Article 203¹ of Poland’s Commercial Companies Code sounds innocent enough: a shareholders’ resolution may establish principles for remunerating management board members—maximum amounts, rights to additional benefits, their limits. And compensation for board members “employed under a contract” is determined by a corporate body or a proxy appointed by the shareholders’ meeting.
The provision was added in 2016 with considerable fanfare—meant to give shareholders “real ability to influence the compensation sphere.” The problem: shareholders always had this ability. Legal commentators uniformly classify Article 203¹ as legislative surplus that complicates rather than clarifies.
The Hierarchy of Authority
In practice, the following order prevails:
Shareholders’ meeting — holds primacy. Can establish both general compensation principles (ranges, benefit limits) and specific compensation for specific board members. Resolutions may also be adopted in writing, without convening a meeting.
Supervisory board — if shareholders haven’t exercised their authority, the board may independently determine compensation when concluding contracts with management board members. It should, however, operate within any guidelines shareholders have established.
Proxy appointed by shareholders’ resolution — if they represent the company in contracts with board members, they may determine compensation. The appointing resolution may, however, contain detailed guidelines limiting their discretion.
The management board is entirely excluded from deciding its own members’ compensation—all are tainted by conflicts of interest.
The Benefits Catalog
The statute mentions “additional benefits” without defining them. The Supreme Court, in its May 19, 2022 order (I USK 430/21), provided an illustrative catalog:
- profit participation (tantièmes),
- bonuses and awards, including anniversary bonuses,
- severance upon termination (so-called golden parachutes),
- signing bonuses (golden hellos),
- supplementary health, property, and personal insurance,
- reimbursement of medical expenses,
- company housing or rental cost reimbursement,
- personal use of company vehicles,
- training and course cost reimbursement,
- representation and image expense reimbursement.
Tantièmes: Are They Permissible in an LLC?
In joint-stock companies, management board members’ rights to profit participation are explicitly provided for. In LLC provisions, no such counterpart exists.
Most legal scholars nevertheless favor permitting tantièmes in LLCs as well. Since shareholders decide on profit allocation by resolution, they can designate a portion for management payments. For certainty, it’s advisable to include appropriate provisions in the company agreement.
Board Members Without Contracts
A common situation: a board member serves solely on the basis of their appointment resolution, without any additional employment contract or management agreement. Article 203¹, sentence 2, literally applies only to members “employed under a contract.”
Does this mean such board members cannot receive compensation? No. The basis for payment will be the shareholders’ resolution itself, adopted pursuant to Article 203¹, sentence 1.
Grossly Excessive Compensation: Consequences
Contract Inconsistent with Shareholders’ Resolution
If shareholders established compensation principles but the supervisory board or proxy concluded a contract violating them—those contract provisions are void as contrary to law.
No Resolution, But Excessive Compensation
When shareholders haven’t established principles but the board or proxy granted grossly inflated benefits—the contract may be void as contrary to principles of social coexistence, particularly when:
- collusion with the board member occurred,
- the proxy acted contrary to the principal’s presumed intent, which the other party knew or should have known.
Shareholders’ Resolution Establishing Excessive Principles
If the majority of shareholders votes through inflated compensation over minority objection—especially when beneficiaries are managers connected to the majority—the minority shareholder may challenge the resolution as contrary to good practices and harmful to company interests.
Further Consequences
- Supervisory board members’ liability for damages (actio pro socio),
- Classification as violation of the prohibition on returning contributions when the manager is simultaneously a shareholder,
- Potential fiscal criminal consequences for disguised profit distribution.
