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Implementation of Corporate Governance Rules for Polish regulated entities

In July 2014, the Polish Financial Supervision Authority (the Polish FSA) issued a set of corporate governance principles (the Rules) for entities operating in the local financial market which are subject to the Polish FSA’s supervision.1

Regulated entities had to implement these Rules, or explain their failure to do so to the Polish FSA, by 1 January 2015. Regulated entities may, however, also opt out from applying certain Rules if the application of such rules would be overly cumbersome (ie could adversely and materially affect their financial situation).

The Rules establish the rules of conduct of regulated entities, their internal and external relationships, including relationships with shareholders and clients, their internal organisation, including the functioning of internal auditing, compliance and other key systems, as well as the organisation of their statutory bodies and the rules of their cooperation. The Rules require, among other things, that:

  • the regulated entity has a transparent and adequate organisational structure which enables it to achieve long-term strategic goals. To achieve these goals, it should organise its activities in a proper manner, including by implementing adequate decision-making procedures, reporting lines, IT systems, risk management and control systems and rules for continued operations;
  • the regulated entity acts in the interest of all of its shareholders. This involves it ensuring adequate access to complete and reliable information for all shareholders without preferential treatment of any selected shareholder, as well as ensuring the possibility of electronic participation in the general meeting of shareholders;
  • as to the regulated entity's shareholders, they must cooperate with each other to implement its goals and to ensure the security of the operations of that entity. This requires, for example, that shareholders provide financial support to the entity if such support is necessary for maintaining liquidity at a level required by legal or supervisory regulations. In addition, when deciding on the payment of dividends shareholders must take into account the level of the regulated entity's own capital, as well as guidelines and individual recommendations issued by the Polish FSA;
  • the supervisory board of the regulated entity must approve transactions with related parties, which have a significant impact on the financial or legal situation of the regulated entity or which lead to the purchase, sale or other disposal of a significant part of its assets;
  • the regulated entity has a transparent policy of remuneration for members of the management body and the supervisory body, as well as key personnel. The remuneration rules should be defined by means of appropriate internal regulation which should be subject to assessment by the general meeting of shareholders as to whether the regulation contributes to the development and security of the operations of the regulated entity; and
  • any necessary information concerning the nature and structure of financial products or services and which is important for a client’s decision-making is made available to the clients on a timely basis.

It will be interesting to assess the approach which regulated entities take on implementation of the Rules.


1 The Corporate Governance Rules would not apply to certain agents, managers of securitisations receivables, issuers carrying out IPOs or whose securities are admitted to a regulated market (unless such issuers are otherwise regulated entities) or foreign legal persons carrying out activities in Poland under applicable authorisation.

Legal and Regulatory Risk Note