Deciphering the Role of Directors in Corporate Governance
Chapter 1
The term “directors” holds paramount significance in the corporate management, serving as the cornerstone of organizational governance and decision-making processes. Within the intricate landscape of directorial structures and responsibilities, it is crucial to unravel the complexities and notice differences surrounding the “one-tier” and “two-tier” frameworks.
In both of them directors play crucial role in the management and oversight of business affairs, but the structure and responsibilities of directors can vary depending on the board model in place.
In the one-tier board model, prevalent in common law jurisdictions, executive directors, non-executive directors, and supervisors are amalgamated into a singular authoritative entity known as the Board of Directors. According to the Delaware General Corporation Law, which serves a classic expression of this monistic governance model, the Board of Directors is entrusted with managing the business and affairs of the corporation. While the US corporate landscape typically features a unified board, it’s customary to establish a myriad of additional board committees such as the audit committee, risk management committee, and others.
Conversely, the two-tier board model, more prevalent in civil law jurisdictions, entails distinct entities for executive and non-executive directors – the Management Board and the Supervisory Board. In continental systems, there’s no differentiation between inside and outside directors; all directors are executives formally designated to the corporate entity known as the Management Board. Non-executives serve on the Supervisory Board and don’t partake in managing the company’s affairs, what absolves them also of directors’ obligations.
In essence, an “executive director” in the one-tier system corresponds to a “member of the management board” in the two-tier system, while a “non-executive director” pertains to a member of the supervisory board.
All subsequent references to company executives, falling under the category of “executive director” in the US system or Management Board in continental Europe, employ the term “director.”
As we delve into the intricacies of Polish regulations in the following discussion, it is prudent to address one additional matter.
The Polish term “dyrektor” may sound like the English “director,” but it holds a distinct meaning. In Poland, a “dyrektor” is an internal function within an organization to handle affairs. This designation would be more accurately translated as “officer” in English terms. Examples of “dyrektor” in Polish context include the CEO, CFO, and CSO – individuals who hold internal managerial roles within a company. However, without specific powers granted by the board, they lack the authority to represent the company externally. Essentially, they do not bear overall responsibility for the company’s situation externally, except in cases of personal fault where they are accountable for their own actions and omissions.
Poland adopted a typical “two tiers” dualistic management system, so term “member of the board” can refer to different positions in Polish law, such as members of the management board, supervisory board, or audit committee. The term “board of directors” itself does not exist. There is also no collegial body composed of executive directors (management board), non-executive directors, and various officers of the company (meaning business directors in Polish terms, e.g., CEO, CFO).
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.
