Increasingly, Polish companies are appointing foreign nationals to the management boards of limited liability companies (sp. z o.o.). This applies both to foreign investors establishing businesses in Poland and to international corporate groups delegating their managers to Polish subsidiaries. In practice, however, the mere appointment of a foreign national to the management board does not always mean that they are legally entitled to perform their duties in Poland.
Depending on the individual’s nationality, the legal basis for holding the position, and the scope of their responsibilities, additional requirements under Polish immigration and employment law may need to be fulfilled.
Can a foreign national become a member of the management board of a Polish limited liability company (sp. z o.o.)?
Yes, absolutely.
Under Polish law, eligibility to serve as a member of the management board is not dependent on Polish citizenship. A foreign national may be appointed to the management board of a Polish limited liability company (sp. z o.o.) on the same terms as a Polish citizen, provided that no statutory grounds for disqualification apply (for example, a conviction for certain criminal offences).
In practice, however, appointing a foreign national to the management board may give rise to additional obligations under the regulations governing the residence and employment of foreign nationals in Poland.
Does a management board member have to enter into a management agreement with the company?
No, although they may do so. A management board member may perform their duties:
In practice, it is common for Polish subsidiaries of foreign companies to appoint foreign nationals to their management boards who already hold executive or managerial positions within the foreign parent company. In such cases, Polish companies often rely solely on the shareholders’ resolution appointing the individual to the management board, without entering into a separate agreement.
However, where the management board member effectively performs the role of an employee of the Polish company, it is common for the company to conclude an employment contract or another appropriate agreement in addition to the appointment resolution.
The model adopted is significant, as it determines the specific obligations relating to the legalisation of the foreign national’s residence and work in Poland.
Does a foreign national serving as a management board member require a work permit?
It depends on the individual’s nationality and on how they actually perform their role.
Nationals of the Member States of the European Union, the European Economic Area (EEA), and Switzerland benefit from the freedom to work and to serve on the governing bodies of companies. As a result, they are generally not required to obtain a work permit.
The situation is more complex for nationals of third countries. In many cases, they will need to obtain a Type B work permit, although Polish law also provides for a number of exemptions from this requirement.
When is a Type B work permit required?
A Type B work permit is required for foreign nationals who serve as members of the management board of a legal entity entered in the register of entrepreneurs and who perform this function in Poland for a total period exceeding six months within any consecutive twelve-month period.
In practice, this means that many foreign management board members who carry out their duties in Poland are required to obtain this type of work permit.
In addition, the management board member must hold an appropriate residence title authorising them to stay in Poland in accordance with the applicable immigration regulations. Depending on the circumstances, this may include, for example, a national visa or a temporary residence permit.
What obligations does a company have when appointing a foreign national to its management board?
Appointing a foreign national from outside the European Union, the European Economic Area (EEA), or Switzerland to the management board involves a number of legal obligations on the part of the company. In particular, the company should verify:
What risks does a company face when appointing a foreign national to its management board?
Improperly appointing a foreign national to perform the duties of a management board member may have serious consequences for both the company and the individual concerned.
The most common issues include:
Depending on the circumstances, these issues may result in financial penalties, difficulties in obtaining or extending the foreign national’s legal residence status, and disruptions to the company’s operations.
For this reason, before appointing a foreign national to the management board, we recommend carrying out a comprehensive legal assessment covering not only corporate law aspects, but also the relevant provisions of immigration law, employment law, social security law, and tax law.
Every limited liability company (sp. z o.o.) in Poland must have a body authorized to represent and manage it. This body is the management board (zarząd). Holding the position of a management board member entails significant responsibility borne by each person in that role.
Year after year, the Polish market is becoming increasingly open to foreign investors. It is therefore useful to know what forms of business activity are permitted for foreigners in Poland and what particular issues require attention. Limited liability company, joint-stock company, or sole proprietorship? Or perhaps an association or foundation?
Foreigners who are temporary or permanent residents of Poland often reach out to us with questions concerning freedom of setting out a business in Poland (in a form of a company, a partnership or a sole tradership). Our most frequent response is typical for a lawyer – that the answer to this question depends on specific situation.
Citizenship of a foreigner is the essential point in determining whether and in which form a they can carry out a business in Poland.
