Governance Structure, Compositional Controversies, and Practical Implications
I. Introduction
The Polish Family Foundation Act of 2023 introduced a tripartite governance structure comprising the management board, supervisory board, and beneficiary assembly. While the legislature expressly articulated the functions of the former two organs—the management board conducts foundation affairs; the supervisory board exercises oversight—the beneficiary assembly’s competencies must be reconstructed from scattered statutory provisions. This legislative lacuna presents significant interpretive challenges and raises fundamental questions about the organ’s proper role within the foundation’s governance architecture.
This Article examines the beneficiary assembly’s legal character, analyzes the controversial statutory framework governing its composition, and offers practical guidance for charter drafting. The analysis reveals that despite superficial similarities to shareholder meetings in corporate entities, the beneficiary assembly operates under fundamentally different premises that demand careful consideration by practitioners establishing family foundations.
II. The Legal Nature of the Beneficiary Assembly
A. Functional Characteristics
The beneficiary assembly serves a dual institutional purpose: ensuring organizational continuity during governance crises and exercising supervisory functions vis-à-vis the management board. One might characterize this organ as the mechanism through which beneficiary interests find expression in foundation governance—though, crucially, it does not constitute a proprietary organ in the corporate law sense.
The legislature’s evident intention was to circumscribe the assembly’s involvement in quotidian foundation operations. Its engagement should concentrate on circumstances requiring intervention to maintain proper organizational functioning, rather than routine management decisions.
B. Distinction from Corporate Shareholder Bodies
The nomenclature’s apparent similarity to the shareholders’ meeting of a limited liability company (zgromadzenie wspólników) or the general meeting of a joint-stock company (walne zgromadzenie) risks generating erroneous analytical conclusions. The fundamental distinction lies in the character of entitlements: beneficiary status and its attendant rights are personal and inalienable. A beneficiary may renounce these rights but cannot transfer them to another party—a stark contrast to shares or stock, which constitute freely transferable property interests.
This distinction carries profound implications. The position of a beneficiary assembly member would correspond, in corporate law terms, to the legally impossible position of a person who is neither shareholder nor stockholder yet possesses personal rights to vote at shareholder meetings and to receive dividends and liquidation proceeds. Only such a hypothetical bundle of rights—severed from any transferable ownership interest—would approximate the beneficiary’s participatory entitlements under the Family Foundation Act.
III. Statutory Competencies
Although the statute contains no consolidated enumeration, systematic analysis reveals the following competency domains:
Personnel matters. The assembly appoints and removes management board members when both the founder and supervisory board are absent, and supervisory board members following the founder’s death. It also designates a special representative for disputes between the foundation and management board members when no supervisory board exists.
Supervisory functions. The assembly reviews and approves management board activity reports and financial statements, grants discharge (absolutorium) to organ members, and appoints independent auditors or audit teams.
Extraordinary circumstances. The assembly establishes liquidators when a foundation in organization lacks a management board and approves the liquidation report. Unless the charter provides otherwise, it may also convene the management board.
IV. The Compositional Controversy
A. The Statutory Framework
The statutory solution governing assembly composition has attracted substantial doctrinal criticism. The assembly comprises exclusively those beneficiaries to whom the founder has granted participatory rights in the charter. Consequently, beneficiary status constitutes a necessary but insufficient condition for organ membership.
The practical ramifications prove far-reaching. A beneficiary excluded from assembly membership forfeits influence over financial statement approval, discharge decisions, and the filling of organ vacancies. In its opinion on the draft legislation, the Polish Supreme Court criticized the opt-in model, observing that the assembly—as the sole organ that arguably should maintain independence from the founder—ought to be autonomous with respect to its composition as well.
From a practical standpoint, this statutory architecture may generate tensions within the beneficiary structure, particularly when excluded beneficiaries perceive their situation as inequitable. The potential for intra-foundation conflict represents a non-trivial governance risk that charter drafters must carefully address.
B. Establishment Requirements
The founder establishes the assembly by designating in the charter at least one beneficiary entitled to participate. This act of establishment requires notarial form as a constituent element of the charter. A notary should decline to execute the instrument if the charter fails to identify at least one assembly member.
A significant interpretive question arises: whether descriptive compositional criteria—for example, “all beneficiaries above forty years of age”—satisfy the statutory requirement. The textual command of Article 26(2)(11), requiring designation of “at least one beneficiary,” arguably supports the necessity of nominal identification. Descriptive criteria might, at most, generate a claim for charter amendment but would not automatically create membership.
C. Modification Procedures
Any alteration to assembly composition requires charter amendment subject to registry court approval. This procedural rigidity may impede flexible responses to changed circumstances—for instance, the death of the sole assembly member.
Prudent charter drafting should consider incorporating liberal amendment provisions regarding assembly composition—perhaps authorizing the management board to effectuate such modifications by resolution without additional formalities beyond registry disclosure. Such provisions would prevent decisional paralysis should the foundation find itself without eligible beneficiaries.
V. Voting Rights and Participatory Entitlements
The right to participate in the assembly presumptively encompasses voting rights. The charter may, however, provide that a particular beneficiary lacks voting rights notwithstanding assembly membership. Differential voting power among members is likewise permissible.
A beneficiary may renounce participatory rights pursuant to Article 39(2) of the Act. Where the founder has granted such rights to only one beneficiary, that person’s death, registry deletion (in the case of a nonprofit organization), or renunciation may result in a mandatory organ remaining unoccupied—a circumstance with potentially serious governance implications.
VI. The Standard of Care
A. Diligence Without Loyalty
Assembly members must exercise due diligence (należyta staranność) in discharging their duties. This standard corresponds to the care generally required in relationships of the relevant type, without elevation to the professional standard applicable to business activities.
Notably, the legislature declined to impose a duty of loyalty toward the foundation on assembly members—unlike the obligations binding management and supervisory board members. A beneficiary participating in organ proceedings may therefore pursue personal interests, provided due diligence is maintained. This asymmetry reflects the assembly’s distinct position within the governance structure: members act as interested parties whose participation serves partly to protect their own entitlements, not solely fiduciary agents of the foundation.
B. Liability Implications
Assembly members do not bear damages liability under Article 75(1)-(2) of the Act, which applies exclusively to management and supervisory board members. Any liability for foundation harm would therefore rest on general civil law principles—specifically, the delictual framework governing fault-based liability.
Breach of the due diligence obligation might, depending on charter provisions, result in loss of participatory rights. Such a consequence could not, however, operate automatically. Loss of assembly membership would require charter amendment regarding the designation of entitled beneficiaries, thereby subjecting the matter to registry court review.
VII. The Treatment of Minor Beneficiaries
The separation of beneficiary status from assembly membership finds partial justification in the possible existence of minor beneficiaries. This rationale loses considerable force, however, given the availability of legal representation through statutory guardians. If the foundation’s purpose encompasses supporting beneficiaries’ education—which presupposes inclusion of minors—excluding them from governance influence raises axiological concerns.
The legislative choice to permit such exclusion reflects a policy judgment privileging founder autonomy over beneficiary participation. Whether this balance proves optimal may depend on specific family circumstances, but practitioners should recognize that blanket exclusion of minor beneficiaries is neither required nor necessarily advisable.
VIII. Recommendations for Charter Practice
Several considerations merit attention in drafting charter provisions governing the beneficiary assembly.
Compositional flexibility. Establishing clear criteria for acquiring and losing membership should be balanced against ensuring procedural flexibility for composition updates. Rigid requirements may prove problematic when circumstances change unexpectedly.
Inclusivity assessment. Restricting participants relative to the full beneficiary class warrants careful evaluation. Does limitation genuinely serve foundation interests, or does it primarily generate conflict risk? The answer will vary by circumstance, but the question demands explicit consideration rather than reflexive adoption of the statutory permission.
Contingency mechanisms. Provisions addressing the absence of assembly members—whether through designated successors, emergency appointment procedures, or fallback to management board authority—can prevent governance paralysis in unforeseen circumstances.
Informed restriction. The decision to narrow assembly composition relative to the beneficiary universe should reflect conscious, situation-specific judgment rather than automatic replication of statutory possibilities. The experience of comparable foreign institutions suggests that transparency and inclusivity in governance structures promote long-term institutional stability.
IX. Conclusion
The beneficiary assembly occupies an ambiguous position within the Polish family foundation’s governance architecture. Neither a proprietary organ conferring ownership-like control nor a mere advisory body, it exercises significant competencies—particularly in crisis situations—while remaining subject to founder-determined compositional constraints.
The statutory framework’s permissiveness regarding membership restriction reflects legislative deference to founder autonomy. This approach, however, creates potential for governance tensions that careful charter drafting must anticipate and address. Practitioners advising on family foundation establishment should recognize that the opt-in model represents a tool requiring judicious deployment, not a default configuration suitable for all circumstances.
The ultimate success of the beneficiary assembly as a governance mechanism will depend substantially on how founders and their advisors navigate the tension between control retention and participatory inclusion. Early indications from foundation practice will merit close scholarly attention as this novel institutional form matures within the Polish legal landscape.
