.
III. Authorized Representatives: The Supervisory Board and the Special Proxy
Article 210 § 1 KSH designates two—and only two—entities competent to represent the company in contracts and disputes with board members: the supervisory board (rada nadzorcza) or a special proxy appointed by resolution of the shareholders’ meeting (pełnomocnik powołany uchwałą zgromadzenia wspólników). This catalogue is exhaustive. The company may not be represented in such matters by a prokurent (commercial proxy), a power-of-attorney holder appointed by the board, an audit committee, or the shareholders’ meeting acting directly.
A. Representation by the Supervisory Board
Where the company has established a supervisory board—an organ that remains optional in most Polish limited liability companies absent specific statutory thresholds—the board possesses autonomous competence to represent the company in transactions with management board members without requiring prior shareholder approval. The supervisory board acts collegially, and its representational authority must be grounded in a formally adopted resolution (uchwała) that specifies, at a minimum, the material terms of the contemplated transaction.
The Supreme Court has drawn a consequential distinction between the decisional act (the resolution determining the substance of the transaction) and the representational act (the execution of the agreement by a designated member of the supervisory board). The latter constitutes what the Court has termed a “technical-legal function”—the externalization of a collegiate decision already taken. A supervisory board member authorized to sign on behalf of the company acts neither as a civil-law proxy nor as a separate agent, but as a functionary of the organ executing its collective will. The prevailing view applies the rules on agency (pełnomocnictwo) per analogiam to such authorization.
The jurisprudence has been emphatic, however, that blanket authorization is impermissible. A resolution purporting to empower the chairman of the supervisory board to enter into “all contracts with board members at his discretion and on such terms as he may determine” constitutes a circumvention of the mandatory norm and is void under Article 58 § 1 of the Civil Code (judgment of the Supreme Court of 23 July 2009, II PK 36/09).
B. The Special Proxy Appointed by the Shareholders’ Meeting
In the overwhelming majority of Polish sp. z o.o. entities—which typically lack a supervisory board—the sole mechanism for valid corporate representation in transactions with board members is the appointment of a special proxy by the shareholders’ meeting. This proxy represents the company, not the shareholders individually; his or her mandate derives from a resolution of a corporate organ.
The resolution must be adopted at a duly convened shareholders’ meeting—not through the written procedure (głosowanie pisemne)—and by secret ballot, as the appointment constitutes a “personal matter” within the meaning of Article 247 § 2 KSH. The Supreme Court confirmed this procedural requirement in its judgment of 15 June 2012 (II CSK 217/11). While non-compliance with the secrecy requirement does not automatically invalidate the resolution, it creates a rebuttable ground for challenge. The proper company registration procedures and the composition of corporate organs recorded in the National Court Register (KRS) serve as the formal framework within which these requirements must be satisfied.
There is doctrinal disagreement regarding whether the proxy’s mandate must be ad hoc (limited to a specific transaction) or may be generic (covering a category of transactions with board members). The better view, supported by considerations of practicality in multi-member companies where convening a shareholders’ meeting for each transaction would be onerous, permits generic mandates—provided that the proxy’s scope of authority is clearly delineated in the enabling resolution.
C. The Question of Priority
Article 210 § 1 employs the disjunctive conjunction “or” (lub in Polish)—a non-exclusive disjunction indicating that both the supervisory board and the special proxy enjoy concurrent and co-equal competence. The dominant scholarly view, endorsed by the Supreme Court in its judgment of 4 August 2009 (I PK 42/09), holds that neither organ possesses inherent priority over the other. In practice, priority should be resolved by a shareholder resolution adopted immediately prior to the contemplated transaction. It bears noting that the parallel provision governing joint-stock companies (Article 379 § 1 KSH) employs the exclusive disjunction “either…or” (albo), which has prompted scholarly debate on whether the choice of conjunctions reflects a deliberate legislative distinction.
IV. Substantive Scope: Which Transactions Require Special Representation
A. Comprehensive Coverage of All Contractual Relations
The substantive reach of Article 210 § 1 KSH extends to all contracts between the company and a member of its management board, irrespective of subject matter or connection to the directorial function. This encompasses not only employment agreements, management contracts, and non-competition covenants, but equally commercial lease agreements, loan transactions, sale-and-purchase contracts, and any other bilateral legal act in which the company and a board member stand on opposite sides.
Following a period of judicial uncertainty under the predecessor provision (Article 203 of the former Commercial Code), the Supreme Court decisively resolved the matter in its order of 11 March 2010 (IV CSK 413/09), holding that Article 210 § 1 “does not differentiate among legal transactions, and accordingly applies to all contracts between the company and a member of its management board, regardless of whether such contracts bear any connection to the function performed by that member in the company’s management board.” The determinative criterion is the identity of the contracting party as a board member, not the subject matter of the transaction.
B. Unilateral Juridical Acts Within Existing Contractual Relations
The prevailing scholarly and judicial view extends the provision’s reach to unilateral juridical acts performed within the framework of an existing contractual relationship—including termination of employment, modification of contractual terms, and withdrawal from a contract. The interpretive basis lies in the statutory formulation itself: Article 210 § 1 speaks of representation “in a contract” (w umowie), not “at the conclusion of a contract” (przy zawarciu umowy)—language that contemplates the entire lifecycle of the contractual relationship, from formation through modification to termination. Teleological reasoning reinforces this reading: if the supervisory board or special proxy possesses competence to create the contractual relationship, coherence demands that the same competence extend to its alteration and dissolution.
C. Ordinary-Course Transactions: A Pragmatic Exception
A significant doctrinal debate concerns so-called “everyday transactions” (transakcje dnia codziennego)—routine consumer purchases made by a board member from the company on standard terms. While the statutory text admits of no exception, the dominant scholarly view holds that employees authorized to transact with customers in the ordinary course of business possess implied authorization to deal with board members on identical terms. This implied authorization, however, extends only to transactions on standard, non-preferential conditions; any departure in favor of the board member triggers the full requirements of Article 210 § 1.
V. Disputes Between the Company and Board Members
The special representation regime applies not only to contractual transactions but equally to disputes (spory) between the company and its board members. The Supreme Court has interpreted this concept expansively to encompass all judicial proceedings—civil, administrative, and arbitral—as well as mediation, where the company and a board member occupy opposing positions or represent divergent interests.
The practical significance of this broad construction is particularly evident in social insurance proceedings. In its resolution of 10 April 2013 (II UZP 1/13), the Supreme Court held that a board member challenging a Social Insurance Institution decision establishing his personal liability for the company’s unpaid contributions may not simultaneously represent the company appearing as an interested party—even where the parties are not formally adversarial—because the potential for conflicting interests suffices to engage the protective mechanism of Article 210 § 1.
VI. The Single-Member Company Exception
Article 210 § 2 KSH establishes a distinct regime for the situation in which the sole shareholder of a limited liability company simultaneously serves as the sole member of its management board. In such circumstances, the special representation rules of § 1 are disapplied entirely: the sole shareholder-director may represent the company in legal acts with himself or herself, subject to the imperative requirement that all such acts be executed in notarial form (forma aktu notarialnego). The notary is obligated to notify the registry court of each such transaction through the court’s electronic system.
The notarial form requirement applies without exception—irrespective of the transaction’s subject matter or value—and encompasses unilateral juridical acts as well as bilateral contracts. Failure to observe the prescribed form results in absolute nullity under Article 73 § 2 of the Civil Code. As a lex specialis provision, Article 210 § 2 must be construed strictly: it does not apply where the sole shareholder is one of several board members, nor where the board is single-member but the company has multiple shareholders. In both cases, the general regime of § 1 governs. For entrepreneurs considering alternative wealth-structuring vehicles—such as the Polish family foundation (fundacja rodzinna)—the single-member company’s governance constraints represent one factor in the comparative analysis of available legal forms.
VII. Consequences of Non-Compliance: Nullity, Ratification, and Procedural Invalidity
A. The Prevailing Doctrine of Absolute Nullity
The dominant judicial position holds that a contract concluded in violation of the representation requirements of Article 210 § 1 KSH is absolutely void (bezwzględnie nieważna) under Article 58 § 1 of the Civil Code, producing no legal effects ab initio and being incapable of subsequent validation. This position was affirmed, inter alia, in the Supreme Court’s judgments of 23 July 2009 (II PK 36/09), 29 January 2014 (II PK 124/13), and 15 June 2005 (II PK 276/04). The implications for board members’ personal liability are considerable, as void contracts cannot serve as a legal basis for remuneration, expense reimbursement, or social insurance coverage. Tax authorities may—and routinely do—deny deductibility of compensation paid under such void arrangements, compounding the financial consequences of the procedural defect.
B. The Emerging Counter-Doctrine of Suspended Inefficacy
A competing scholarly current, which has gained increasing judicial traction, argues for the application per analogiam of Article 103 of the Civil Code—governing unauthorized agency—to produce a regime of suspended inefficacy (bezskuteczność zawieszona) rather than absolute nullity. Under this framework, a contract executed in contravention of Article 210 would constitute a negotium claudicans—an “imperfect” juridical act capable of subsequent ratification by the supervisory board or a duly appointed special proxy. The Supreme Court endorsed this approach in its judgment of 2 July 2015 (III PK 142/14), and the 2019 amendment to Article 39 of the Civil Code—which now expressly permits ratification of acts performed by a “false organ” of a legal person—has strengthened the doctrinal foundation for this position.
The distinction between these competing sanctions carries profound practical consequences. Under the nullity doctrine, neither party can rely on the defective contract, and the company must ex nunc execute a new agreement with proper representation. Under the suspended-inefficacy model, subsequent ratification validates the original agreement retroactively, preserving the continuity of the legal relationship. The resolution of this controversy remains one of the most consequential open questions in Polish corporate law.
C. Employment by Implied Conduct
Even where a formal employment contract is void, the Supreme Court has recognized that an employment relationship may arise per facta concludentia—through the actual performance of work with the knowledge and acquiescence of a properly authorized representative of the company. This constitutes not a ratification of the void contract but the formation of a new implied employment relationship on the same terms. The critical prerequisite, however, is that the company’s implied acceptance must emanate from an organ or proxy competent under Article 210 § 1; acquiescence by the management board alone is insufficient.
D. Procedural Consequences
Non-compliance with the special representation requirements in litigation gives rise to the nullity of proceedings under Article 379(2) of the Code of Civil Procedure (absence of an organ authorized to represent the party). Where the company is the claimant, the court will set a deadline for remedying the representational defect; failure to comply results in dismissal of the action. Where the company is the defendant, the court may appoint a curator. In proceedings before administrative courts, analogous consequences follow from the corresponding provisions of the Act on Proceedings Before Administrative Courts.
VIII. The Lacuna of Former Board Members
Perhaps the most consequential interpretive controversy surrounding Article 210 concerns its temporal scope. The prevailing judicial position, consistently maintained by the Supreme Court, holds that the special representation regime applies exclusively to incumbent board members—those holding an active mandate at the moment of the relevant transaction or dispute. Upon adoption of a resolution of dismissal, the former director becomes a “third party” vis-à-vis the company, and representational authority reverts to the management board under the general rules.
This interpretation, grounded in the textualist principle of exceptiones non sunt extendendae, generates a troubling protection gap. Incumbent board members who decide on severance terms, post-employment non-competition arrangements, or pending claims with a recently dismissed colleague operate under precisely the same species of conflict of interest that Article 210 was designed to neutralize. The collegial bonds forged during joint service do not dissolve upon formal dismissal; the risk that the incumbent board will accommodate a former member’s interests at the company’s expense—whether out of professional solidarity, anticipation of reciprocal treatment, or concern about disclosure of shared decisions—remains acute. This dynamic is particularly pronounced where the company faces potential insolvency proceedings and claims against former directors for damage caused during their tenure.
The jurisprudence has fashioned an imperfect compromise through the doctrine of “simultaneity” (jednoczesność): the supervisory board retains competence to terminate a board member’s employment contract if—and only if—the dismissal from the corporate function and the termination of the contractual relationship occur simultaneously, ideally within a single resolution. The Supreme Court has increasingly interpreted this simultaneity requirement literally, demanding that both acts be encompassed in a single vote—an exacting standard that presents formidable procedural difficulties in practice.
De lege ferenda, a legislative extension of Article 210 to former board members—at least in matters connected with the directorial mandate—would close this protective lacuna and align Polish law with the German jurisprudential standard, where courts have extended the supervisory board’s representational competence to the post-mandate period under § 112 AktG.
IX. The Identity of the Special Proxy: Constraints and Controversies
Article 210 § 1 imposes no express limitations on the class of persons eligible for appointment as special proxy. In theory, the shareholders’ meeting enjoys unfettered discretion. In practice, however, two constraints—one broadly accepted, the other fiercely contested—narrow the field considerably.
First, it is universally acknowledged that the proxy may not be a prokurent or an employee of the company. The structural subordination of these persons to the management board—whose authority Article 210 is designed to displace—would defeat the provision’s protective purpose.
Second, and more controversially, the predominant doctrinal view holds that no member of the management board may serve as special proxy—not even one who is not party to the contemplated transaction. The rationale transcends the narrow prohibition on self-dealing; it rests on the systemic concern that collegial relationships within the board create a generalized risk of partiality. A minority position, supported by certain Supreme Court decisions (notably the order of 7 April 2010, II UZP 5/10), contends that the shareholders are best positioned to assess in casu whether a particular board member can serve impartially, and that a categorical prohibition exceeds the statutory mandate.
The safer course for practitioners—particularly given the gravity of the sanctions—is to appoint an external person, such as a legal advisor (radca prawny), a shareholder, or a member of the supervisory board where one exists.
X. Practical Recommendations
For entrepreneurs operating through Polish limited liability companies, the following prophylactic measures are advisable.
Prior to any contract with a board member, a shareholders’ meeting should be convened to adopt a resolution—by secret ballot—appointing a special proxy. The resolution should identify the proxy, the counterparty board member, and at least the material terms of the contemplated transaction. In single-member companies where the sole shareholder serves as sole director, notarial form is mandatory for every transaction between the shareholder-director and the company, without exception.
Where simultaneous dismissal and contract termination is contemplated, both elements should be consolidated in a single supervisory board resolution to preserve the board’s representational competence under the “simultaneity” doctrine. All enabling resolutions should be meticulously archived: in disputes with the tax authority, social insurance proceedings, or civil litigation, the burden of demonstrating proper representation falls squarely on the company, and documentary lacunae are treated as evidence of defective authorization.
XI. Conclusion
Article 210 KSH embodies a legislative judgment that the protection of the company’s interests in transactions with its own management cannot be entrusted to the management itself. The mechanism it establishes—mandatory disinterested representation—is conceptually elegant but operationally demanding. Its violation produces consequences that radiate across multiple domains of law, from the nullity of the underlying contract to the invalidity of judicial proceedings conducted on its basis.
The unresolved doctrinal tensions—between absolute nullity and suspended inefficacy, between textualist and purposive approaches to the temporal scope of the provision, between categorical and contextual assessments of proxy eligibility—ensure that Article 210 will continue to generate complex commercial disputes for the foreseeable future. For the practitioner, the imperative is clear: procedural meticulousness in constituting special representation is not a formality but a condition of the legal validity of the company’s most consequential relationships—those with the persons who manage it.
Prepared by Kancelaria Prawna Skarbiec – corporate and commercial law, tax advisory, protection of shareholder and board member interests in capital companies.
Robert Nogacki – licensed legal counsel (radca prawny, WA-9026), Founder of Kancelaria Prawna Skarbiec.
There are lawyers who practice law. And there are those who deal with problems for which the law has no ready answer. For over twenty years, Kancelaria Skarbiec has worked at the intersection of tax law, corporate structures, and the deeply human reluctance to give the state more than the state is owed. We advise entrepreneurs from over a dozen countries – from those on the Forbes list to those whose bank account was just seized by the tax authority and who do not know what to do tomorrow morning.
One of the most frequently cited experts on tax law in Polish media – he writes for Rzeczpospolita, Dziennik Gazeta Prawna, and Parkiet not because it looks good on a résumé, but because certain things cannot be explained in a court filing and someone needs to say them out loud. Author of AI Decoding Satoshi Nakamoto: Artificial Intelligence on the Trail of Bitcoin’s Creator. Co-author of the award-winning book Bezpieczeństwo współczesnej firmy (Security of a Modern Company).
Kancelaria Skarbiec holds top positions in the tax law firm rankings of Dziennik Gazeta Prawna. Four-time winner of the European Medal, recipient of the title International Tax Planning Law Firm of the Year in Poland.
He specializes in tax disputes with fiscal authorities, international tax planning, crypto-asset regulation, and asset protection. Since 2006, he has led the WGI case – one of the longest-running criminal proceedings in the history of the Polish financial market – because there are things you do not leave half-done, even if they take two decades. He believes the law is too serious to be treated only seriously – and that the best legal advice is the kind that ensures the client never has to stand before a court.
