ABSTRACT

The article presents an original analysis of the relationship between legal mechanisms of corporate governance and strategic management in joint-stock companies. The mainthesis of the studyis as follows: company law and capital market regulations are not merely an external constraint on managerial activity; rather, they create the institutional architecture of strategy–they determine who may formulate strategy, who controls it, and how itshould be justified, communicated, financed and corrected. In a joint-stock company, strategy is therefore not only a managerial document; it is a process embedded in the structure of competences of the management board, supervisory board, general meeting, shareholders, the market and regulators.

The article proposes an original KIDR model, according to which law affects strategy through four layers: competences, information, disciplinary accountability and risk. This model makes it possible to capture the idea that effective corporate governance is not limited to the control of the management board, but consists in shaping the decision-making process in such a way that strategic riski staken consciously, loyally, transparently and in the interest of the company. Of particular importance in this respectare: the autonomy of the management board in conducting the company’s affairs, strengthened by the prohibition on issu ingbinding instructions to it by the general meeting and the supervisory board; the continuous supervision exercised by the supervisory board; the business judgment rule; mechanisms for the protection of shareholders; and regulations concerning remuneration, related-party transactions, inside information, sustainable development, cross-border mobility of companies and the functioning of corporate groups.

The article demonstrates that contemporary strategic management in a joint-stock company requires a shift from the model of “legal compliance as ex post control” to the model of “corporate governance as decision design”. In this approach, law does not replace strategy, but it defines the minimum conditions for its rationality, accountability and legitimisation.

Keywords: corporate governance, joint-stock company, Commercial CompaniesCode, strategic management, supervisory board, business judgment rule, public company, European Union law, ESG, CSRD, CSDDD, shareholders.

1. Introduction

A joint-stock company is one of the most legally complex forms of conducting business activity. Its structure allows for the concentration of capital, the dispersion of ownership, the trading of shares, the raising of financing from the market and the separation of ownership from management. This separation is a source of efficiency, because it enables the professionalisation of management, but at the same time it generates the classic agency problem: the persons making decisions do not always bear the economic consequences of those decisions to the same extent as share holders. In economic literature, this problem has been described as the relationship between the principal and the agent, in which the costs of monitoring, incentives and potential disloyalty become part of the structure of the enterprise.[1]

In this context, corporate governance may be understood as a system of rules, procedures, bodies, rights, obligations and incentives intended to ensure that a company is capable of taking business risk, while not becoming host age to the arbitrariness of the management board, a dominant share holder, short-term market pressure or conflicts of interest. The classical approach to corporate governance emphasised the issue of directing and controlling the company, where as more recent approaches–visible, among others, in the OECD/G20 standards–stress the importance of legal, regulatory and institutional frameworks that support market efficiency, investor protection, transparency and the accountability of corporate bodies.[2]

The basic Polish point of reference is the Commercial Companies Code, which regulates the formation, organisation, operation, dissolution, mergers, divisions and transformations of commercial companies. For a joint-stock company, the CCC creates a system of corporate bodies, competences, liability, share holder rights and decision-making rules. This system is not closed, however. In the case of public and listed companies, it is supplemented by capital market regulations, European Union law, information standards, principles of good practice and, increasingly, regulations concerning sustainable development.[3]

European Union law is gradually shifting the centre of gravity of company law from the traditional protection of capital and disclosure of registry data towards a broader architecture of cross-border mobility, digitalisation of procedures, share holder rights, remuneration, related-party transactions, diversity of corporate bodies and sustainability reporting. Directive 2017/1132 codifies selected aspects of company law, while subsequent acts– in particular Directives 2019/1151, 2019/2121, 2017/828, 2022/2464, 2022/2381 and 2024/1760, with significant amendments introduced subsequently in 2026 – show that the EU model of corporate governance is becoming increasingly multidimensional.[4]

In this article, I adopt the thesis that the relationship between law and strategy in a joint-stock companyis one of feedback. Law not only restricts the management board, but also enables the safetaking of risk; it not only imposes reporting obligations, but also organises the flow of strategic information; it not only protects share holders, but also shapes the cost of capital; it not only regulates liability, but creates a decision-making culture. Good strategic management in a joint-stock company is therefore always management within a legally shaped framework of corporate governance.

Methodological Assumptions and the Original KIDR Model

The analysis is based on four methods. First, it uses the dogmatic-legal method, because the starting point is the binding provisions of the Commercial Companies Code, capital market statutes and acts of European Union law. Second, it applies the functional method, because what matters is not only the wording of legal provisions, but also their role in the company’s decision-making processes. Third, it uses the economic-institutional method, because corporate governance is a response to agency conflicts, information a symmetry and the need to reduce the cost of capital. Fourth, itapplies the systemic method, since the strategy of a joint-stock company a rises at the intersection of company law, capital market law, accounting, compliance, ESG, the law of corporate groups and EU regulations.

I propose an original KIDR model, which organises the influence of law on strategic management through four layers:

• K – Competences. Law determines which corporate body has the right to initiate, approve, control or block specific strategic decisions. In a joint-stock company, the autonomy of the management board in conducting the company’s affairs is crucial, but it is balanced by the competences of the supervisory board and the general meeting.
• I – Information. Law determines what information must be generated, to whom it must be provided, when it must be disclosed and when it should remain confidential. Without a proper flow of information, strategy becomes either uncontrollable or incommunicable.
• D – Disciplinary accountability. Law builds mechanisms of loyalty, diligence, civil liability, administrative sanctions and reputational market pressure. Strategy is assessed not only by reference to the outcome, but also by reference to the process by which it was prepared.
• R – Risk. Law does not eliminate business risk, but distinguishes permissible risk from abuse. This is most visible in the business judgment rule, which protects decisions made loyally, within the limits of justified risk and on the basis of adequate information.

The KIDR model makes it possible to avoid two simplifications. The first consists in treating corporate governance as purely formal compliance with regulations. The second consists in treating strategy as an autonomo us managerial domain that is only “checked” by lawyers after the fact. In reality, a mature strategy of a joint-stock company should be designed from the outset as a legally accountable decision.

The Joint-Stock Company as a Strategically Regulated Organisation

The joint-stock company is a particularly interesting object of analys is because it combines considerable business flexibility with a high level of formalisation. The joint-stock form enables the issue of shares, the concentration of dispersed capital, entry into the public market, debt and equity financing, transformations and functioning within corporate groups. At the same time, each of these possibilities is legally framed: by the articles of association, resolutions of corporate bodies, rules of representation, the information regime, requirements for the protection of share holders and the liability of members of corporate bodies.

From a strategic perspective, this means that a joint-stock company cannot be analysed solely as an enterprise, but must also be seen as a capital institution. Its strategy does not consist only in choosing markets, products, technologies and sources of competitive advantage. It also includes the choice of financing structure, dividend policy, relations with share holders, the supervision model, the approach to risk, information disclosure, remuneration of senior management, the structure of the corporate group and the manner of responding to EU regulations.

In the classical theory of corporate governance, the protection of investors against the appropriation of value by persons controlling the company is of central importance. Shleifer and Vishny indicated that the question of corporate governance is, in essence, the question of how suppliers of finance secure a return on their investment; in this approach, legal protection of investors is one of the conditions for the development of the capital market.[1]

The contemporary problem, however, is broader. A joint-stock company must not only protect investors, but also reta in the ability to create long-term value under conditions of technological, geopolitical, climate-related, regulatory and reputational pressure. For this reason, corporate governance ceases to be merely a mechanism for controlling managers. It becomes a mechanism of strategic resilience.

The Polish Model of Corporate Governance in a Joint-Stock Company

The Polish joint-stock company is based on a dualistic model: the management board conducts the company’s affairs and represents it, the supervisory board exercises continuous supervision, and the general meeting performs ownership and constitutional competences. From a strategic point of view, the most important principle is that the management board is not an executive committee of either the general meeting or the supervisory board. The Commercial Companies Code provides that the general meeting and the supervisory board may not issue binding instructions to the management board concerning the conduct of the company’s affairs.[2]

This principle is of fundamental importance for strategic management. First, it as signs responsibility for strategy to the body that has current operational knowledge. Second, it prevents the dilution of responsibility: if the management board takes decisions, it must be able to demonstrate that they were taken loyally, diligently and on the basis of appropriate information. Third, it protects the company from a situation in which a majority share holderor the supervisory board informally directs the company’s activity, but formally does not bear responsibility for the consequences of decisions.

The autonomy of the management board does not, however, mean discretion without limits. The board’s strategy must comply with the articles of association, resolutions of the general meeting adopted within the scope of its competences, provisions on share capital, disclosure requirements, the interest of the company, share holder rights and the standard of due diligence. The management board’s autonomy is there for e professional, not personal. The board does not act “for itself”; itacts as a body entrusted with capital and the interest of the company.

In a joint-stock company, the supervisory board exercises continuous supervision over the company’s activities in all areas of its operations. It is not a management body, but its role in strategic practice is much broader than passive control of legality. A properly functioning supervisory board should assess the assumptions of the strategy, monitor the achievement of objectives, examine the adequacy of the internal control system, verify risks, analys e material transactions, monitor conflicts of interest and control the quality of management information.[3]

In recent years, the Polish model of the supervisory board has been strengthened. The 2022 amendment to the Commercial Companies Code introduced, among other things, solutions intended to increase the professionalisation of supervision, including the possibility for the board to use an adviser to the supervisory board at the company’s expense. This is strategically important because the supervisory board of tenassesses decisions that are technologically, financially orregulatorily complex: acquisitions, restructurings, investment projects, energy transition, cyber security risks, related-party transactions orentry into foreign markets.[4]

The supervisory board should not replace the management board, but it should require the board to use a decision-making process that makes it possible to establish that the strategy is well considered, data-based, consistent with the company’s interest and subject to risk control. In this sense, the supervisory board is a body of strategic supervision, although it is not a body of strategic management.

The literature rightly emphasises that the function of a member of the supervisory board should not be reduced to passive formal control. It is even indicated that “the function of a supervisory board member is a managerial function”, which is justified by the similarity between the tasks performed by supervisory board members and those performed by management staff. At the same time, the authors stress that supervision is a broader concept than control, which allows the supervisory board to be understood as a body that genuinely influences the functioning of the company, although with out taking over the management board’s competence to conduct the company’s affairs. This position corresponds with the thesis of the present article, according to which the supervisory board is one of the key links in strategic corporate governance.[5]

The general meeting performs an owner ship and constitutional function. It decides on matters fundamental to the existence of the company, such as amendments to the articles of association, share issues requiring a resolution, distribution of profit, discharge of members of corporate bodies, appointment of members of corporate bodies, mergers, divisions or transformations, where the law requires a resolution. The general meeting is there fore a place for the legitimisation of structural decisions, not for the day-to-day running of the enterprise.

For strategy, this means that some decisions are managerial in nature, while others are ownership-corporate decisions. The management board may prepare an expansion strategy, but its implementation may require resolutions of the general meeting concerning financing, amendments to the articles of association or reorganisation transactions. In public companies, the general meeting also becomes a forum for dialogue with institutional investors, who increasing lyassess not only financial results, but also remuneration policy, the structure of the board, ESG risks and the quality of communication with the market.

The boundary between legitimisation and interference is delicate, however. If share holders attempt to steerday-to-day management outside their formal competences, they violate the logic of the joint-stock model. If, on the other hand, the management board ignores the ownership mandate and the long-term interests of shareholders, the risk of managerial alienation a rises. Proper corporate governance consists in balance: shareholders set the framework and hold the board accountable, the management board conducts the company’s affairs, and the supervisory board supervises.

Loyalty, Diligence and the Business Judgment Rule as the Legal Core of Strategy

Members of the management board and supervisory board a reobliged to perform their duties with the due diligence resulting from the professional nature of their activity and to be loyal to the company. The Commercial CompaniesCode also provides for the obligation to maintain company secrets, including after the expiry of the mandate.[6]

The most strategically important mechanism of liability is, however, the rule of business assessment, that is the business judgment rule. In the Polish Commercial Companies Code, it is expressed, among other things, in the provision according to which a member of the management board, supervisory board or a liquid a tordoes not breach the duty of due diligence if, acting loyally towards the company, he or she acts within the limits of justified business risk, including on the basis of information, analyses and opinions that should have been taken into account in the given circumstances.[7]

The importance of this rule for strategic management is enormous. Strategy always concerns the future, and the future is uncertain. There is no strategy with out risk. If members of corporate bodies were liable for every un favourable out come, they would rationally avoid bold, innovative and long-term decisions. The business judgment rule does not, however, protect recklessness. It protects a decision-making process that was loyal, informed, rational and within the limits of permissible risk.

From this perspective, documenting the strategic process has not only organisational but also legal significance. A decision to acquire a competitor, enter a new market, close an un profitable business line, invest in technology, change the distribution model or issue shares should be based on analyses, variants, identification of risks, economic justification and minutes of corporate bodies. The greater the strategic risk, the greater the significance of the quality of information and the decision-making trail.

In practice, the business judgment rule should lead to a change in corporate culture. The point is not to create documents “in case of litigation”, but to build a process in which the management board and supervisory board areable to answer four questions: why the decision was consistent with the interest of the company, what alternatives were considered, what risks were accepted and on the basis of what information those risks were deemed acceptable.

The Interest of the Company, the Interest of Share holders and Long-Term Value

One of the most difficult concepts in corporate governance is the interest of the company. It cannot be mechanically equated with the interest of the management board, the supervisory board, the majority share holder, the minority, creditors, employees or the market. The interest of the company is a synthetic category: it includes the ability of the company as a legal person to conduct business on a lasting basis, create value, remain solvent, comply with the law and pursueits economic purpose.

Thisis of fundamental importance in strategic management. A strategy subordinated exclusively to short-term growth in the share price may under mine the long-term resilience of the company. A strategy subordinated solely to the ambitions of the management board may lead to excessive expansion risk. A strategy subordinated only to the interest of the dominant share holder may lead to the transfer of value outside the company. A strategy subordinated exclusively to the expectations of social stakeholders may, in turn, weaken the economic foundations of the enterprise if it ignores profitability and the cost of capital.

A properly understood interest of the company therefore requires a balance between profitability, durability, compliance with the law, reputation, liquidity, investment capacity and an acceptable level of risk. Law does not provide a ready-made answer to the question of which strategy is best. It does, however, create procedures intended to limit the arbitrariness of that answer.

Corporate Groups and Strategic Holding Management

Contemporary joint-stock companies very of ten function within corporate groups. In such an arrangement, the strategy of one company may form part of the strategy of the group. This gives rise to the classic conflict between the interest of the subsidiary and the interest of the entiregroup. The Polish amendment to the Commercial Companies Code of 2022 introduced regulations on the law of corporate groups, including the mechanism of a binding instruction issued to a subsidiary participating in a group by the parent company.[8]

Strategically, this is one of the most important changes in Polish company law in recent years. It enables more formal holding management, while at the same time requiring the proceduralisation of group decisions. If a subsidiary is to carry out a decision that is beneficial from the point of view of the group but potentially disadvantageous locally, legal justification, documentation and an assessment of consequences are necessary. The law of corporate groups thus attempts to reconcile the economic reality of corporate groups with the principle of the separate legal personality of each company.

For strategic management, this means that the strategy of a corporate group cannot be merely an informal expectation of the centre. It should be described, communicated and linked to corporate mechanisms. The parent company should understand that directing the group does not release it from the obligation to respect the rights of subsidiaries, their creditors, minority shareholders and members of their corporate bodies. The subsidiary, in turn, should understand the extent to which participation in the group changes its strategic space.

The Public Company: The Market as an Additional Mechanism of Corporate Governance

A public company operates under particular pressure of transparency. Where as in a non-public company the main channel of control consists of the corporate bodies and share holders, in a public company an additional market mechanism emerges: investors, analysts, the media, the regulator, the stock exchange, rating agencies, proxy advisers, institutional investors and public opinion.

The Act on Public Offering regulates, among other things, the rules for making public offerings, introducing financial instruments to organised trading and the functioning of public companies. In turn, the EU Market Abuse Regulation creates a common framework for preventing market abuse, including insider dealing, un law fuldis closure of inside information and market manipulation.[9]

MAR has a direct impact on strategic management. Strategy of ten generates inside information: a planned acquisition, a material investment, the loss of a contract, a change in forecasts, restructuring, a decision to issue shares, a regulatory dispute or a technological project. As a rule, an issuer must inform the public as soon as possible of inside information that directly concerns it, and if it delayed is closure, it must meet the conditions provided for by law and control confidentiality.[10]

This means that strategy in a public company cannot be managed solely as internal information. There must be a system for identifying inside information, a procedure for delaying is closure, an insider list, control over communication with investors and consistency between strategic messages and disclosure obligations. Obligations concerning insider lists furtherstreng then the importance of controlling the flow of information in strategic projects.[11]

The capital market therefore acts as an external audit of strategy. A company that communicates its strategy in consistently, makes promises without a basis, conceals risks ordiscloses information selectively exposes it self not only to legal sanctions, but also to an increase in the cost of capital and a decline in investor confidence.

The Best Practices of GPW ListedCompanies as the Soft Law of Strategy

In Polish conditions, the Best Practices of GPW Listed Companies 2021 are of particular importance. They were adopted by a resolution of the Exchange Supervisory Board and have applied since 1 July 2021; their application is voluntary, but reporting on compliance with the principles is mandatory under the “comply or explain” rule.[12]

The 2021 Best Practices show that corporate governance is becoming increasingly strategic. The document emphasises, among other things, ESG, climate, sustainable development, diversity and equalpay. In the section on information policy and communication with investors, it indicates that the company should include ESG issues in its strategy, including environmental, social and employee matters, and should publish the assumptions of the strategy, measurable objectives and information on progress.[13]

From the point of view of strategic management, the 2021 Best Practices are a bridge between hard law and market expectations. Not every principle of good practice is a statutory norm, but failure to apply it requires an explanation. This shifts the emphasis from formal compliance to reputational accountability. A company may depart from a given practice, but it must convincingly explain why its corporate governance model never the less remains rational.

The most important function of good practices is that they introduce the language of strategy into corporate governance. The company is not merely to report historical data. It should present the direction of development, objectives, metrics, progress and the way in which non-financial risks are managed. In this sense, good practicess treng then the role of strategic communication as an element of market trust.

Remuneration, Related-Party Transactions and Conflicts of Interest

One of the most important points of contact between law and strategy is remuneration policy. The remuneration of members of the management board and supervisory board is not a neutral administrative cost. It is an incentive instrument. It may support long-term value, but it may also encourage short-term maximisation of results, excessive risk, manipulation of indicators or post ponement of costs over time.

The implementation of the SRD II Directive in Poland strengthened the role of shareholders in the area of remuneration. The Act of 16 October 2019 implemented Directive 2017/828, and the provisions of the Act on Public Offering provide, among other things, for the obligation of the general meeting of a public company to adopt a remuneration policy for members of the management board and supervisory board and for the supervisory board to prepare an annual remuneration report.[14]

Strategically, this means that the remuneration system should be linked to the company’s lasting objectives. If the strategy assumes an energy transition, digitalisation, foreign expansion, improvement of margins, debtreduction or growth in innovativeness, the remuneration policy should reflect these priorities. Otherwise, an inconsistency a rises: the company declares a long-term strategy, but remunerates for short-term results.

The second critical area is related-party transactions. In public companies, special rules apply to material related-party transactions, including thresholds based on the value of assets and the requirement of supervisory board consent. This mechanism has strategic importance because related-party transactions may be economically justified, but they may also serve to transfer value outside the company.[15]

A conflict of interest is one of the greatest threats to strategy. It does not always consist in an obvious abuse. It often takes the form of a subtle preference: selecting a contractor from the group, financing a project beneficial to the dominant shareholder, allocating costs between companies, selling an asset at a price that is difficult to verify, or setting bonus objectives favourable to managers. In such cases, law requires not only formal consent, but also transparency, market terms and documentation.

European Union Company Law Regulations and Their Strategic Significance

Directive 2017/1132 relating to certain aspects of company law is one of the main acts organising EU company law. It covers, among other things, issues of disclosure, company formation, capital protection and reorganisations, such as mergers and divisions. For strategy, the Directive has infrastructural significance. It ensures a minimum level of harmonisation that facilitates cross-border functioning of companies, builds investor confidence and reduces the legal costs of operating in different Member States. A strategy of foreign expansion, group reorganisation or attracting investors from other EU Member States would be much more difficult if each Member State applied completely separate standards of disclosure, capital and reorganisation.[16]

Directive 2019/1151 amended Directive 2017/1132 with respect to the use of digital tools and processes in company law. Its purposeis to facilitate, among other things, the online formation of companies, registration of branches and filing of documents in electronic form.[17]

Digitalisation has a strategic dimension because it reduce stransaction costs and accelerate scorporate processes. For corporate groups, it mean seasier creation of structures in different jurisdictions, faster circulation of documents and greater importance of digital corporate compliance. At the same time, its trengthens the importance of cybersecurity, reliability of registry data and interoperability of systems.

Directive 2019/2121 regulated cross-border transformations, mergers and divisions of companies. Its significance lies in the fact that the rights of companies to cross-border mobility must be balanced with the protection of employees, creditors and shareholders, while the previous absence of a common frame workled to fragmentation and legal uncertainty.[18]

For joint-stock companies, this means that cross-border reorganisation becomes a strategic instrument. It may serve to simplify the group structure, transfer the registered office, integrate operations after an acquisition, optimise operations or adapt to investor requirements. It is not, however, merely a legal operation. It is a strategic decision requiring analysis of the interests of shareholders, creditors, employees, tax authorities, regulators and the market.

Directive 2007/36 established a framework for the exercise of certain rights of shareholders in listed companies, while Directive 2017/828, known as SRD II, strengthened long-term shareholder engagement. These regulations cover, among other things, the identification of shareholders, the flow of information, supervision of directors’ remuneration and related-party transactions.[19]

Their strategic significance is two fold. First, the company must treat shareholders as participants in corporate governance, not merely as passive providers of capital. Second, institutional investors gain tools to influence strategy, especially in the areas of remuneration, the structure of corporate bodies, capital allocation, climate and related-party transactions.

Directive 2022/2381 on improving the gender balance among directors of listed companies provides for targets for the participation of persons of the under-represented sex in the bodies of listed companies– as a rule, atleast 40% among non-executive directors or 33% among all directors. According to public information on Polish legislative work, the implementing draft is to concernamend ments including the Act on Public Offering and to cover certain listed companies meeting size criteria.[20]

Strategic management should not treat diversity as a statistical obligation. From the point of view of corporate governance, what matters is the quality of the decision-making process, the plurality of experience, the limitation of group think and the greater legitimisation of corporate bodies. Diversity of the supervisory board and management board may strengthen the company’s ability to identify risks and opportunities, especially in the social, technological and regulatory environment.

ESG, CSRD, ESRS and CSDDD: The New BoundaryBetween Reporting and Strategy

Regulations concerning sustainable development areamong the most important examples of how law changes strategic management. The 2022 CSRD Directive amended the EU framework for corporate sustainability reporting, and the Commission adopted the European Sustainability Reporting Standards– ESRS – in Delegated Regulation 2023/2772.[21]

The regulatory situation in 2026 is, however, dynamic. Directive 2026/470 amended the earlier CSRD and CSDDD frameworks in order to simplify obligations and strengthen competitiveness. With regard to sustainability reporting, it became important, among other things, to raise the thresholds for the scope of obligations to entities exceeding specified values, including an average of 1,000 employees and EUR 450 million in net revenue in the relevant categories. Directive 2026/470 also provides for changes in the area of assurance, including abandoning the requirement to adopt reasonable assurance standards and postponing the deadline concerning limited assurance standards.[22]

In parallel, the CSDDD, that is Directive 2024/1760 on corporate sustainability duediligence, introduces a framework of responsibility for large undertakings for duediligence processes in chains of activities. Following the 2026 amendments, the basicthresholds were significantly increased, including to morethan 5,000 employees and morethan EUR 1.5 billion in worldwide net turnover for EU companies. The transposition of changes in the area of the CSDDD has beens pread over time, and the application of national measures is generally scheduled from 26 July 2029, with a separate deadline for certain reporting obligations.[23]

In Poland, the CSRD was implemented by the Act of 6 December 2024 amending, among other things, the Accounting Act, and in 2026 further amendments were adopted in connection with simplifications and exemptions. The Ministry of Finance indicated that the implementation of the 2026 amendments would take place in stages, including through the possibility of exempting certain entities from reporting obligations for the years 2025 and 2026 if they do not fall within the newscope.[24]

For strategic management, the most important conclusionis the following: ESG is no longer merely a reputational narrative. Even with a narrowing of the scope of formal obligations, larger companies must create data systems, materiality assessment procedures, supervision over value chains, environmental and social policies and mechanisms for controlling non-financial information. Smaller companies, although they may fall outside the formalscope of obligations, may still be subject to contractual pressure from larger counter parties, banks and investors. ESG strategy therefore becomes part of the strategy of financing, sales, procurement and risk management.

Corporate Governance as a System of Strategic Information

Information is the currency of corporate governance. Without information, share holders can not assess the management board, the supervisory board cannot supervise, the market can not properly value shares and the management board can not take rational strategic decisions.

In a joint-stock company, information operates on several levels. First, there is management information–financial, operational, market, technological and regulatory data used by the management board. Second, there is supervisory information –reports and documents submitted to the supervisory board. Third, there is ownership information – materials for shareholders, the general meeting and investors. Fourth, thereis public information – current and periodic reports, inside information, financial and non-financial reports. Fifth, there is confidential information – data whose premature disclosure could violate the interest of the company or the rules of the market.

Strategy requires the synchronisation of these layers. Both excessive confidentiality and excessive exposure are dangerous. If the management board with holds information, the supervisory board becomes an apparent body. If the company discloses strategic information without control, it may breach MAR, weaken its negotiating position ormis lead the market. If ESG reporting is detached from operational data, the risk of green washing a rises. If the investor relations policy is inconsistent with the strategy, the market loses confidence.

In practice, a mature information governance system should include: a map of strategic information, a procedure for classifying inside information, a reporting calendar, standards for materials prepared for the supervisory board, rules of access to documents, a matrix of information risks, control over communication with investors and the linkage of ESG data with financial and operationalsystems.

Capital, Share Issues, Dividends and Resource Allocation

The strategy of a joint-stock company is always a strategy of capital allocation. Company law affects it through rules concerning share capital, share issues, pre-emptive rights, dividends, redemption of shares, debt financing, reorganisations and the protection of creditors. EU company law has traditionally placed strong emphasis on capital protection and disclosure of information, and Directive 2017/1132 is one of the main acts in this area.[25]

In management practice, a decision to issue shares is not merely a technique for raising capital. It may lead to the dilution of shareholders, a change of control, the entry of a strategic investor, financing of an acquisition, improvement of debtratiosor implementation of an incentive programme. Law therefore requires procedures, resolutions, information and protection of shareholders, because capital decisions directly change the economic position of owners.

Similarly, dividend policy is not merely the distribution of profit. It is a strategic signal. A high dividend may indicate business maturity and the absence of attractive investment projects, but it may also weaken growth capacity. Retaining profit may finance expansion, but itmay also raise share holders’ concerns about the efficiency of capital allocation. Corporate governance requires dividend policy to be consistent with strategy, financing structure and risk.

Strategy of Acquisitions, Reorganisations and Corporate Succession

Mergers, divisions, transformations and acquisitions are the most spectacular strategic decisions of joint-stock companies. Theycombine elements of company law, capital market law, competition law, financing, accounting, taxation, labour law and communication with investors.

EU regulations on cross-border reorganisations increase the predictability of such operations with in the EU. This does not mean, however, that facilitating corporate mobility eliminates risks. On the contrary: the easier formal reorganisations become, the greater the importance of the strategic quality of decisions. A legal reorganisation should result from a business justification and should not be an end in itself.[26]

In M&A transactions, the business judgment ruleis of particular importance. A management board recommending an acquisition should be able to demonstrate that it analysed synergies, price, integration risks, financing, alternatives, the impact on indebtedness, regulatory risks, effects on shareholders and scenarios of failure. The supervisory board should verify not only the formal compliance of the transaction, but also the quality of the decision-making process.

Critical Assessment of the Polish Model

The Polish model of corporate governance in a joint-stock company has several important advantages. First, the dualistic structure of corporate bodies clearly separates management from supervision. Second, the prohibition on issuing binding instructions to the management board by the general meeting and the supervisory board protects the responsibility of the management board. Third, the business judgment rule strengthens the space for rational risk. Fourth, regulations on public companies and stock-exchange best practices increase transparency. Fifth, the law of corporate groups responds to the reality of holding structures.[27]

This model also has weaknesses. The first is formalism. Companies of ten focus on fulfilling documentation obligations instead of on the quality of the decision-making process. The second is the un even quality of supervisory boards. In some companies, the board is a genuine partner in strategic supervision; in others, itis a reactive body, informationally dependent on the management board or the dominant shareholder. The third weaknessis the conflict between the dominant shareholder and the minority, especially in companies with a concentrate downership structure. The fourthis the risk of informational over regulation, in which the number of reports grows fasterthan their decision-making use fulness.

The greatest challenge, however, is not the absence of regulations, but the quality of their institutional use. A company may have a formally correct statute, supervisory board regulations, remuneration policy, MAR procedure and ESG report, and never the less take strategic decisions in a non-transparent, reactive and personal manner. Genuine corporate governance is revealed not in documents, but in the way in which the company’s bodies discus s risk, capital, responsibility and long-term value.

European Union law affects Polish joint-stock companies on fourlevels. First, it harmonises the infrastructure of company law. As a result, Polish companies can more easily function cross-border, conductre organisations within the EU and communicate with investors according to more comparable standards. Second, its trengthens the rights of shareholders and institutional investors. SRD II shifts the emphasis from passive owner ship to engagement, dialogue and assessment of the company’s long-term policy. Third, it broadens the concept of strategic risk. ESG regulations, sustainability reporting and due diligence in chains of activities mean that environmental, social and human rights risks become elements of strategy, not an appendix to the annual report. Fourth, EU law increases the importance of data and comparability. A company can no longer base its strategic communicationsolely on narrative. It must build indicators, processes, reporting standards, audit trails and control systems. Even when the scope of formal obligations is narrowed, the regulatory direction remains clear: the market and regulators expect better information about the durability of the business model.[28]

Recommendations for the Practice of Joint-Stock Companies

The first recommendation concerns the strategic process. The management board should design strategy so that, from the outset, it complies with the requirements of the business judgment rule: it should be based on data, analyses, variants, risk identification and documented justification. The minutes of a meeting of a corporate body should not merely be a formal summary of the voting result, but evidence of the quality of the decision-making process.[29]

The second recommendation concerns the supervisory board. The board should have an annual calendar of strategic supervision, covering the assessment of strategy, budget, risks, financing, investment projects, succession, compliance, cybersecurity, ESG and investor relations. It should also use the right to expert support when assessing decisions that exce edits internal specialist competences.[30]

The third recommendation concerns information. The company should create a coherent architecture of strategic information: from operational data, through materials of the management board and supervisory board, to public reporting. It is particularly important to link financial, non-financial and regulatory information.

The fourthre commendation concerns remuneration. Remuneration policy should be linked to measures of long-term value, not solely to short-term financial results. If the company declares transformation, innovation, debtreduction, improved energy efficiency or foreign expansion, bonus targets should reflect this.

The fifth recommendation concerns corporate groups. Parent companies should formalise group strategy and mechanisms for issuing instructions, while subsidiaries should document how group decisions relate to their own interests, risks and the protection of minority shareholders and creditors.

The sixth recommendation concerns ESG. Companies should not treat sustainability reporting as a task for the communications department. ESG data should be linked to risk management, financing, procurement, investments, supply chains and relations with counterparties. This also applies to companies that formally may not be covered by the fullscope of CSRD obligationsafter the 2026 amendments, because contractual and financial pressure may transmit ESG requirements down the value chain.[31]

The seventhre commendation concerns investor relations. A public company should communicate its strategy in a manner that is coherent, measurable and compliant with MAR obligations. Excessive strategic marketing without an operation albasis is legally and reputationally risky.[32]

De Lege Ferenda Proposals

First, Polish law should continue to strengthen the quality of supervision, but without transforming the supervisory board into a co-management body. The direction should be towards better information, specialisation, responsibility and competences of board members, not towards blurring the boundaries between management and supervision.

Second, standards for documenting strategic decisions should be developed. The point is not to multiply statutory obligations, but to provide practical guidelines that would help corporate bodies demonstrate compliance with the standard of diligence and reliance on the business judgment rule.[33]

Third, further observation of practice will be necessary in the law of corporate groups. The most important issue is that the mechanism of binding instructions should not become an instrument for shifting riskson to subsidiaries, but should remain a transparent instrument for coordinating group strategy.[34]

Fourth, ESG regulations should be implemented in such a way as not to create empty reporting. If companies are to report data, those data should be useful for investors, the company’s bodies and the organisation itself. Good reporting law does not consist in the maximum number of indicators, but in the use fulness, comparability and verifi ability of information.[35]

Fifth, the “comply or explain” principle should be developed qualitatively. Explanations provided by companies concerning non-compliance with good practices should not be general formulas, but specific reasoning referring to the business model, owner ship structure, size of the company and adopted alternative mechanisms.[36]

Conclusion

Legal mechanisms of corporate governance in Poland and the European Union are not an addition to strategic management in a joint-stockcompany. They are its constitutive element. They determine who takes decisions, who supervises them, what information must be generated, what riskis permissible, how shareholders are protected, when the market must be informed and how the company is to account for the long-term impact of its activity.

The most important conclusion of the article is as follows: the strategy of a joint-stock company is legally legitimised by the quality of the decision-making process. It is not enough that a decision turns out to be beneficial ex post. It is also not enough that a resolution has been formally adopted. In mature corporate governance, strategy must be prepared by the competent body, based on adequate information, supervised by the supervisory board, communicated in accordance with law, free from undis closed conflicts of interest and embedded in the long-term interest of the company.

Polish company law gives the management board space to conduct the company’s affairs and takerisks. At the same time, it requiresloyalty, diligence, supervision, transparency and responsibility. European Union law complements this model with a cross-border, digital, investor-related, informational and sustainable dimension. As a result, the joint-stock company of the future will have to be not only economically efficient, but also legally predictable, informationally mature and strategically resilient.

The best corporate governance does not consist in eliminating risk. It consists in enabling the company to takerisk in a reasonable, documented, loyal and controllable manner. It is precise lyatthis point that law and strategy meet most closely.

Bibliography

Literature

Brakoniecki D., Kiełczewski M., The term of office of electing the supervisory board as the period corresponding to internship in a management position, „Journal of Modern Science” 2020, vol. 2/45.

Jensen M.C., Meckling W.H., Theory of the Firm: Managerial Behavior, Agency Costs and Ownership Structure, “Journal of Financial Economics” 1976, vol. 3, no. 4.

Shleifer A., Vishny R.W., A Survey of Corporate Governance, “Journal of Finance” 1997, vol. 52, no. 2.

Legal Acts

Directive 2007/36/EC of the European Parliament and of the Council of 11 July 2007 on the exercise of certain rights of shareholders in listedcompanies, OJ L 184, 14.7.2007.

Directive (EU) 2017/828 of the European Parliament and of the Council of 17 May 2017 amending Directive 2007/36/EC as regards the encouragement of long-term shareholder engagement, OJ L 132, 20.5.2017.

Directive (EU) 2017/1132 of the European Parliament and of the Council of 14 June 2017 relating to certain aspects of company law, OJ L 169, 30.6.2017.

Directive (EU) 2019/1151 of the European Parliament and of the Council of 20 June 2019 amending Directive (EU) 2017/1132 as regards the use of digital tools and processes in company law, OJ L 186, 11.7.2019.

Directive (EU) 2019/2121 of the European Parliament and of the Council of 27 November 2019 amending Directive (EU) 2017/1132 as regards cross-borderconversions, mergers and divisions, OJ L 321, 12.12.2019.

Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse, OJ L 173, 12.6.2014.

Directive (EU) 2022/2381 of the European Parliament and of the Council of 23 November 2022 on improving the gender balance among directors of listed companies and related measures, OJ L 315, 7.12.2022

Directive (EU) 2022/2464 of the European Parliament and of the Council of 14 December 2022 as regards corporate sustainability reporting, OJ L 322, 16.12.2022.

Directive (EU) 2024/1760 of the European Parliament and of the Council of 13 June 2024 on corporate sustainability due diligence, OJ L, 5.7.2024.

Directive (EU) 2026/470 of the European Parliament and of the Council of 24 February 2026 amending Directives 2006/43/EC, 2013/34/EU, (EU) 2022/2464 and (EU) 2024/1760 as regards certain corporate sustainability reporting and due diligence requirements, OJ L, 26.2.2026.

Act of 29 September 1994 on Accounting, Journal of Laws 1994 No. 121, item 591, as amended.

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Act of 29 July 2005 on Public Offering and the Conditions Governing the Introduction of Financial Instruments to Organised Trading and on Public Companies, Journal of Laws 2005 No. 184, item 1539, as amended.

Commission Delegated Regulation (EU) 2023/2772 of 31 July 2023 supplementing Directive 2013/34/EU as regards sustainability reporting standards, OJ L, 22.12.2023.

Act of 6 December 2024 amending the Accounting Act, the Act on Statutory Auditors, Audit Firms and Public Oversight, and certain other acts, Journal of Laws 2024, item 1863.

Act of 27 February 2026 amending the Accounting Act, Journal of Laws 2026, item 333.

Other Sources

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OECD, G20/OECD Principles of Corporate Governance 2023, OECD Publishing, Paris 2023.

The Committee on the Financial Aspects of Corporate Governance, Report of the Committee on the Financial Aspects of Corporate Governance, London 1992.

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[1] A. Shleifer, R.W. Vishny, A Survey of Corporate Governance, “Journal of Finance” 1997, vol. 52, no. 2, pp. 737-738.

[2] Commercial Companies Code, Art. 368 § 1, Art. 375¹, Art. 382 § 1 and Art. 393.

[3] Commercial Companies Code, Art. 382 § 1.

[4] Act of 9 February 2022 amending the Commercial Companies Code and certain other acts, Journal of Laws 2022, item 807; Commercial Companies Code, Art. 382¹.

[5] D. Brakoniecki, M. Kiełczewski, The term of office of electing the supervisory board as the period corresponding to internship in a management position, “Journal of Modern Science” 2020, vol. 2/45, pp. 248-249.

[6] Commercial Companies Code, Art. 377¹ and Art. 387¹.

[7] Commercial Companies Code, Art. 483 § 3.

[8] Commercial Companies Code, Art. 21¹-21¹⁶, esp. Art. 21² § 1-3; see also Act of 9 February 2022 amending the Commercial Companies Code, Journal of Laws 2022, item 807.

[9] Act of 29 July 2005 on Public Offering and the Conditions Governing the Introduction of Financial Instruments to Organised Trading and on Public Companies, Art. 1; Regulation (EU) No 596/2014 on market abuse, Art. 1 and Art. 7-12.

[10] Regulation (EU) No 596/2014 on market abuse, Art. 7, Art. 17(1) and Art. 17(4).

[11] Regulation (EU) No 596/2014 on market abuse, Art. 18.

[12] Giełda Papierów Wartościowych w Warszawie, Best Practice for GPW Listed Companies 2021, approved by Resolution No. 13/1834/2021 of the Exchange Supervisory Board of 29 March 2021 and applicable from 1 July 2021.

[13] Giełda Papierów Wartościowych w Warszawie, Best Practice for GPW Listed Companies 2021, principles 1.3 and 1.4, pp. 4-5; principle 6.2, p. 16.

[14] Directive (EU) 2017/828, Art. 9a and Art. 9b; Act on Public Offering, Art. 90d and Art. 90g.

[15] Ibidem, Art. 9c; Act on Public Offering, Art. 90h-90l, esp. Art. 90i.

[16] Directive (EU) 2017/1132, Art. 1; disclosure: Art. 14-16; capital maintenance: Art. 44-86; mergers and divisions: Art. 87-160.

[17] Directive (EU) 2019/1151, Art. 1; Directive (EU) 2017/1132 as amended, including Art. 13g, Art. 13j, Art. 28a and Art. 28b.

[18] Directive (EU) 2019/2121, Art. 1, amending Directive (EU) 2017/1132 as regards cross-border conversions, mergers and divisions.

[19] Directive 2007/36/EC, Art. 1 and Art. 5-14; Directive (EU) 2017/828, in particular Art. 3a-3c, Art. 9a-9c.

[20] Directive (EU) 2022/2381, Art. 5(1) and Art. 7.

[21] Directive (EU) 2022/2464, Art. 1, amending Directive 2013/34/EU, in particular Art. 19a, Art. 29a and Art. 29b; Commission Delegated Regulation (EU) 2023/2772, Art. 1 and Annexes I-II.

[22] Directive (EU) 2026/470, Art. 3, amending the CSRD framework, including the new scope thresholds and assurance-related changes.

[23] Directive (EU) 2024/1760, Art. 1, Art. 2, Art. 5-11, Art. 16 and Art. 29, as amended by Directive (EU) 2026/470, Art. 4.

[24] Act of 6 December 2024 amending the Accounting Act, the Act on Statutory Auditors, Audit Firms and Public Oversight, and certain other acts, Journal of Laws 2024, item 1863; Act of 27 February 2026 amending the Accounting Act, Journal of Laws 2026, item 333; Accounting Act, Art. 63r.

[25] Directive (EU) 2017/1132, Art. 44-86, concerning capital maintenance and alteration rules for public limited liability companies.

[26] Directive (EU) 2019/2121, Art. 1; Directive (EU) 2017/1132 as amended, provisions on cross-border conversions, mergers and divisions.

[27] Commercial Companies Code, Art. 375¹, Art. 382 § 1, Art. 483 § 3 and Art. 21²; Best Practice for GPW Listed Companies 2021, principles 1.3-1.4.

[28] Directive (EU) 2017/1132; Directive (EU) 2017/828; Directive (EU) 2022/2464; Directive (EU) 2024/1760, as amended by Directive (EU) 2026/470.

[29] Commercial Companies Code, Art. 483 § 3.

[30]Ibidem, Art. 382 § 1 and Art. 382¹; D. Brakoniecki, M. Kiełczewski, op. cit., pp. 242-244.

[31] Directive (EU) 2022/2464; Commission Delegated Regulation (EU) 2023/2772; Directive (EU) 2024/1760, as amended by Directive (EU) 2026/470.

[32] Regulation (EU) No 596/2014 on market abuse, Art. 7, Art. 17 and Art. 18.

[33] Commercial Companies Code, Art. 483 § 3.

[34] Commercial Companies Code, Art. 21¹-21¹⁶, esp. Art. 21².

[35] Directive (EU) 2022/2464; Commission Delegated Regulation (EU) 2023/2772, Annexes I-II.

[36] Best Practice for GPW Listed Companies 2021, “comply or explain” approach, pp. 2-3; principles 1.3-1.4, pp. 4-5.

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[1] M.C. Jensen, W.H. Meckling, Theory of the Firm: Managerial Behavior, Agency Costs and Ownership Structure, “Journal of Financial Economics” 1976, vol. 3, no. 4, pp. 308-309.

[2] The Committee on the Financial Aspects of Corporate Governance, Report of the Committee on the Financial Aspects of Corporate Governance, London 1992, para. 2.5; OECD, G20/OECD Principles of Corporate Governance 2023, Chapter I.

[3] Act of 15 September 2000 – Commercial Companies Code, Journal of Laws 2000 No. 94, item 1037, as amended, Art. 1 § 1.

[4] Directive (EU) 2017/1132, Art. 1; Directive (EU) 2019/1151, Art. 1; Directive (EU) 2019/2121, Art. 1; Directive (EU) 2017/828, Art. 1; Directive (EU) 2022/2464, Art. 1; Directive (EU) 2022/2381, Art. 5(1); Directive (EU) 2024/1760, Art. 1, as amended by Directive (EU) 2026/470.

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Authors: Dariusz Brakoniecki[1]-Dariusz Budrowski[2]-Wojciech Kondrat[3]

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[1]Phd, DSc, Associate Professor, University College of Professional Education in Wrocław, email: dariusz.brakoniecki@gmail.com, ORCID ID: 0000-0001-7967-9172.

[2]PhD, Academy of Justice, Poland, e-mail: d.budrowski@gmail.com, ORCID: 0009-0008-6575-5419.

[3] MA., MBA, Nicolaus Copernicus Superior School, email: wojciech.kondrat@sgmk.edu.pl, ORCID:0009-0005-9519-6679.