Commercial representation – a power of attorney granted by an entrepreneur part 1

Commercial representation frequently makes it easier for an entrepreneur to do business. Therefore, it is worth knowing precisely what it is and what the principles of granting it are.

Commercial representation is a special type of power of attorney…

Commercial representation is a power of attorney granted by an entrepreneur who is obliged to register with the Central Register and Information on Business Activity (hereinafter “CEIDG”) or the register of entrepreneurs of the National Court Register. This power of attorney encompasses the authorization to conduct activities in court and out of court, which are related to managing the business.

As the commercial representation encompasses activities related to managing a business, there is no dispute that companies, particularly a limited liability company, not conducting business cannot appoint a commercial representative.

According to the definition presented above, there can be no doubt that commercial representation can be established by a sole proprietor or by entrepreneurs who need to be registered in the register of entrepreneurs, namely partnerships (registered, professional, limited partnerships and mixed joint-stock and limited partnerships), companies (limited liability, joint-stock and European companies), cooperatives, European cooperatives, state-owned enterprises, research institutes, mutual insurance companies and branches of foreign entrepreneurs operating in Poland.

A commercial representation cannot be established by a civil partnership which is not a legal entity. A civil partnership, as such, is not an entrepreneur and is not subject to entry into the register of entrepreneurs or the CEIDG. However, a commercial representation can be established by the company’s partners who are subject to requirement of registration in the CEIDG or the register of entrepreneurs. It should be remembered that the activities taken by such a commercial representative only affect the sphere of that partner’s activities and not those of the partnership or the other partners.

A commercial representation cannot be established by companies in liquidation or by an entrepreneur after being declared bankrupt. A commercial representation established before the opening of liquidation or after declaring bankruptcy expires by law.

According to the provisions of the restructuring law, the opening of restructuring proceedings results in the expiry of the commercial representation established by the debtor. However, in the course of the restructuring proceedings, the administrator may grant powers of attorney, including commercial representations.

The commercial representative is a representative of the entrepreneur. Therefore, a legal transaction conducted by a commercial representative within the scope of his authorization results in consequences directly for the principal.

The commercial representative’s rights are extensive…

A commercial representative may:

• conclude contracts;
• acquire rights;
• incur liabilities;
• employ workers;
• conduct procedural activities before civil and administrative courts or appear before bodies of public administration (e.g. file an action with the court, withdraw an action, enter into a settlement);
• grant powers of attorney ad litem;
• exercise rights from stocks and shares held by the entrepreneur;
• conduct activities in criminal proceedings;
• appear in tax proceedings;
• issue bills of exchange and cheques and grant sureties;

on behalf of the entrepreneur

The commercial representative is, among others, authorized to enter into sales contracts (including those resulting in the purchase of machinery, equipment or raw materials, and the sale of the company’s fixed assets), leases, cultivation contracting, supply contracts, contracts for the provision of services, loan or facility agreements (regardless of the amount) or contracts for the acquisition of real estate or rights to real estate. A commercial representative can also perform activities related to protecting or exercising industrial property rights.

According to the Voivodship Administrative Court in Lublin, the commercial representative is authorized to act on behalf of the enterprise (and not its management board or branch of the enterprise) in administrative proceedings (in proceedings before tax and customs authorities, the Polish Patent Office, the President of the Office of Competition and Consumer Protection, the Energy Regulatory Office, local government bodies and bodies of government administration) and proceedings before administrative courts (proceedings before voivodship administrative courts and the Supreme Administrative Court). The court emphasized that the commercial representative is authorized to act on behalf of the enterprise in proceedings initiated by an application regarding overpayment and to sign corrections of the tax returns and declarations without presenting a specific power of attorney for this. Such authorization arises from the essence of the commercial representation and does not require such a commercial representative to additionally have a power of attorney granted in the procedure of Article 80 a of the Tax Code.

In summary, the commercial representative’s rights apply to actual, legal and procedural activities.

As a commercial representative is entitled to conduct activities related to running a business, it is accepted that he is not entitled to conduct activities related to the establishment of a business, end its activities or submit petitions on this to the register or records.

I shall write about the restrictions on the commercial representation, how to establish it and the content of the document of the commercial representation in the next post.