A Guide for Foreign Investors

One of the first practical questions a foreign investor faces after setting up a Polish limited liability company (spółka z ograniczoną odpowiedzialnością, or sp. z o.o.) is simple: who will sign documents in Poland? The parent company’s directors are often abroad, while contracts, bank mandates, tax filings and correspondence with public authorities need a signature locally, and often quickly.

Polish law offers two main answers. The person can be appointed to the management board (zarząd), or can be granted a prokura, a statutory commercial power of attorney. The holder of a prokura is called a prokurent. To a counterparty both look alike, since both appear in the National Court Register (KRS) and both can bind the company. Behind the scenes, however, the two roles differ fundamentally in authority, control and, above all, personal liability.

Key point for investors: a management board member can become personally liable for the company’s unpaid debts, taxes and social security contributions. A prokurent, as a rule, cannot. This single difference often decides which structure a foreign group chooses for its local representative.

Two different legal positions

The management board member: part of the company

The management board is a corporate body of the sp. z o.o. Legally, the company acts through it. A board member is not an agent standing outside the company but part of its governing structure. Board members are appointed and dismissed by a shareholders’ resolution, unless the articles of association provide otherwise, for instance by giving a particular shareholder the right to appoint a board member directly (Article 201 of the Commercial Companies Code, KSH).

The board has two distinct powers: it manages the company’s affairs (internal decision-making) and represents the company externally. Board members hold a term of office and must act with the diligence expected of a professional.

The prokurent: a statutory commercial agent

A prokura is a special power of attorney regulated in the Polish Civil Code (Articles 109¹ et seq.). Unlike an ordinary power of attorney, its scope is defined by law: it authorises the holder to perform all court and out-of-court acts connected with running the business. It is registered in the KRS, so third parties can verify it.

Key formal points investors should know:

• a prokura is granted by the management board, and in an sp. z o.o. this requires the consent of all board members (Article 208 § 6 KSH),
• it must be granted in writing, otherwise it is invalid,
• only a natural person with full legal capacity can be a prokurent,
• it can be revoked at any time, and a single board member can revoke it.

What a prokurent can and cannot do

In day-to-day business the prokurent’s authority is very broad. A prokurent can negotiate and sign commercial contracts, open and operate bank accounts, deal with tax offices and courts, and hire employees. For most operational matters, counterparties treat a prokurent’s signature the same way as a board member’s.

The limits lie in two areas.

Statutory exclusions. A prokura does not cover selling the enterprise, leasing it out, or selling or encumbering real estate. Each of these requires a separate power of attorney for that specific transaction (Article 109³ of the Civil Code).

Internal governance. A prokurent represents the company but does not manage it as a corporate body. In particular, a prokurent cannot:

• exercise the powers of the management board as a body, such as convening a shareholders’ meeting,
• sign the company’s annual financial statements, which under the Polish Accounting Act is the duty of the management board (Article 52),
• transfer the prokura to someone else, although a prokurent may appoint an attorney for a specific act or type of acts.

Tailoring control: types of prokura

For a foreign parent, the ability to limit the local representative’s signing power is often as important as the power itself. Polish law allows the following forms:

• sole prokura (samoistna): the prokurent acts alone,
• joint prokura (łączna): the prokurent must act together with another prokurent, or together with a management board member,
• branch prokura (oddziałowa): limited to matters of a registered branch.

Watch out: apart from these forms, a prokura cannot be limited with effect towards third parties. Internal caps, such as a maximum contract value or a ban on certain transactions, bind the prokurent towards the company, but a contract signed in breach of them remains valid. Control therefore has to be built in through the type of prokura and a well-drafted internal agreement.

Personal liability: the decisive difference

Company debts

Under Article 299 KSH, management board members are jointly and severally liable with their personal assets for the company’s obligations if enforcement against the company proves ineffective. There are defences, the most important being that a bankruptcy petition was filed on time. A prokurent is not subject to this liability, because the provision applies only to board members.

Tax arrears and social security contributions

The Polish Tax Ordinance (Article 116) follows the same model: board members are liable for the company’s tax arrears arising during their term of office if enforcement against the company fails. The same rules apply to unpaid social security (ZUS) contributions. A prokurent is exposed to this liability only in a narrow situation, namely when acting as an attorney of a company still „in organisation” (registered but not yet entered in the KRS) that has no management board yet.

Insolvency

Polish insolvency law requires a bankruptcy petition to be filed within 30 days of the company becoming insolvent. This duty rests on those who have the right both to manage the company’s affairs and to represent it (Article 21 of the Bankruptcy Law). Since a prokurent only represents the company, the duty, and the related civil and criminal liability, generally does not apply to them.

Liability towards the company itself

Board members are liable to the company for damage caused by acts or omissions contrary to law or the articles of association (Article 293 KSH). A prokurent’s liability towards the company depends on the underlying agreement. If the prokurent is an employee, Polish labour law applies, and liability for unintentional damage is capped at three months’ salary.

A prokura is not a complete shield. A prokurent who in practice handles the company’s financial or tax matters can bear liability for fiscal offences as if they were the perpetrator (Article 9 § 3 of the Fiscal Penal Code). Criminal liability for mismanagement is also possible where the prokurent is contractually responsible for the company’s assets. Narrower civil liability does not mean no risk at all.

Duties and loyalty

A board member has a statutory duty to run the company’s affairs and is subject to a statutory non-compete obligation (Article 211 KSH). Since 2022, Polish law has also recognised a version of the business judgement rule (Article 209¹ KSH), which protects board members who act within the limits of reasonable economic risk.

A prokurent has no equivalent statutory duties. A prokura is an authorisation, not an obligation to act. Any duties, including confidentiality and non-compete clauses, must be set out in the underlying contract, whether an employment contract, a civil-law contract or a management agreement. For a foreign parent, this contract is the main tool for governing the local representative.

Choosing the right structure: common set-ups

Foreign board, local signatory. The management board consists of group executives based abroad, while a local manager holds a prokura for day-to-day signing. Strategic decisions remain with the board. A joint prokura, requiring the prokurent to sign together with a board member or a second prokurent, keeps key transactions under control.

Local CFO or finance manager. Granting a prokura gives the manager full operational signing power without making them a board member and without exposing them to liability under Article 299 KSH and Article 116 of the Tax Ordinance. This can make it easier to recruit experienced local managers. The fiscal-penal risk described above remains.

Local manager with real decision-making power. If the person is expected to co-govern the company, sit in management decisions and carry responsibility for them, a seat on the management board is the appropriate choice. A prokura gives no influence over internal matters and can be revoked at any moment.

Note that combining both roles in one person within the same company is not an option: a board member already represents the company by virtue of their appointment, and the prevailing view is that they cannot also be its prokurent.

Key takeaways

• Legal nature: a board member is part of the company’s governing body; a prokurent is its statutory commercial agent.
• Appointment: board members are appointed by the shareholders (unless the articles provide otherwise); a prokura is granted by the board unanimously and can be revoked by any board member.
• Powers: the board manages and represents the company; a prokurent only represents it, excluding transactions concerning the enterprise as a whole and real estate.
• Duties: board members have statutory duties and a non-compete obligation; a prokurent’s duties come from their contract.
• Liability: board members face personal liability for company debts, taxes, ZUS contributions and late bankruptcy filing; a prokurent generally does not, but remains exposed to fiscal-penal liability.

How ATL Law can help

ATL Law advises foreign investors on setting up and running companies in Poland, including designing the representation structure of Polish subsidiaries. We prepare board resolutions and prokura documents, draft agreements with board members and prokurents, and handle KRS registrations, in English and Polish. If you are deciding whether your local representative should join the management board or hold a prokura, we will be glad to help.