Defensive Strategies and Exculpatory Grounds – Personal Liability of Management Board Members
I. Personal Liability of Management Board Members for Corporate Obligations Under Article 299 of the Polish Commercial Companies Code: Defensive Strategies and Exculpatory Grounds
The service of process in an action predicated upon Article 299 of the Polish Commercial Companies Code (Kodeks spółek handlowych, hereinafter “CCC”) presents former and incumbent management board members of a limited liability company (spółka z ograniczoną odpowiedzialnością) with a legal challenge demanding strategic deliberation. This statutory provision—a distinctive construct of Polish corporate jurisprudence without direct analogues in comparative law—establishes a mechanism for piercing the corporate veil by imposing personal liability upon directors for corporate obligations. Such liability represents a significant departure from the foundational principle that shareholders of capital companies bear no responsibility for entity debts.
This Article examines the defensive strategies available to management board members confronted with claims under Article 299 CCC and analyzes the statutory grounds permitting exculpation from such liability. Particular attention is devoted to the critical nexus between the timely filing of insolvency petitions and directorial accountability, as well as the significance of demonstrating the futility of execution proceedings against the corporate debtor as a prerequisite to pursuing personal claims against its officers.
II. The Liability Framework: Establishing the Prima Facie Case
A. The Creditor’s Evidentiary Burden
Before examining defensive strategies, one must first comprehend the structural architecture of claims arising under this provision. A creditor proceeding against a management board member bears the burden of establishing two essential elements.
First, the creditor must demonstrate the existence of a corporate obligation, which necessitates presentation of an enforceable title (tytuł egzekucyjny). While this most commonly takes the form of a final and binding court judgment, it may alternatively comprise a notarial deed containing a submission to enforcement or an extract from the schedule of claims in insolvency proceedings.
Second, the creditor must establish the unsuccessful execution of enforcement proceedings against the company. Polish jurisprudence has recognized various evidentiary means of satisfying this requirement: a bailiff’s order terminating execution proceedings due to the absence of attachable assets; a court order dismissing an insolvency petition on grounds of insufficient assets to cover procedural costs; an asset disclosure statement prepared pursuant to Article 913 of the Code of Civil Procedure; and, in certain circumstances, corporate financial statements demonstrating the absence of recoverable assets.
B. The Burden-Shifting Mechanism
The distinctive character of Article 299 CCC manifests in its allocation of evidentiary burdens. Upon the creditor’s successful demonstration of the foregoing elements, the burden shifts to the defendant director, who must affirmatively establish the existence of statutory grounds for exculpation. This procedural architecture reflects the legislature’s policy judgment favoring creditor protection while preserving avenues for directors who acted with appropriate diligence.
III. Defensive Strategies: A Taxonomy of Exculpatory Grounds
A. Challenging Standing and the Temporal Scope of Liability
The threshold defense involves contesting whether the defendant properly falls within the class of persons subject to liability under Article 299 CCC. Such liability attaches exclusively to individuals who held valid appointments to the management board during the period when the corporate obligation existed and, concurrently, when grounds for filing an insolvency petition had materialized.
Significantly, registration in the National Court Register (Krajowy Rejestr Sądowy) bears merely declaratory—rather than constitutive—effect for these purposes. An individual who remains registered following the expiration of their mandate bears no responsibility for obligations arising subsequent to that date. A fortiori, an individual appointed to the board does not escape liability merely because their registration was delayed.
A noteworthy development in this area emerged from the Constitutional Tribunal’s judgment of April 12, 2023 (Case No. P 5/19), which recognized the right of former board members to challenge the very existence of an underlying claim established by a judgment rendered in proceedings initiated after the termination of their directorial status. This represents a significant departure from the prior jurisprudential consensus, under which courts consistently declined to examine the merits of the corporate obligation, invoking the binding effect of final judgments under the doctrine of res judicata.
B. Timely Filing of Insolvency Petitions: The Critical Nexus
The relationship between the filing of insolvency petitions and directorial liability constitutes the axial principle of the Article 299 CCC framework. The most efficacious exculpatory ground remains demonstration that the petition for declaration of insolvency was filed “at the appropriate time” (we właściwym czasie). This formulation has engendered persistent interpretive controversy.
The Insolvency Law prescribes a thirty-day period from the emergence of insolvency. However, the jurisprudence developed under Article 299 CCC does not mechanistically equate “appropriate time” with this statutory deadline. The Supreme Court has repeatedly indicated that the relevant inquiry concerns whether the company’s assets, at the time of filing, remained sufficient to provide at least partial satisfaction to creditors through insolvency proceedings—rather than the moment when the company had already become an insolvent shell incapable of covering even procedural costs.
This flexible construction may operate to the advantage of management board members. Even where the formal thirty-day period has elapsed, if the petition was filed at a time when meaningful creditor recovery remained possible, the exculpatory condition may be deemed satisfied.
Notably, the identity of the petitioner is immaterial for exculpatory purposes. The relevant filing may originate from the defendant personally, from another board member, or even from a corporate creditor.
C. Initiation of Restructuring Proceedings as an Alternative Ground
Since 2016, management board members may alternatively invoke the issuance—at the appropriate time—of an order opening restructuring proceedings (whether accelerated arrangement proceedings, arrangement proceedings, or remedial proceedings) or an order approving an arrangement in proceedings for arrangement approval.
This legislative choice reflects the underlying philosophy of restructuring law: the legal system rewards attempts to preserve the enterprise as a going concern rather than proceeding directly to liquidation. It bears emphasis that in proceedings for arrangement approval, only the judicial approval of the arrangement itself—not preliminary preparatory acts—carries exculpatory significance.
D. Demonstrating Absence of Fault
A management board member may escape liability by establishing that the failure to file an insolvency petition was not attributable to their fault. In practice, this ground proves most difficult to establish successfully.
The jurisprudence consistently imputes a professional standard of care to board members. Consequently, the following contentions do not constitute effective defenses:
- Internal allocation of responsibilities within the board and personal non-involvement in financial matters;
- Absence of economic or legal education;
- Unfamiliarity with insolvency law requirements;
- Pursuit of remedial measures and expectation of improving corporate fortunes;
- Reliance upon shareholder assurances regarding capital infusions.
Absence of fault may be successfully invoked only in circumstances objectively precluding the discharge of directorial duties—such as severe, prolonged illness or deliberate obstruction of access to financial documentation by fellow board members, provided that attempts to obtain such information are adequately documented.
E. Establishing Absence of Creditor Harm
The final statutory exculpatory ground requires demonstration that the creditor suffered no loss notwithstanding the failure to file a timely insolvency petition.
This ground typically becomes relevant in two scenarios:
First, where corporate assets were so minimal that even timely filing would have resulted in dismissal of the petition pursuant to Article 13 of the Insolvency Law (insufficient funds to cover procedural costs).
Second, where the structure of corporate liabilities and the statutory priority scheme for creditor satisfaction in insolvency proceedings would have precluded recovery on the claim in question regardless. This situation arises particularly where substantial portions of corporate assets were encumbered by security interests in favor of other creditors.
Establishing this ground requires conducting a hypothetical analysis—essentially, a simulation of how insolvency proceedings would have unfolded and what degree of recovery the plaintiff creditor would have achieved.
IV. Procedural and Substantive Defenses Beyond the Statutory Framework
Beyond the exculpatory grounds enumerated in Article 299(2) CCC, management board members may assert defenses arising under general principles of civil law.
Limitation of actions against board members is governed by the three-year prescriptive period applicable to tort claims, computed from the date on which the creditor obtained knowledge of the unsuccessful execution. In cases qualifying as criminal non-filing of insolvency (Article 586 CCC), this period extends to twenty years.
Set-off of the board member’s personal claims against the plaintiff is permissible; however, one may not invoke claims belonging to the company itself.
In appropriate circumstances, the board member may also challenge the quantum of the claim, particularly the methodology employed in calculating interest. Interest for the company’s delay must be capitalized and expressed as a fixed sum—it cannot be automatically transposed as accruing interest in an action against the board member.
V. Tactical Considerations in Litigation
Actions under Article 299 CCC are adjudicated under the procedural regime governing commercial matters, which imposes heightened formal requirements and evidential preclusion rules. Defendants who are natural persons may, however, petition for adjudication without application of the specialized commercial procedure.
From a defensive standpoint, the preservation and organization of corporate financial documentation from the period of service assumes critical importance. Financial statements, board resolutions, and correspondence with professional advisors may prove essential in establishing exculpatory grounds—particularly in determining the “appropriate time” for filing an insolvency petition.
VI. Conclusion: Principles for Effective Defense
Effective defense against personal liability of management board members under Article 299 CCC requires mastery of the statutory exculpatory grounds and the capacity to demonstrate that unsuccessful execution against the company did not result from negligent failure to file an insolvency petition. Exculpation from liability under Article 299 remains achievable where the director establishes timely initiation of restructuring or insolvency measures, absence of fault in any such omission, or absence of creditor harm.
The nexus between insolvency filing obligations and directorial liability is of fundamental significance—the timeliness of response to corporate insolvency ultimately determines the possibility of escaping personal liability. Accordingly, every management board member should maintain contemporaneous awareness of the company’s financial condition and carefully document all measures undertaken in response to financial distress.
This Article is intended for informational purposes and does not constitute legal advice. Each matter involving management board liability requires individualized analysis of the relevant factual and legal circumstances.
Kancelaria Prawna Skarbiec
Founder and Managing Partner of Skarbiec Law Firm, recognized by Dziennik Gazeta Prawna as one of the best tax advisory firms in Poland (2023, 2024). Legal advisor with 19 years of experience, serving Forbes-listed entrepreneurs and innovative start-ups. One of the most frequently quoted experts on commercial and tax law in the Polish media, regularly publishing in Rzeczpospolita, Gazeta Wyborcza, and Dziennik Gazeta Prawna. Author of the publication “AI Decoding Satoshi Nakamoto. Artificial Intelligence on the Trail of Bitcoin’s Creator” and co-author of the award-winning book “Bezpieczeństwo współczesnej firmy” (Security of a Modern Company). LinkedIn profile: 18 500 followers, 4 million views per year. Awards: 4-time winner of the European Medal, Golden Statuette of the Polish Business Leader, title of “International Tax Planning Law Firm of the Year in Poland.” He specializes in strategic legal consulting, tax planning, and crisis management for business.
