Appointment of a curator for a limited liability company in the absence of a body authorised to represent it

Factual situation 

The law firm is providing legal services to a limited liability company engaged in the commercial leasing of real estate (hereinafter: the company). The company owns commercial and service facilities in which tenants carry out their activities on the basis of lease agreements concluded with the company. 

In the course of ongoing legal services, the sole shareholder and also the sole member of the company’s management board died. As a result, the company lost the authority to represent it, which made it impossible for the company to appear in business and carry out its current activities.  

Action taken 

Having analysed the possible legal options, taking into account the ongoing inheritance proceedings and the related impossibility of immediately appointing the company’s management board, our law firm filed an application with the registry court for the appointment of a curator for the company on the basis of Article 42 § 1 of the Civil Code. Indeed, this provision provides for the possibility of appointing a curator in the event that a legal person cannot be represented or conduct its affairs due to the lack of a body authorised to represent it. The primary role of the curator is to take actions aimed at appointing or completing the composition of the body representing the legal person. 

The court granted the request and appointed a curator for a period of one year. Information about the appointment of the curator was disclosed in the company’s National Court Register, thus ensuring credibility vis-à-vis third parties in business dealings. 

Problematic issues and actions taken in the case  

Two important legal issues have arisen in the course of the superintendent’s role: 

1. Expiry of the ‘s term of office  

The court, in accordance with Article 421 § 1 sentence 1 of the Civil Code, appointed a curator for one year, but during this time the succession proceedings had not been validly concluded, which meant that it was still not possible to appoint a board of trustees 

According to the regulations, the powers of the curator expire, as a rule, after a period of one year from the date of appointment – as the function of the curator is, by its nature, only a temporary function. However, the second sentence of Article 42 § 1 of the Civil Code provides that in particularly justified cases the court may extend the term of office of the curator for a further specified period of time, if the activities aimed at the appointment of the management board or liquidation of the company could not be completed within the originally appointed term of the curator’s appointment.  

Faced with the continuing impossibility of appointing a board of directors, the law firm applied to the court for an extension of the superintendent’s term of office for a further year on the grounds of the pending succession proceedings and the need to ensure the continued day-to-day operation of the company. 

2. Expiry of the lease and the question of whether the company can enter into a new agreement  

During the superintendent’s tenure, one of the leases under which the company had let the premises expired. The tenant vacated the premises and the company had to bear the costs of maintaining the unrented property, which adversely affected its financial position. The question arose as to whether the superintendent had the authority to enter into the lease on behalf of the company. In this regard, it was necessary to conduct an analysis regarding the scope of the superintendent’s authority  his function.  

Notwithstanding the broad scope of the powers of the curator in the court’s decision to appoint him, the disposition of Article 42 § 2 of the Civil Code, according to which, until a corporate body is appointed or supplemented or a liquidator is appointed, the curator represents the legal person and manages its affairs within the limits set out in the court’s certificate, it is necessary to bear in mind the basic purpose of his function. This purpose is set out in Article 42 § 3 of the Civil Code, according to which the curator is obliged to take immediate steps to appoint or supplement the composition of the body of the legal person authorised to represent it and, if necessary, to liquidate it. Granting a curator the competence to represent a legal person is primarily intended to secure the interests of the represented entity, as well as to protect the interests of the other participants in trade (A. Kubiak-Cyrul, Commentary to Article 42 of the Civil Code, in: Kodeks cywilny. Commentary, ed. M. Załucki, 4th edition, 2024, access: Legalis). 

In turn, Article 42 § 4 of the Civil Code provides that the guardian must obtain the court’s consent for certain actions. These actions include:  

1) the acquisition and disposal of an undertaking or an organised part thereof and the execution of a legal transaction whereby an undertaking or an organised part thereof is put into temporary use; 

2) the acquisition and disposal of and encumbrance on real estate, perpetual usufruct or an interest in real estate. 

As can be seen from the above, these are therefore the actions of greatest importance from the perspective of the economic interests of the legal entity. The taking of the above-mentioned actions by the curator without prior authorisation of the registration court results in the invalidity of such actions, without the possibility of their subsequent confirmation.  

In the case of the presented issue, the analysis of the notion of “encumbrance of real estate” contained in Article 42 § 4 item 2 of the Civil Code became particularly important. The legislator did not provide a definition of this notion, and therefore it became necessary to answer the question whether the conclusion of a lease agreement by the superintendent, on the basis of which the company’s real estate will be leased, constitutes an act “encumbering real estate” and, consequently, requires prior court authorisation. 

There are different positions in legal doctrine. Possible interpretative variants oscillate between a narrow meaning, which identifies the notion of “encumbrance” with the establishment of a limited right in rem on the real estate, e.g. usufruct, easement, mortgage, and a broad meaning, which covers with its scope also bond relations giving rise to a claim, the content of which is the possibility to use the real estate, and the effect – depriving the entitled person of the authority over the thing (lending, leasing, rental, tenancy, timeshare) (A. Herbet, Commentary to Article 42 of the Civil Code, in: Kodeks cywilny. Commentary, ed. P. Machnikowski, ed. 1, 2022, access: Legalis). Due to the type of sanction reserved – namely the invalidity of an act – the assessment of a given act each time requires particular caution in the light of the interests of the legal person. 

In the case, an application was made for the court of registration to authorise the superintendent to enter into a lease agreement for premises on behalf of the company. In the application, both the subject of the lease the conditions under which the agreement is to be concluded were described. In addition, a justification was provided in which it was demonstrated that the conclusion of the aforementioned lease agreement is in the best interest of the company and remains in line with the economic purpose of its operation. The lack of a tenant not only prevents the company from generating ongoing income from the letting of the premises, but also results in the company being obliged to incur recurring costs associated with its maintenance. 

Result 

The registry court granted both applications with orders stating: 

• extended the superintendent’s term of office for a further year, which ensured that the company could continue to be legally represented; 

• authorised the conclusion of a new tenancy agreement for the premises and set out its material provisions. 

As a result of the action taken, the company was able to continue its day-to-day operations despite the absence of a board of directors, and allowing a new lease to be concluded avoided the financial losses associated with the company maintaining unrented premises. 

Conclusions 

The loss of management in a company, for whatever reason, can significantly hamper its operation and paralyse its business. Thanks to the legal solutions applied, it has been possible to ensure the continuity of the company’s operations and safeguard its interests.  

The firm has extensive experience in these types of cases and offers comprehensive legal support to entrepreneurs. If your company needs assistance in a similar situation or is considering entering into an agreement with a company on whose behalf a curator is acting, please do not hesitate to contact us!