Can a guardian be appointed for a limited partnership?

One general partner (Mr B) brought an action against the other general partner (Mr A) for disqualification from representing partnership D a limited partnership. At the same time, this partnership has two general partners Mr A and Mr B and company C as a limited partner. At the same time, the articles of association of D sp. k. are formulated in such a way that only Mr A has the right to represent D sp. k. In addition, together with the lawsuit, Mr B requested security consisting in the suspension of Mr A’s right to represent company D sp. k. and the appointment of a curator for the company for the duration of the proceedings for deprivation of the right of representation. An analogous action, together with a request for security, was brought by Mr B in company E sp. k., whose composition is identical to that of company D sp. k.

The Regional Court in Warsaw, in two decisions concerning companies D sp. k and E sp.k. dismissed the applications for security filed by Mr B. First, the SO indicated that Mr B had failed to prove the claim, as Mr B’s allegations that Mr A was engaged in competitive activity with D sp. k. and E sp. k., that he was not loyal to the other general partner and that Mr B had abused his authority were not substantiated.

More importantly, however, the Regional Court in Warsaw indicated in both decisions that the manner of security requested by Mr B was inadmissible. This is because the SO indicated that the requested method of security is in fact the satisfaction of the claimant’s claim even before the Court’s final decision, which is in direct contradiction with Article 30 § 2 of the Companies Act[1], according to which: “the deprivation of a shareholder’s right to represent the company may be effected only for valid reasons by a final court decision“. Meanwhile, Mr. B wanted to achieve this effect already on the basis of a freezing order.

At the same time, as the Warsaw Regional Court added: “the manner of securing by appointing a curator for the company for the duration of the present proceedings is inadmissible, due to the fact that, pursuant to Article 42 of the Civil Code, a curator is appointed when a given entity does not have a body authorised to represent it, and the task of the curator is to immediately appoint the bodies of the legal entity and, if necessary, to apply for its liquidation. The defendant is therefore right that the method of security indicated by the plaintiff is inadmissible, as the plaintiff requested the appointment of a curator contrary to the applicable legal provisions. A curator is appointed in the absence of organs, but only in capital companies or exceptionally in partnerships or limited joint-stock partnerships. In other partnerships, including limited partnerships, it is not possible to appoint a curator because this type of company does not have organs and the manner of representation of such an entity is specified in the articles of association.”

The above reasoning should be fully agreed with. It is also worth pointing out, one more argument that the defendant (Mr. B) pointed out, which prejudges the inadmissibility of the manner of security requested by Mr. B. The appointment of a curator in a limited partnership would also be contrary to Article 38 of the Companies Act, which we apply mutatis mutandis under Article 103 § 1 to a limited partnership. According to this provision: “the conduct of the company’s affairs may not be entrusted to third parties to the exclusion of the partners“. A third party should be understood as an entity that does not have the status of a partner in a partnership. Running the affairs of the company, on the other hand, consists in undertaking activities necessary to manage the company (undertaking all actions aimed at realising the purpose of an economic organisation such as a general partnership, including acts of management and leadership, administration and other organisational activities). The regulation of Article 38 § 1 of the Companies Act expresses the personal nature of a partnership, in which an important role is played by the person of the partner, who influences the activity of the company and bears personal and unlimited liability for its obligations.

The appointment of a curator for the company for the duration of the trial would therefore constitute a breach of a mandatory provision, i.e. Article 38 of the Companies Act. This is all the more so because – after the appointment of such a curator – Mr A would continue to have unlimited liability for the liabilities incurred by the curator. When establishing D sp. k. and E sp. k., Mr A agreed to be liable for the obligations of these companies with all his assets only if he himself is responsible for the conduct of its affairs and is authorised to represent it. This is in fact the nature of partnerships, where – unlike capital companies – the partners generally agree to be liable with their own assets for the company’s obligations if they manage the company’s affairs themselves. The method of security requested by Mr B was therefore unknown to commercial law and civil procedure, and its inclusion was a violation of a mandatory provision of law prohibiting the transfer of the conduct of partnership affairs to a third party.

In view of the above, the decision of the Regional Court in Warsaw should be fully endorsed and the conclusion should be drawn that no curator may be appointed in a limited partnership or general partnership.

[1] we apply this provision on the basis of Article 103 § 1 of the Companies Act mutatis mutandis to a general partnership.