- Business in Poland -
Commercial Power of Attorney
What is commercial power of attorney (power of procuration)?
Commercial Power of Attorney (referred to as "power of procuration" in legal terminology) is a special type of commercial power of attorney that may only be granted by an entrepreneur who is subject to the obligation of registration in the National Court Register (KRS) or the Central Register and Information on Economic Activity (CEIDG). The essence of the power of procuration is the authorization to perform legal and extrajudicial acts on behalf of the principal, related to the operation of the business. This authorization is statutorily defined and constitutes a general power of attorney, but with a broader scope than that provided for in Article 98 of the Polish Civil Code. A commercial power of attorney can only be granted to a natural person who possesses full legal capacity. It cannot be transferred, although the procuration holder may appoint attorneys for specific actions, acting within the scope of their authorization.
Legal requirements and the form of granting commercial power of attorney
The granting of a commercial power of attorney requires written form under the penalty of nullity. Under the current regulations, it is also permissible to submit a declaration granting the power of procuration in electronic form, using a qualified electronic signature, which is legally equivalent to a written form. Importantly, the granting or revocation of the commercial power of attorney must be reported to the relevant business register, specifying the type of procuration (e.g., individual, joint, or branch), with the legal effect of the authorization arising from the moment the declaration of intent is made, not from the moment of registration.
Types of commercial power of attorney: individual, joint, and branch procuration
A commercial power of attorney can be granted as an individual power of procuration – enabling the holder to act independently – or as a joint power of procuration, which requires the cooperation of multiple individuals (e.g., two holders or a holder and a member of the management board). In practice, the so-called improper joint power of procuration is also encountered, where it is stipulated that the holder may represent the entrepreneur only in conjunction with a member of the management board. The doctrine also accepts the institution of branch power of procuration, which is territorially limited to matters related to the operations of a specific branch of the enterprise, separately registered. This solution allows for effective differentiation of the powers of the procuration holders and enhances control over the organizational structure of large business entities.
Scope of authority of the procuration holder under Polish law
The scope of the procuration holder's authority is statutorily defined in Article 109¹ §1 of the Civil Code and includes all judicial and extrajudicial acts related to the operation of the business. The holder may, inter alia, conclude civil law contracts, commercial and banking agreements, represent the entrepreneur before courts and administrative authorities, grant litigation powers of attorney, settle disputes both judicially and extrajudicially, and participate in mediation and arbitration proceedings. This authority includes both ordinary management acts and those that extend beyond the scope of ordinary management.
Legal limitations on the commercial power of attorney
However, certain actions of a special nature are excluded from the scope of the commercial power of attorney by law, such as the sale of the business (in whole or in part), its temporary lease (e.g., renting), and transactions involving real estate, including its transfer or encumbrance (e.g., establishing a mortgage or easement). To undertake these actions, the procuration holder must be granted a separate, specific power of attorney. Legal doctrine and case law support the view that these limitations apply to both dispositive and obligational acts (e.g., a preliminary agreement concerning the sale of real estate).
Internal limitations and third-party protection in procuration agreements
In relation to the internal relationship between the procuration holder and the entrepreneur, it is possible to contractually limit the scope of their authority (e.g., by limiting the value of contracts concluded or restricting the scope to specific types of actions). However, such limitations do not affect third parties acting in good faith. An exception exists where a third party knowingly collaborates with the procuration holder in a manner that harms the interests of the entrepreneur—in such cases, exceeding the scope of the commercial power of attorney may be invoked as a circumstance resulting in civil liability.
Expiry and revocation of a commercial power of attorney
As a commercial law institution, the commercial power of attorney terminates upon the death of the holder, deregistration of the entrepreneur, declaration of bankruptcy, opening of liquidation proceedings, or transformation of the entrepreneur. Conversely, the death of the entrepreneur or the loss of their legal capacity does not cause the power of procuration to expire. The commercial power of attorney may be revoked at any time, and this right is absolute—it cannot be effectively excluded or limited by any legal action. In the case of capital companies, the decision to revoke the commercial power of attorney is made by the management board; in partnerships, it is made by any partner authorized to conduct the company’s affairs. Due to the broad scope of authority granted to the procuration holder and the limited ability to monitor their actions by third parties, the institution of commercial power of attorney requires particular diligence at the stage of its granting and in the supervision of its implementation. Proper structuring of representation rules, internal procedures, and the monitoring of procuration holders' actions can significantly contribute to increasing the security of business transactions and reducing the legal risks for the entrepreneur.
