Proxy for an entrepreneur running a sole proprietorship

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A proxy for an entrepreneur is a special type of power of attorney that may be granted only by an entrepreneur. So far, i.e. before the date of entry into force of the package of acts constituting the so-called The Constitution for Business, on April 30, 2018, could only be granted by an entrepreneur subject to entry in the Register of Entrepreneurs of the National Court Register. This constituted a significant limitation for natural persons conducting business activity subject to entry in the Central Register and Information on Economic Activity, as the legislator did not provide for the possibility and natural persons operating in the form of a civil partnership. The institution of a procuration is characterized by a much broader scope of activity than an ordinary power of attorney, therefore enabling it to be established by a sole trader will make it easier for him to run a business.

What is the Constitution for Business?

The Constitution for Business is a package of laws:

  • Entrepreneurs' law;

  • provisions introducing the Act - Entrepreneurs' Law and other acts relating to business activity;

  • the Act on the Ombudsman for Small and Medium Enterprises;

  • the Act on the Central Register and Information on Economic Activity and the Information Point for Entrepreneurs;

  • the Act on the Rules for the Participation of Foreign Entrepreneurs and Other Foreign Persons in Economic Trade on the territory of the Republic of Poland,

which assume many benefits for both natural persons starting a business activity and entrepreneurs who already run such business.

What is a procuration? Proxy for entrepreneurs before the entry into force of the Constitution for business

Pursuant to Art. 1091 § 1 of the Act of 23 April 1964 Civil Code (Journal of Laws 2017.459, i.e. of 2017.03.02), hereinafter: the Civil Code, the proxy is a power of attorney granted by an entrepreneur subject to the obligation to enter into the register of entrepreneurs, which includes authorization to perform judicial and extrajudicial actions which are related to running a business.

A proxy for entrepreneurs is a special type of power of attorney that could be granted before April 30, 2018 only by an entrepreneur who is entered in the Register of Entrepreneurs kept by the National Court Register at the registry court.

The difference between a proxy and ordinary power of attorney comes down to the scope of competence. A proxy has a much wider range of powers - they cover all activities related to running a business. Of course, as in most cases, there are some exclusions. Pursuant to Art. 1093 of the Civil Code, a power of attorney for a particular activity is required to sell the enterprise, perform a legal action on the basis of which it is put into temporary use, and to sell and encumber the property. Thus, the commercial proxy cannot independently, inter alia, sell (sell) the enterprise.

Proxy for an entrepreneur should be granted in writing, otherwise null and void. What does it mean? If it was granted in a different form, the procuration is invalid. It also cannot be moved. This prohibition results from Art. 1096 of the Civil Code. Nevertheless, the commercial proxy may appoint an attorney to perform specific activities, but cannot grant the so-called further procuration.

Of course, the granting of a power of attorney had to be reported to the registry court competent according to the entrepreneur's seat, by completing the KRS-Z3 and KRS-ZL forms and a written declaration of the attorney on consent to perform the function together with a resolution on the appointment of a proxy. Amendments to the National Court Register are payable - PLN 250.00 (change of data) + PLN 100.00 (announcement in the Court and Economic Monitor).

The commercial proxy may be revoked at any time. Before April 30, 2018, the procuration expires as a result of removing the entrepreneur from the register, declaration of bankruptcy, liquidation, and appointment of a probation officer pursuant to Art. 42 § 1 of the Civil Code. The expiry of the procuration does not result in the death of the entrepreneur or the loss of his legal capacity (Article 1097 § 4 of the Civil Code).

Important!
There are several types of proxy:
- total - proxies must cooperate together in running the enterprise;
- independent - a proxy (each of the proxies) may independently represent the entrepreneur;
- mixed - cooperation of a proxy with a member of the management board or a partner authorized to represent the company;
- branch office - the commercial proxy is limited in running the enterprise's affairs only to its branch, e.g. in a given locality (specified territory).
The type of commercial proxy used depends on the proxy's choice as well as the scope and size of the business

It is this last sentence that is puzzling in terms of changes in the institution of procuration. Since a proxy may be granted by entrepreneurs subject to entry in the National Court Register, why did the legislator mention the death of the entrepreneur (of course, a natural person, because a company entered in the register itself cannot die)?

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Proxy for entrepreneurs after April 30, 2018

It is the content of Art. 1097 § 4 of the Civil Code in the version in force before April 30, 2018 aroused a lot of controversy. As indicated by the Ministry of Development and Finance in the justification to the draft act on successive management of a natural person's enterprise: if it is foreseen that an entrepreneur granting a procuration may be killed, and on the other hand, in practice, the right for an entrepreneur - a natural person to grant a procuration is denied, it is an inconsistency that must be eliminated.

By the Act of March 6, 2018, the provisions introducing the Act - Entrepreneurs' Law and other acts on economic activity (Journal of Laws 2018.650, i.e. from 2018.03.30), a new definition was introduced to the Civil Code - proxy for entrepreneurs.

Pursuant to Art. 1091 § 1 of the Civil Code in the wording in force from April 30, 2018, a proxy is a power of attorney granted by an entrepreneur subject to the obligation to enter into the Central Register and Information on Economic Activity or to the register of entrepreneurs of the National Court Register, which includes authorization to perform judicial and extrajudicial activities related to running a business.

Adding a statement, as compared to the wording of Art. 1091 § 1 of the Civil Code before the amendment, subject to the obligation to be entered in the Central Register and Information on Economic Activity, opened the possibility for natural persons conducting business activity to appoint a commercial proxy.

Important!
From April 30, 2018, an entrepreneur running a sole proprietorship has the option of appointing a commercial proxy who will be subject to the obligation to enter into the Central Register and Information on Economic Activity.

The changes proposed by the Ministry of Development and Finance with regard to the commercial proxy were also included in the draft act on successive management of an enterprise of a natural person. Pursuant to Art. 9 sec. 1 point 2 of the above-mentioned of the project, the entrepreneur may appoint a succession administrator by stipulating that upon the entrepreneur's death, the indicated proxy will become a succession administrator. The purpose of introducing such a change would be the uninterrupted operation of a natural person's enterprise after his death. However, the above-mentioned act is currently at the stage of parliamentary readings, so some time will elapse before it undergoes the legislative process.

Returning, however, to the changes in the commercial proxy that have been in force since April 30, 2018, both the appointment of a commercial proxy and the expiry of the commercial proxy are connected with the obligation to report to the Central Register and Information on Economic Activity.

The rules related to the appointment of a proxy and the entrepreneur's obligations in this respect are specified in Chapter 6 of the Act of March 6, 2018 on the Central Register and Information on Economic Activity and the Information Point for Entrepreneurs (Journal of Laws 2018.647, i.e. from 2018.03.30).

Pursuant to Art. 38 sec. 1 above of the Act, an entrepreneur entered into the CEIDG may publish information about his attorney or proxy via the CEIDG ICT system. Thus, the legislator introduced the possibility to establish a procuration remotely, i.e. electronically.

The appointment of a proxy and his entry into CEIDG will eliminate the need to use a power of attorney in a paper version. This is of particular importance when dealing with matters before public administration bodies. The authority will be able to independently (ex officio) confirm the authorization of the commercial proxy to act for the entrepreneur.

Benefits for entrepreneurs from the appointment of a proxy

Why is it worth appointing a commercial proxy:

1) The commercial proxy has a very wide range of powers. Its authorization applies to both court actions (representation of an entrepreneur in court) and out-of-court actions (e.g. conclusion of contracts), therefore the changes allowing the appointment of a proxy for an entrepreneur running a sole proprietorship will significantly facilitate the conduct of business affairs.

2) The procuration for entrepreneurs and its scope are specified in the act, which is an additional advantage due to legal certainty and security of business transactions.

3) The procuration for entrepreneurs may be established and revoked at any time.

4) The entrepreneur can easily go on vacation, because during his absence the company can be managed by a proxy.