The maturity of a liability of a limited liability company and the liability of a board member

Pursuant to Article 299 § 1 of the Commercial Companies Code, the liability of the members of the board of directors has been defined, which comes into effect if enforcement against the company proves ineffective, the members of the board of directors are then jointly and severally liable for its obligations.

At this point, it is necessary to point out the exoneration prerequisites referred to in Article 299 § 2 of the Companies Act, where a member of the board of directors may free himself from the liability referred to in § 1 if he proves that:

1. a bankruptcy petition was filed in due time or
   
2. at the same time a decision was issued to open restructuring proceedings or
   
3. at the same time a decision was issued to approve the arrangement in the proceedings for approval of the arrangement, or
   
4. the failure to file a bankruptcy petition was through no fault of the bankrupt or
   
5. despite the failure to file a bankruptcy petition and the failure to issue a decision on the opening of restructuring proceedings or
6. the failure to approve the arrangement in the proceedings for the approval of the arrangement, the creditor has not suffered any damage.

Accordingly, in the absence of exonerating conditions, then the liability of board members is activated. Due to the wording of Article 299 of the Companies Act, in particular, the use of the term “liabilities” has resulted in divergent interpretations that adversely affect the certainty of trading and the law.

With regard to the maturity of liabilities, two views have become established in case law. According to the position of some courts, members of the management board are liable under Article 299 § 1 of the Code of Commercial Companies for the company’s liabilities that became due while they were in office. For example, the Supreme Court, in a judgment dated January 17, 2007, in the case ref: II CSK 322/06, indicated that “in principle, members of the management board are liable under Article 299 of the CCC for the obligations of the company who occupied this position during the time from the maturity of the obligation until the time when the creditor brings an action, and for all obligations that arose during the period in which they held this function, including those that arose only after the prerequisites for filing a bankruptcy petition were met (cf. the resolution of the Supreme Court dated November 25, 2003, III CZP 75/03, OSNC 2005, no. 1, item 3). This view has already been expressed many times on the grounds that Article 298 of the CCC is in force (cf. e.g., the Supreme Court’s judgment of February 21, 2002, IV CKN 793/00, OSNC 2003, no. 2, item 22, of May 7, 1997, II CKN 117/97 and of April 5, 2002, II CKN 1092/99) and should be shared. If it had been the will of the legislator to narrow the scope of liability of members of the management board of limited liability companies only to liabilities existing at the time when the prerequisites for filing a bankruptcy petition were met, he would have expressed this by limiting the scope of this liability in the wording of Article 299 § 1 of the Companies Act. Meanwhile, not only did he not do so, but on the contrary, he explicitly, by using the phrase “may free himself from the liability referred to in § 1,” referred to the full scope of liability set forth in this provision.”

The Aministrative Court in Poznań, in its ruling of November 15, 2021 in the case ref: I AGa 118/20, also shared the position of the Supreme Court of January 17, 2007, where it indicated that “in principle, members of the management board are liable under Article 299 of the Code of Commercial Companies for the obligations of the company, who occupied this position during the time from the maturity of the obligation until the creditor brings an action.”

On the other hand, according to another view, members of the management board are liable for the company’s obligations under Article 299 § 1 of the Code of Commercial Companies regardless of whether the obligations became due while they were in office. For example, it should be pointed to the Resolution of the Supreme Court of February 28, 2008 in the case ref. no.: III CZP 143/07, that “taking into account the purpose and nature of liability provided for in Article 299 of the CCC, it should be assumed that in the event of ineffective enforcement of a specific liability, liability under the principles of this provision is borne by persons who were members of the board of directors or liquidators at the time of the existence of this liability, or more precisely, its basis. Covering the liability of a given board member or liquidator of all obligations of the company, the basis of which exists at the time of his office, and thus also obligations not yet due at that time, is justified by the fact that the declaration of bankruptcy, which the board member or liquidator should apply for in order to prevent ineffectiveness of execution, would cause maturity also of obligations not yet having such a feature […] The defendant, on the other hand, if he wants to free himself from liability, should prove one of the exonerating circumstances specified in Art. 299 § 2 KSH (cf. the judgments of the Supreme Court of February 21, 2002, IV CKN 793/00, OSNC 2003, no. 2, item 22, of May 16, 2002, IV CKN 933/00, and of March 8, 2007, III CSK 352/06).”

The Supreme Court, in its decision of June 27, 2019, in Case No.: III CSK 8/19, pointed out that “the provision of Article 299 of the Code of Commercial Companies shapes the liability of board members as liability “for the obligations” of the company. It is borne by persons who were members of the company’s management board at the time when the basis of a liability already existed, even an unmatured one, since a declaration of bankruptcy, which a member of the management board should apply for in order to prevent ineffective enforcement, would also cause liabilities not yet having this feature to become due.”

In view of the above discrepancies in the case law with regard to disagreements on liabilities and the necessity of their maturity, while serving as a member of the board of directors, in my opinion there is a potential possibility of an attempt by a member of the board of directors to avoid liability under Article 299 of the Companies Act. However, in view of the purpose of the established liability of management board members for the company’s liabilities, which is primarily to protect the interests of the creditor for the mismanagement of the management board, in my opinion one is inclined to the view that a management board member is liable for the company’s liabilities regardless of whether they became due during their function.