Supreme Court of Poland: joint irregular commercial power of attorney is inadmissible

After two months, the reasoning for the resolution of the Supreme Court of Poland (Sąd Najwyższy) ("SCP") on the joint irregular commercial power of attorney (prokura łączna niewłaściwa) has now been published. Acts performed by holders of the joint irregular commercial power of attorney remain valid, but the registry court has the authority to delete this inadmissible type of commercial power of attorney ex officio. 

Background

Up to now it has been a matter of dispute in case law and legal literature whether a joint irregular commercial power of attorney is admissible under Polish law. A joint irregular commercial power of attorney means such joint representation that involves the holder of the commercial power of attorney (prokurent) and a person whose power of representation stems from a different legal title (for example, a management board member in a capital company (spółka kapitałowa) or a partner in a partnership (spółka osobowa)). In order to harmonise the conflicting interpretations, the SCP recently addressed the legal question submitted by the First Chairman of the SCP on the admissibility of such joint irregular commercial power of attorney. 

In the reasoning supporting the submission of the legal question, the First Chairman of the SCP referred to the SCP’s original position under which it was admissible to grant commercial power of attorney subject to the condition that its holder is only authorised to act jointly with a management board member or a partner. As Polish law does not provide for joint irregular commercial power of attorney, the SCP previously stated that a commercial power of attorney of this type should be subject, by analogy, to the provisions on joint regular commercial power of attorney (two holders of the commercial power of attorney acting jointly). This resolution has only been accepted to a certain extent, as some courts have expressed a contrary position. This disagreement was caused by the amendment of the provisions on commercial power of attorney and the introduction to Polish law of the "branch commercial power of attorney" (commercial power of attorney limited to matters concerning a branch). As a result of the above-mentioned amendment, the principle of numerus clausus of the types of commercial powers of attorney has been derived, which states that there are only three types of commercial powers of attorney which are expressly set out in the Polish Civil Code (Kodeks cywilny):

• Individual commercial power of attorney (prokura samodzielna / samoistna).
• Branch commercial power of attorney (prokura oddziałowa).
• Joint regular commercial power of attorney (prokura łączna).

The joint regular commercial power of attorney means in this case a joint representation of at least two holders of the commercial power of attorney. 

Resolution and reasoning

In response to the legal question submitted by the First Chairman of the SCP, the SCP (comprising of seven judges) produced a resolution on 30 January 2015 (Case No. III CZP 34/14). This resolution states that it is not possible to enter into the Polish entrepreneurs' register of the National Court Register (rejestr przedsiębiorców Krajowego Rejestru Sądowego) one holder of the commercial power of attorney, and to stipulate that he is entitled to represent the company only jointly with a management board member. In the eagerly awaited reasoning for this resolution, published in the beginning of April, the SCP underlined the importance of the principle of numerus clausus of the types of commercial powers of attorney, which is primarily intended to ensure certainty in legal transactions. In addition, the SCP stressed that the resolution will entail legal effect only for the future. As a result, all acts performed by holders of joint irregular commercial power of attorney on or before 30 January 2015 remain valid and require no subsequent approval by the management board. However, from 31 January 2015 onwards, the registry court is entitled ex officio to delete from the Polish entrepreneurs' register of the National Court Register any individual commercial power of attorney that is exercisable only together with a management board member. 

Conclusion

The flexibility of the joint irregular commercial power of attorney has led to its widespread use and, therefore, the SCP's resolution affects many companies. In practice, this kind of commercial power of attorney has been especially employed, firstly, where in given circumstances it was appropriate for the effective functioning of a company and, secondly, where, in order to protect company's interests, the individual right of representation of a holder of the commercial power of attorney was limited by the obligation to act jointly with a management board member. 

Finally, it is important to stress that the SCP's resolution outlined above does not entirely rule out the possibility of a joint representation of a capital company by a holder of the commercial power of attorney and a management board member. The Polish Commercial Companies Code (Kodeks spółek handlowych) states that where the management board consists of several members, it is sufficient for representations on behalf of the company to be made by one management board member acting jointly with one holder of the commercial power of attorney, unless the articles of association provide for other rules of representation. In the end, this mixed type of representation can lead to the same result as the joint irregular commercial power of attorney, that is, joint representation involving a holder of the commercial power of attorney and a management board member. However, unlike the inadmissible joint irregular commercial power of attorney, this solution restricts the management board member's right of representation and not that of the holder of the commercial power of attorney.