BOARD REMUNERATION
In this article, we will introduce you to the concept of board remuneration. Specifically, we will address whether the payment of such remuneration for performing a function is mandatory, the possible ways of paying such remuneration, and whether it is subject to taxation and social insurance.
CAN A BOARD MEMBER RECEIVE REMUNERATION?
- According to the applicable regulations, the Commercial Companies Code (hereinafter referred to as the "CCC") does not impose an obligation on the company to pay remuneration for performing the function of:
- the president of the board;
- the vice-president of the board;
- a board member.
Therefore, as a general rule, board members are not entitled to remuneration.
However, there are no regulations in place that would prohibit board members from receiving such remuneration.
- Furthermore, in accordance with the wording of Article 203(1) of the CCC, a resolution of the shareholders may establish:
- the rules for remunerating board members;
- the remuneration of board members employed under an employment contract or another type of contract.
Thus, the regulations allow for the employment and payment of remuneration to board members of a company, but do not mandate it. Remuneration may be paid based on a resolution of the Shareholders' Meeting, an employment contract, or another type of agreement.
THE AMOUNT OF REMUNERATION FOR A BOARD MEMBER
In the case of remuneration paid based on an employment contract, regulations specify the minimum amount. However, for remuneration paid based on a resolution of the Shareholders' Meeting, there are no limits to its amount. Nonetheless, it is important to ensure that such remuneration is in line with market rates and does not harm the company or its shareholders.
TAXATION OF BOARD MEMBER REMUNERATION AND SOCIAL INSURANCE OBLIGATIONS
Remuneration paid to a board member based on a resolution of the Shareholders' Meeting triggers an obligation to register that member for health insurance, with a contribution rate of 9%, and it is subject to income tax under general rules. A board member employed under an employment contract must be mandatorily registered with the Social Insurance Institution (ZUS), which requires payment of all ZUS contributions.