Duties of Corporate Authorities in the Context of Takeover Attempts

Abstract

This paper analyzes the duties of a corporate board in the context of takeover attempts in Polish law. The closed corporate governance model, that has dominated the Polish market, resulted in a rather insignificant role that civil liability for failure to meet duties by the public company's board played in Polish case law. In the case of the Polish capital market, most takeovers are ‘friendly’ in nature due to a control exercised over Polish public companies by strategic investors. When it comes to the adoption of reactive defense measures by a company's board faced with a threat of a hostile takeover, Polish law remains relatively permissive. Polish company law does not reserve defense measures to the exclusive competence of the general meeting. At the same time the duties of a corporate board in this area are limited and their private law enforcement remains very poor. It does not however mean that a corporate board enjoy unrestrained freedom in this respect. The discussion below will focus on the basic rules of procedure followed by a corporate board facing a hostile takeover attempt.