One might think that a liquidator acts solely for the benefit of the company and all its shareholders, but nothing could be further from the truth. Sometimes, a liquidator is unreliable and acts solely to protect the interests of one of the shareholders. Is there a remedy for this? Fortunately, yes. The shareholders themselves can take action, and if they cannot agree among themselves, the Commercial Companies Code provides for the possibility of dismissing an unreliable liquidator through the courts.
Dismissal of the liquidator pursuant to a resolution of the shareholders
Pursuant to Article 276 of the Commercial Companies Code, liquidators may be dismissed by resolution of the shareholders. This is related to the general principle of equality of shareholders in a company (which follows directly from Article 174 § 1 of the Commercial Companies Code).
Therefore, if the majority of shareholders vote in favor of dismissing the liquidator, this will be possible simply on the basis of a resolution of the shareholders’ meeting (somewhat similar in structure to a resolution dismissing a member of the management board).
If there was only one liquidator in the company, in practice, when the existing liquidator is dismissed, a new one must be appointed. Otherwise, the company will be deprived of its representative body.
Court dismissal of the liquidator in the event of disagreement among shareholders
However, a problem arises when it is impossible for the partners to adopt a resolution for some reason (particularly due to internal conflict within the company and the inability to reach an agreement, and at the same time the lack of a majority shareholding by one partner or several partners acting in concert).
The provisions of the Commercial Companies Code provide for such a situation. The solution that can be used in such a case is to apply to the registry court for the dismissal of the liquidator. Pursuant to Article 276 § 4 of the Commercial Companies Code, at the request of persons having a legal interest, the court may, for important reasons, dismiss the liquidators and appoint others.
When submitting such a motion to the court, it is therefore necessary to demonstrate a legal interest in submitting the motion and valid reasons for dismissing the liquidator. Such a legal interest is most often characteristic of shareholders (e.g., those omitted when adopting a resolution to put the company into liquidation). Important reasons, on the other hand, will most often relate to improper actions of the liquidator: failure to convene shareholders’ meetings, concluding agreements not aimed at liquidation, failure to inform shareholders about the proceedings (despite their requests), paying oneself any remuneration from the company’s bank account without an appropriate resolution of the shareholders or a concluded agreement, etc.
In judicial practice, “important reasons” may also include circumstances such as: failure to provide documentation to a partner and failure to inform them about actions taken, disposal of company assets without the partner’s knowledge, or violations of the Accounting Act.
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Court procedure for dismissing a company liquidator
The procedure for judicial dismissal of a liquidator may take up to several years from the date of filing the application. This depends on the workload of the relevant registry court, and in practice, a decision can be expected after approximately 2-3 years. That is why it is so important to attach to the application for dismissal of the current liquidator the consent of the new, target liquidator whom we are requesting to be appointed in place of the dismissed one. This will significantly speed up the proceedings, and the court will be able to issue an appropriate decision, containing both the dismissal of the current liquidator and the appointment of a new one.
Court dismissal of the liquidator – what next?
Dismissing an unreliable liquidator is only the first step on the road to regaining control over the company. The next steps will often involve entrusting an auditor with examining the company’s situation. This is because the actions of the dismissed liquidator are often not in accordance with the Accounting Act, which gives rise to many irregularities. It is worth diagnosing them and implementing corrective measures at the very beginning (so that the new liquidator does not expose himself to liability).
It is not uncommon for partners, after dismissing an unreliable liquidator, to consider repealing the resolution on liquidation and continuing to run the company, which is perfectly legal. It should only be remembered that such a resolution (similar to a resolution to put the company into liquidation) must be recorded by a notary public.
If the actions of the dismissed liquidator also involved concluding agreements that were unfavorable to the company, the new liquidator and partners may also be faced with the need to consider actions aimed at terminating such agreements. These can often be difficult negotiations lasting many months, sometimes ending up in court.
Decision to wind up a business sometimes appears to be necessary. But how do you dissolve a company? What is a liquidation? What does it involve? How is it carried out? The answers to these questions can be found below.
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.
Serving as a member of the management board involves rights, duties and responsibilities. Who is a member of the management board? How do they differ from a commercial proxy? Are the details of a board member publicly available? Answers to some questions related to the topic of management board membership can be found below.
