“Liability of a Management Board Member of a Company Operating on the Basis of a Resolution of Shareholders for the Crime of Mismanagement.”
As mentioned in one of the previous posts, the crime of mismanagement, regulated by Article 296 of the Criminal Code, is also referred to as embezzlement.
What is the crime of mismanagement?
To recap, according to Article 296 § 1 of the Criminal Code, anyone who, being obligated based on a statutory provision, a decision of the relevant authority, or an agreement to handle financial matters or business activities of a natural person, legal entity, or an unincorporated organizational unit, not having legal personality, causes significant financial damage through the abuse of granted powers or the failure to fulfill their obligations shall be subject to a penalty of imprisonment for a term ranging from 3 months to 5 years.
Who can commit the crime of mismanagement?
Criminal liability under Article 296 of the Criminal Code can be incurred by individuals involved in financial or business matters of another entity, including members of the boards of companies (cooperatives, foundations), members of their supervisory boards or audit committees, liquidators, receivers, directors of enterprises, and others.
Can the crime of mismanagement be committed when there was no financial loss?
The crime in question belongs to consequential crimes, and, for its commission, it is necessary to cause significant financial damage. Significant damage is the one that, at the time of the offense, exceeds PLN 200,000.
I would like to emphasize that merely creating a direct risk of causing significant financial damage can also lead to criminal liability, although in a privileged form (Article 296 § 1a of the Criminal Code).
Does acting on the basis of a resolution of another company’s body exempt a member of the board from criminal liability?
The answer to this question is negative. A member of the board who fulfills the elements of the crime of mismanagement will not avoid criminal liability simply because they acted based on a resolution, for example, by the general meeting of shareholders of a joint-stock company.
In this context, the Court of Appeal in Lublin expressed its opinion in a judgment dated April 22, 2022, case number: II AKa 93/21, stating that: Resolutions of a general meeting of shareholders, expressing consent to carry out specific actions by the company’s board in accordance with statutory provisions or the articles of association, do not exempt the board from the competence to perform a particular action and do not release them from liability for the consequences of the given action. These resolutions do not have the character of a victim’s consent to a specific action excluding criminal liability since it is not the general meeting that is the authorized body to represent the joint-stock company externally.
Summary
As this article indicates, individuals involved in financial or business matters of a natural person, legal entity, or an unincorporated organizational unit without legal personality should always assess their actions in terms of acting within their powers and duties because even acting based on a required resolution of another entity’s body does not exempt them from responsibility for their actions.”