Resigning from the board of directors doesn’t always solve the problem.

Especially when the National Court Register still lists you as a board member.

The Commercial Companies Code provides a specific procedure for resigning from the position of a member of the management board in a single-member management board. In the case of a limited liability company, the sole member of the management board convenes a shareholders’ meeting, thereby submitting his or her resignation to the shareholders. The invitation to the meeting should also include a statement of resignation. The resignation takes effect on the day following the date on which the shareholders’ meeting was convened.

Why did the legislature introduce this special procedure?

This procedure is intended to resolve practical issues related to this matter. First, it clarifies to whom the sole member of the management board should address the declaration of intent to resign. Second, it allows for the appointment of a new member of the management board at the convened shareholders’ meeting, which can eliminate the problem of a lack of persons authorized to represent the company. At the same time, it allows the member to cease performing their duties regardless of whether the shareholders adopt a resolution to appoint a new management board.

An effective resignation does not always mean removal from the National Court Register

In practice, however, it may turn out that the mere effective submission of a resignation does not resolve all issues. After the end of the day on which the shareholders’ meeting was convened, the management board member ceases to hold office, and the entry in the National Court Register should be updated accordingly. It is precisely at this stage that difficulties often arise.

Based on the Loewen team’s experience, the approach of the registry courts to such situations is not uniform. In some cases, the courts remove the board member from the register in accordance with the filed petition. However, there are situations in which the court refuses to remove the member due to a lack of persons authorized to represent the company. As a result, the former board member, despite having effectively resigned, may still appear in the National Court Register as a person serving on the board.

What risks are associated with an outdated entry?

This issue has significant practical implications. A former board member often lacks any real means of pressuring the shareholders to appoint a new board and update the information in the registry. At the same time, information disclosed in the KRS is presumed to be true. This means that until the entry is amended, a person listed in the registry as a member of the management board may be forced to prove, on each occasion, that their term has expired as a result of a valid resignation.

Consequently, a question arises regarding the consistency of commercial law regulations with the practice of registration proceedings. On the one hand, a resignation is effective regardless of a subsequent entry in the KRS, as the entry is declaratory in nature in this regard. On the other hand, failure to update the data in the registry may lead to unnecessary complications, costs, and risks for the former management board member.

What can be done if the data is not updated?

The legislature has provided mechanisms that allow the registry court to address outdated data in the registry, including the ability to conduct enforcement proceedings or take action ex officio. However, this does not change the fact that, in practice, successfully having a former board member removed from the National Court Register (KRS) may require taking additional steps and providing adequate justification for one’s position before the registry court.

Resigning from the Board of Directors – It’s Worth Preparing the Procedure Properly

If you have been denied the removal of the sole management board member from the KRS or are planning to resign and are unsure how to safely navigate this process, contact the Loewen team. We will help you prepare the necessary documentation and carry out the procedure in a way that minimizes the risk of continued listing in the registry.

Loewen, it’s thinkable.

Author: Attorney-at-law Maciej Siejbik