The duties of a member of the management board in a limited liability company (LLC) include, among others, representing the company. What is the function of the management board? Who can become its member and what are their responsibilities? Does the execution of these tasks affect the success and proper functioning of the LLC? Find answers in the article below.
Table of Contents
- The management board of a limited liability company in Poland
- Composition of the management board of a limited liability company and choosing its members
- Duties of a management board member of a limited liability company
The management board of a limited liability company in Poland
The management board is a mandatory body of a limited liability company. It plays a crucial role in its functioning. The Commercial Companies Code and the articles of association regulate its operations. The management board directs the current activities of a limited liability company in Poland. It has the authority to make binding decisions. Therefore, the scope of duties of the management board member of a limited liability company is extremely important. Consequently, it requires further discussion.
Composition of the management board of a limited liability company and choosing its members
The management board of a limited liability company consists of one or more members. Both shareholders and other individuals may be appointed to this function.
A management board member is appointed and dismissed by a resolution of shareholders unless the company’s agreement provides otherwise. The agreement may specify that a board member is appointed by the supervisory board after a qualifying process.
The resolution of shareholders may specify the requirements to be met by candidates for the position. The company’s agreement may also define these requirements.
Duties of a management board member of a limited liability company
The scope of duties of a management board member in an LLC includes the competence of its management board. This means both managing the company’s affairs and its representation.
As mentioned above, the management board of an LLC in Poland may consist of one or more members. If the management board has several members, the articles of association determine the method of representation.
If there are no other provisions in the articles of association, these requirements apply for making statements on behalf of an LLC:
- Cooperation of two members of the management board, or
- Cooperation of one member of the management board together with a commercial proxy
It is also possible for the articles of association to grant the right of independent representation to each board member.
In the absence of separate regulations, each management board member may independently conduct the company’s day-to-day activities within the scope of ordinary management.
- prior to settling a matter not exceeding ordinary management, at least one of the board members opposed it or
- the case exceeds the scope of the company’s usual activities,
a prior resolution of the management board is necessary. Resolutions of the management board are adopted by an absolute majority of votes.
1. Managing the company’s affairs
The primary duty of a management board member in a limited liability company is to manage the company’s affairs. This involves internal decision-making and organizational and economic matters.
Managing the company’s affairs as a management board member entails performing practical tasks. These include:
- Organizing the company’s operations,
- Directing the company’s current activities,
- Managing the company’s assets,
- Issuing opinions and making decisions concerning the company,
- Participating in negotiations.
In this case, the members of the management board act independently from the shareholders’ meeting. This is the result of the separation of capital and management in capital companies.
Managing the company’s affairs as a management board member in a limited liability company may also involve legal actions. This primarily applies to resolutions. Their number increases with the complexity of the company’s structure and the number of management board members.
2. Representing the company
Unlike managing the company’s affairs, representing an LLC relates to external relations. The essence of this duty is to make statements of will on behalf of the company to other participants in legal transactions.
According to the Commercial Companies Code, the scope of obligations involved in representing an LLC as a board member is broad. It includes both judicial and extrajudicial activities.
The category of judicial activities pertains to those carried out before the courts. This refers to actions taken before any court. Namely, common, administrative, or the Supreme Court (subject to the obligation of compulsory representation by a lawyer). Extrajudicial activities encompass all other actions. The legislator does not impose additional conditions for carrying them out. This allows for the free and autonomous performance of duties in the field of representing an LLC by its management board members.
The representation of an LLC by a management board member cannot be limited with legal effect toward third parties. So, contractual provisions that limit the right of a board member to represent the company or the scope of such representation are ineffective against third parties. Yet, this does not apply to limitations resulting from legal regulations.
3. Restraining from competitive activities
According to the Commercial Companies Code, a member of the management board should:
- exercise due diligence resulting from the professional nature of his activities, and
- remain loyal to the company.
A management board member may not disclose the secrets of an LLC even after his mandate has expired.
The above regulation aims to:
- highlight the importance of a management board member’s duties in an LLC for its functioning,
- indicate the standard that should be achieved in performing his duties, by determining the professional nature of his activities
- in the case of a violation of the law or the company’s agreement, which caused damage to the company – to facilitate the assessment of whether the board member in question is at fault.
The obligation of a management board member in an LLC to act loyally towards the company is not unusual. It aligns with the standards of professional management.
4. Presumption of competence of the management board in a limited liability company
Although it doesn’t result directly from the CCC, the management board of an LLC uses the so-called presumption of competence. It means that the management board has all the powers that are not reserved by law or the company’s agreement for other bodies. In case of doubts as to who should conduct the affairs and represent the company, it should be assumed that it is always the management board.
Members of the management board of a limited liability company have many obligations. They include managing the company’s affairs and representing it. According to the CCC, managing the company’s affairs and representing it concerns all judicial and non-judicial actions. The management board members of an LLC must perform their duties with due diligence and loyalty to the company.
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