Competence and Authority in Swedish and Polish Company Law - A comparative study

Abstract: Competence according to the Swedish Companies Act is the right to take measures on behalf of the company because of the rules in the act concerning the dividing of functions that belongs to a certain representative of the company in relation to a third party. Authority is defined as the right to undertake measures on behalf of the company because of the underlying relation to the representative of the company. The competence is directed out towards a third party and the authority is directed inwards the company.
Poland operates a two-tier system that follows the German model. It is comprised of a supervisory board for supervising the company’s affairs and a management board for managing the company. The powers of managing the affairs in the company and representing the company are vested in the management board. A management board member’s right to represent the company encompasses all acts the company may undertake and this must not restricted with respect to third parties. However, if the management board consists of more than one member, the articles of association may set out restrictions in the manner of which the company should be represented.
The positional authority in Swedish law is created through contract and is regulated in the Contract Act (SFS 1915:218) the reason to why there is a prerequisite of contract is because the position has to derive from the principal’s own contribution. The limitations of competence depend upon the nature of the position and are defined through custom rather that through statute.
Comparing the Polish commercial proxy and the Swedish positional authority, one significant difference is that the commercial proxy has clear limitations on what the proxy holder can and cannot do, whereas the positional authority is wider and this has led to several court cases from the Swedish Supreme Court concerning the limitations of the positional authority. Factors to be considered are for example; the independency of the position and custom.
The commercial proxy does not serve the same purposes as the positional authority; it is actually more similar to the Swedish authority to sign for a firm. The commercial proxy is granted through a power of attorney and needs to be registered in the Register of Entrepreneurs and is only valid for people active on the premises of an enterprise serving the public.
There are few similarities between a holder of a Polish commercial proxy and the authority of the managing director in a Swedish company. The managing director of a Swedish company is a company body and the holder of a commercial proxy is a person who has been entrusted by the managing board to carry out legal acts in the name of the company. The holder of a commercial proxy has a standing mandate from the principal and it is in the
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nature of the mandate that the holder of the proxy will take some actions based on his own decisions, nevertheless, the holder should never take actions which are not in the interest of the principal. The managing director of a Swedish company has a different and greater responsibility when taking actions on behalf of a company and must always act with the interest of the business and the profit when carrying out legal acts.
The First Company Law Directive leaves it to the national law of each country to regulate the more detailed questions concerning competencies and authority. The aim of the First Company Law Directive is to make sure that whoever is authorised to represent a company is visible for a third party.