Since the Family Foundation Act came into force, considerable time has passed. However, when reviewing proposed family governance structures within family foundations, it’s clear that the relationships between the family foundation and the family business, as well as within the foundation itself, are still not fully understood..
FAMILY FOUNDATION – CORE GOVERNING BODIES
A family foundation typically has three mandatory bodies:
- Management Board (Zarząd)– the executive body.
- Supervisory Board (Rada Nadzorcza)– mandatory if there are more than 25 beneficiaries.
- Assembly of Beneficiaries (Zgromadzenie Beneficjentów)– the approving body.
The law defines a basic model for each of these bodies, but also allows for significant flexibility in shaping their competencies—provided that their core legal nature is respected (e.g., the supervisory board cannot be given executive powers). This flexibility allows the governance of a family foundation to be custom-tailored to the needs of a specific family and business..
SUCCESSION USING A FAMILY FOUNDATION AND ITS RELATIONSHIP TO THE FAMILY BUSINESS
Succession through a family foundation often means the foundation becomes the sole or majority shareholder of the family business, which typically operates as a limited liability or joint-stock company. In this model, the foundation’s management board represents the foundation at shareholder meetings and makes key decisions regarding the business.
Depending on how the governance is structured, the board may act independently or be required to obtain approval from the assembly of beneficiaries or the supervisory board for how it exercises voting rights..
ASSEMBLY OF BENEFICIARIES
The assembly of beneficiaries of a family foundation is often compared to the shareholders' meeting (general meeting) in capital companies. However, this comparison is not entirely accurate. The assembly of beneficiaries is not an ownership body like the shareholders' meeting. Beneficiaries, just like the founder, are not the owners of the family foundation’s assets. Moreover, unlike the ownership bodies of capital companies, not all beneficiaries sit on the assembly—only those who have been granted such a right by the founder. It is the founder alone who decides on the number of votes assigned to a given beneficiary and any changes in this regard.
As with other bodies such as the management board and the supervisory board, the powers of the assembly of beneficiaries can be significantly modified compared to the statutory model. In the statutory model, the assembly of beneficiaries primarily performs functions related to the closing of the financial year (reviewing and approving the financial statements, distributing or covering the financial result, granting discharge of duties), and if continuing the foundation’s activities becomes pointless, it may decide to dissolve the family foundation.
Depending on the founder’s discretion, the powers of the assembly of beneficiaries may be extended to include a range of other important functions, such as granting consent for the management board to undertake specific actions indicated in the statute (e.g., sale/purchase of real estate, shares/securities, investments exceeding a certain value), amending the statute, defining detailed rules for the distribution of benefits, providing opinions or recommendations to the foundation’s bodies, or ensuring the continuity of the foundation’s bodies (appointing and dismissing members of the supervisory board and management board).
These functions may also be extended to make the exercise of voting rights at the shareholders' meeting of the family business subject to the consent of the assembly of beneficiaries. The assembly may also be granted the right to appoint and dismiss not only members of the foundation’s management and supervisory boards but also members of the management and supervisory boards of the family business.
Therefore, depending on the specific decisions made during the succession process, the assembly of beneficiaries may either serve as a merely auxiliary and complementary body to the family foundation or become the most important decision-making body, directly shaping the operations of the family business.
SUPERVISORY BOARD
Rada nadzorcza w ustawie o fundacji rodzinnej ukształtowana została jako typowy organ nadzorczo-kontrolny, który stoi na straży prawidłowości działania zarządu i zgodności jego poczynań z prawem, statutem oraz interesem fundacji i jej beneficjentów. Podobnie jak w przypadku zgromadzenia beneficjentów, tak i w przypadku rady nadzorczej, możliwe jest rozszerzenie jej kompetencji, o ile nie będzie to prowadzić do przejęcia przez radę zadań zarządu i tym samym nie będzie sprzeczne z istotą funkcji nadzorczej.
Czy rada nadzorcza może pełnić także funkcje doradcze? Wydaje się, że w ramach efektywnego nadzoru rady nadzorcze powinny wchodzić w strategiczne dyskusje z zarządem fundacji, w ich toku służyć radą opartą na doświadczeniu i wiedzy, wyrażać opinie co do dokonania określonych czynności, realizacji określonej inwestycji, czy przeprowadzenia dezinwestycji. Takie działanie należałoby uznać za wartościowy element dobrego ładu rodzinnego. Ponadto przepisy ustawy o fundacji rodzinnej nie zakazują tego wprost. Powyższemu towarzyszyć musi jednak ważne zastrzeżenie – funkcja doradcza nie może przerodzić się w faktyczne zarządzanie fundacją rodzinną. Jak wyżej wskazano, rada nadzorcza nie może przejmować kompetencji zarządu ani wkraczać w bieżące prowadzenie spraw fundacji. Jej rola doradcza może wspierać zarząd, a nie zastępować go. Decyzje operacyjne i strategiczne podejmuje zarząd, a rada je nadzoruje (i ewentualnie, jeśli statut tak stanowi, zatwierdza niektóre z nich). Co więcej, należy uważać, aby rola doradcza realizowana przez radę nadzorczą nie wpływała negatywnie na zdolność rady do obiektywnego sprawowania nadzoru. Zaangażowaniem na poziomie doradczym w określoną decyzję może bowiem prowadzić do późniejszych trudności z jej bezstronną oceną. Rada nadzorcza może zatem pełnić funkcje doradcze, często jest to wręcz pożądane jako element wsparcia dla zarządu i skutecznego nadzoru. Jednak jej podstawową rolą pozostaje nadzór, a działania doradcze nie mogą prowadzić do przejmowania przez radę kompetencji zarządu ani osłabiać jej obiektywności w sprawowaniu kontroli.
Ta ostatnia konstatacja jest tym bardziej słuszna, że ustawa o fundacji rodzinnej pozwala tworzyć „organy fakultatywne”, których uprawnienia fundator, czy później (ewentualnie) zgromadzenie beneficjentów, mogą kształtować samodzielnie. Zatem dla tych fundatorów lub fundacji, których intencją byłoby sformalizowanie funkcji doradczej, powołanie takiego właśnie „organu fakultatywnego” byłoby bardzo dobrym rozwiązaniem.
ORGANY FAKULTATYWNE
The supervisory board, as defined in the Family Foundation Act, is shaped as a typical supervisory and control body that safeguards the proper functioning of the management board and ensures its actions comply with the law, the foundation’s statute, and the interests of the foundation and its beneficiaries. As with the assembly of beneficiaries, the powers of the supervisory board can be expanded, provided this does not lead to the board taking over the responsibilities of the management board, which would contradict the essence of its supervisory function.
Can the supervisory board also perform advisory functions?
It seems that, as part of effective oversight, supervisory boards should engage in strategic discussions with the foundation’s management board, offering advice based on experience and knowledge, expressing opinions on specific actions, investment projects, or divestments. Such involvement should be seen as a valuable element of good family governance. Moreover, the Family Foundation Act does not explicitly prohibit this.
However, an important caveat must be made: the advisory function must not turn into actual management of the family foundation. As mentioned above, the supervisory board cannot assume the powers of the management board or interfere in the day-to-day operations of the foundation. Its advisory role is meant to support the management board, not replace it. Operational and strategic decisions are made by the management board, while the supervisory board oversees them (and, if the statute provides, approves some of them).
Furthermore, care must be taken to ensure that the advisory role of the supervisory board does not compromise its ability to exercise objective oversight. Involvement in a decision at the advisory level may later hinder impartial evaluation of that decision. Therefore, while the supervisory board may perform advisory functions—and this is often desirable as support for the management board and effective oversight—its primary role remains supervision. Advisory activities must not lead to the board taking over management responsibilities or weakening its objectivity in exercising control.
This conclusion is even more valid considering that the Family Foundation Act allows for the creation of “optional bodies,” whose powers can be independently defined by the founder or, later, by the assembly of beneficiaries. Thus, for founders or foundations wishing to formalize an advisory function, establishing such an “optional body” would be a very good solution.
Optional Bodies in a Family Foundation
“Optional bodies” may be granted executive powers (supporting the management board in handling affairs and representing the family foundation), supervisory powers (even replacing the supervisory board, provided its establishment is not mandatory), or advisory powers. As previously mentioned, the Family Foundation Act does not impose any restrictions on the creation or appointment of such voluntary bodies. The only limitations are considerations of rationality and proportionality, ensuring that the family governance structure and organizational setup of the foundation are appropriate to the type and scale of its activities, the size of its assets, and the number of beneficiaries.
Practical examples of “optional bodies” and their powers can be found in jurisdictions that have had private or family foundations for decades. Their experiences can serve as valuable references.
For instance, in Liechtenstein, where many Polish families established private foundations even before the Polish law came into force, an advisory board or committee is often appointed as an optional body. This board may have consultative powers for the founder, the management board, or even the supervisory board. Its members may include experts in fields relevant to the foundation’s purpose or operations, such as investments in a specific sector.
Another example of an optional body is the family council, which is also commonly used in Malta. Its members may represent the interests of different family branches or all beneficiaries. The tasks of such a council may include consulting the management board’s decisions, nominating candidates for mandatory foundation bodies, resolving family disputes related to the foundation, or ensuring communication between the foundation and its beneficiaries.
Other useful optional bodies may include various specialized committees—such as investment, audit, or charitable committees—depending on the scale and nature of the foundation’s activities..
The Role of the Protector
A particularly interesting solution may be the institution of the protector, which is well known in private foundations in Liechtenstein and can certainly be applied in the Polish context as well. In Liechtenstein, the powers of the protector can be—and usually are—structured as supervisory and control functions. However, the scope of the protector’s rights and duties can vary significantly depending on the specific case.
In addition to supervisory powers that directly protect the interests of the beneficiaries, the founder, and the foundation itself, the protector may also be authorized to approve certain actions or exercise a veto right over decisions made by the foundation’s board (or management). The protector often also has the right to receive information about the foundation’s activities.
Typically, the protector is a highly trusted individual chosen by the founder, and the institution is essentially established for that person. In such cases, granting the protector broad powers is intended to ensure that the founder’s vision and will—especially after their death—are faithfully carried out..
Summary
The establishment, assignment of powers and duties, cooperation rules between optional and mandatory bodies, and appointment/removal mechanisms must be defined in the foundation’s charter.
Ultimately, it is the founder who decides—at the time of creating the foundation—which bodies (beyond the mandatory management board and assembly of beneficiaries) will be established, what they will be called, who will serve on them, what powers they will have, and how they will interact. The flexibility of the Family Foundation Act allows for a tailor-made governance structure, perfectly suited to the founder’s goals and the foundation’s needs.
Author: Beata Krzyżagórska - Żurek
