Personal Liability of Management Board Members under the Laws of Poland: The Polish Exception
This article is a chapter of the ebook “Shielding Directors: A Practical Guide for Foreign Directors of Polish Companies” — see the full table of contents or download the complete ebook (PDF).
The personal liability of management board members in Poland is unlike anything in comparable legal systems. Article 299 of the Commercial Companies Code, the centrepiece of this guide, is, as the leading Polish commentary observes, an original creation of Polish legislation, unknown to other European legal systems. It is exceptional even within Poland: no analogous liability for private-law debts exists for the management of joint-stock companies, cooperatives, or foundations. Only in the realm of public levies does Article 116 of the Tax Ordinance replicate the construction, there extending it to joint-stock companies and other legal persons.
A construct with no European siblings, and a prophecy from 1934
The provision is old. Its ancestor, Article 298 of the 1934 Commercial Code, was drafted by the interwar Codification Commission, which justified it on grounds that read as freshly today as in 1931: experience had shown that limited liability companies were too often “liquidated in fact” without regard for the rules protecting creditors. Remarkably, the same Commission anticipated the provision’s central pathology. It declined to make the liability absolute, warning that an unconditional guarantee by managers “would lead, in many cases, to the appointment as managers of persons offering no material guarantee whatsoever, acting as figureheads behind whom the shareholders, the real managers of the company, would hide.” Ninety years later, Polish courts are still litigating figurehead cases, and still resolving them against the figurehead. The drafters saw the problem coming; they simply decided creditors mattered more.
What this does to the corporate veil
The orthodox account of the capital company holds that the corporate veil shields both shareholders and managers from the company’s failures, pierced only in exceptional circumstances. In Poland, for management board members, the orthodoxy is close to inverted. One can defensibly say that personal liability of board members for the debts of a failed company is the rule, from which a director escapes only by proving one of a short list of statutory defences. Functionally, the position of a Polish management board member at the moment of corporate distress resembles that of a general partner more than that of an officer of a Delaware corporation.
A perception formed in distant legal environments, that directors rarely face personal financial consequences in practice, does not survive contact with Polish reality. Three features of the local landscape explain why.
First, creditor culture. Poland is not, in general, a litigious country. But pursuing the board members of a defaulting company is not regarded here as an aggressive escalation; it is a standard phase of routine debt recovery, undertaken by collection departments as a matter of due care, often without much prior analysis of litigation cost or the time value of money. The claim against the director is, so to speak, on the checklist.
Second, the tax authority has no choice. For tax arrears, the Supreme Administrative Court has held that Article 116 obliges the authority to conduct liability proceedings against all persons who may bear responsibility, in practice all board members (resolution of 9 March 2009, I FPS 4/08). This is not a routine course of action but a legal necessity on the authority’s part. Where a commercial creditor might weigh relationships before suing, the tax office weighs nothing. It proceeds.
Third, the policy choice is explicit. Some systems, facing the psychology of managers grappling with insolvency, choose to encourage bold rescue attempts, the American instinct, lately also the Australian one. Polish law makes the opposite choice without embarrassment: when the company can no longer pay, the directors’ personal assets are conscripted to repay its creditors, and creditor protection is openly prioritised over the financial freedom of management. Whether this is wise policy is debated in the literature; that it is the law is not debated at all.
One genuine consolation, and one half-consolation
Foreign directors accustomed to U.S. practice can strike one item from the worry list: securities class actions, the primary legal risk for the board of a distressed American public company, are essentially absent from the Polish landscape. Group proceedings exist on paper but are rare and have no tradition in director-liability matters. The Polish risk is not a jury and a headline; it is a quiet administrative decision or a modest commercial lawsuit that ends with a bailiff and your personal bank account.
The half-consolation: Polish litigation costs are moderate. A director sued under Article 299 will rarely face the “can’t afford to win” scenario of high-cost jurisdictions, where a defendant capitulates because continuing the defence is financially impossible. The defence is affordable. Whether it succeeds, as the next chapter on the legal basis of subsidiary liability begins to show, is another matter.
Read the Full Guide
This chapter is part of the ebook “Shielding Directors: Navigating Personal Liability in Times of Financial Turmoil and Insolvency — A Practical Guide for Foreign Directors of Polish Companies.”
This article is general information, not legal advice. © Kancelaria Prawna Skarbiec
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.
