Mandatory PKD (Polish Classification of Activities) in Company Agreements/Articles of Association

In recent months, we encountered a case where a bank pointed out to a company that it was conducting business activities that were not disclosed in its corporate documents. The bank made the conclusion of an agreement with the client contingent upon making changes to these documents.

Was/is the bank right?

In the circumstances discussed, the company was indeed conducting activities that were not described in the aforementioned documents, but none of the activities conducted are regulated.

Is the company obliged to update the subject of its activities in the agreement/articles of association (and, consequently, in the National Court Register)?

According to Article 21 of the Commercial Companies Code, the company agreement or articles of association must contain provisions regarding the company’s scope of activities (§ 1 item 3), which must not be contrary to the law (§ 1 item 2). Due to the requirement to specify the company’s scope of activities according to the PKD classification (Article 40 item 1 of the Commercial Companies Code) and the review by the registry court, the practical possibility of violating Article 21 of the Commercial Companies Code. Article 21 § 1 item 2 of the Commercial Companies Code is significantly limited.

CONCLUSION 1:

Therefore, in accordance with the requirements contained in the Commercial Companies Code, only the failure to specify any object of a company’s activity justifies the sanction of dissolution of such a company.

Article 21 of the Commercial Companies Code implements into Polish law the requirements of Articles 11 and 12 of Directive 2017/1132, which provide for the possibility of invalidating the company’s articles of association, among other things, when “the object of the company’s activity is unlawful or contrary to public policy.”

The issue of object of activity was regulated in more detail in Directive 2009/101/EC of the European Parliament and of the Council of 16 September 2009, which was replaced by the currently applicable Directive 2017/1132. Article 10 of Directive 2009/101/EC stated that: “1. Measures taken by a company’s governing bodies shall be binding, even if such measures do not arise from the company’s objects, unless such measures exceed the powers that the law confers or allows them to confer.

However, Member States may provide that the company shall not be liable for such measures where such measures exceed the company’s objectives, if the company proves that the third party knew that the measures exceeded the company’s objectives or that the third party could not have been unaware of them, having regard to the circumstances; disclosure of the statutes does not constitute sufficient proof.”

CONCLUSION 2:

Neither the Directive Directive 2017/1132 nor Article 21 § 1 item 3 of the Commercial Companies Code define the minimum necessary specification of a company’s objects. Polish law also does not regulate the principles of liability when a company’s actions exceed its objectives.

What other provisions say on this subject:

• Article 18 sec. 1 of the KrRejSU Act only concerns liability for reporting false data to the National Court Register (KRS) “if they were subject to mandatory entry upon request.” As previously indicated, there is no obligation to report every type of business activity actually conducted to the KRS under Polish law. Therefore, failure to disclose all types of business activity cannot be considered reporting false data.
• Art. 601 § 1 of the Code of Petty Offenses concerns conducting business activity without the required registration in the business register, entry in the register of regulated activities, or without the required license or permit. The wording of this provision indicates that it will not apply to the facts in question.

In business practice, we encounter the following potential consequences of conducting business activities that are not included in the company’s articles of association/statutes:

• difficulties obtaining permits and concessions for regulated activities,
• difficulties with grants, relief, and tenders – requiring the other party to such proceedings to update the Polish Classification of Activities (PKD),
• hypothetical tax and fiscal penal liability, which is not supported by the case law.

CONCLUSION 3:

While the case of the bank mentioned at the beginning of this report can be linked to the recent sensitivity of banks related to AML, it should be noted that requiring companies to include every type of activity in their articles of association/statutes is not supported by applicable regulations. Furthermore, in business transactions, with the exception of State Treasury companies, the PKD list in the company’s articles of association/statutes is not subject to specific analysis after registration in the National Court Register. Individual factual circumstances, in particular those involving the performance of regulated activities, may of course change such general conclusions, but this did not apply to the case of our client.