A manufacturing company in Silesia appoints a new management board member. Within six months, a creditor files a claim alleging that the board failed to file for insolvency in time, causing the creditor a loss exceeding PLN 3m. The director has no personal assets to cover that exposure. The company had no Directors and Officers (D&O) insurance in place.

D&O insurance protects Polish board members and supervisory board members against personal liability claims arising from their management decisions. Polish corporate legislation imposes direct personal liability on directors for company debts when they miss the 30-day insolvency filing deadline or act against shareholders' interests. A well-structured D&O policy covers defence costs, settlements, and judgments – shielding personal assets from claims that can reach several million PLN.

This guide explains how D&O coverage works under Polish law, what triggers liability, how to structure a policy correctly, and what mistakes boards most commonly make. Three business scenarios illustrate the practical differences between adequate and inadequate cover. A checklist and FAQ close the guide for quick reference.

Why does personal liability exposure matter for Polish directors?

Polish corporate legislation – the Kodeks spółek handlowych (Commercial Companies Code, KSH) – imposes direct personal liability on members of management boards and supervisory boards. The exposure is not theoretical. Creditors, shareholders, and the tax authority can pursue a director's private assets when the company cannot satisfy its obligations. Understanding the scope of that exposure is the starting point for any D&O analysis.

The most frequently triggered liability pathway involves insolvency. Insolvency law requires a board to file for insolvency within 30 days of the company becoming insolvent – either balance-sheet insolvent or cash-flow insolvent. A director who misses that deadline becomes personally liable for the full amount of unsatisfied creditor claims. The filing is made to the district court (sąd rejonowy) at the company's registered office, as recorded in the National Court Register (Krajowy Rejestr Sądowy, KRS).

Liability does not stop at insolvency. The Commercial Companies Code imposes liability for actions taken against the company's interests, failure to act with due diligence, and approval of unlawful distributions. The Polish Financial Supervision Authority (Komisja Nadzoru Finansowego, KNF) can also pursue board members of regulated entities for governance failures. Criminal exposure – relevant to white-collar defence – arises from fraudulent trading, false accounting, and improper asset stripping.

The practical risk profile depends on company size and sector. A board member of a mid-sized manufacturing company in Silesia faces a different claim landscape than a fintech director subject to KNF oversight. Both, however, share the same statutory personal liability framework. That shared exposure is what makes D&O insurance relevant across industries, not just in financial services.

What does a D&O policy actually cover in Poland?

A standard D&O policy in Poland contains three insuring agreements. Side A covers individual directors when the company cannot or will not indemnify them – the most important protection for personal assets. Side B reimburses the company for indemnification payments it has already made to directors. Side C covers the company itself for securities claims. Most Polish SME policies lead with Side A; larger corporate programmes combine all three.

Defence costs are typically covered from the first day of a claim, subject to the insurer's consent to counsel. That advance-payment feature matters enormously in practice. A director facing a creditor claim of PLN 2m may need PLN 200,000 in legal fees before a single hearing. Without D&O, that cost falls on the director personally.

Polish policies generally exclude:

  • Fraud and intentional misconduct (confirmed by a final court judgment)
  • Personal profit obtained unlawfully
  • Bodily injury and property damage claims
  • Pension fund liability (covered separately)
  • Prior and pending litigation known at inception

The interplay between exclusions and the insolvency liability pathway is a common source of disputes. Insurers sometimes argue that a director who knowingly delayed an insolvency filing committed intentional misconduct. Polish courts have generally required a final criminal conviction before that exclusion applies – but the litigation risk during that period is real. A properly drafted policy should include a severability clause, ensuring that one director's misconduct does not void coverage for others.

Run-off coverage deserves special attention. Standard D&O policies are written on a claims-made basis: the claim must be notified during the policy period. When a director resigns or the company changes ownership, a run-off extension of at least six years is advisable. Insolvency proceedings in Poland can last three to five years; creditor claims may arrive long after a director has left the board.

How should Polish directors structure their D&O programme?

Structuring a D&O programme starts with a liability audit. Directors should identify the three highest-risk exposure categories for their specific company: insolvency filing obligations, tax liability under the Ordynacja podatkowa (Tax Ordinance), and potential claims from shareholders or third parties. Each category carries a different claims profile and may require different policy language.

Three business scenarios illustrate the structural choices:

Scenario 1 – Manufacturing company, Silesia. A board of three directors runs a company with PLN 80m in annual revenue and significant bank debt. The primary risk is insolvency liability. The recommended structure is a combined Side A/B policy with a limit of at least PLN 10m, a 72-hour defence cost advance mechanism, and a six-year run-off clause. The policy should explicitly cover restructuring Poland proceedings – both postępowanie restrukturyzacyjne (restructuring proceedings) and sanacja (remedial restructuring).

Scenario 2 – IT company, Warsaw. A two-person management board of a software company faces exposure from investor claims and IP disputes. The recommended structure is a Side A policy with a sublimit for regulatory investigations, including any KNF inquiry if the company handles payment services. A pre-pack insolvency scenario – where assets are sold before formal insolvency – should be covered explicitly, since insurers occasionally dispute whether pre-pack transactions constitute "wrongful acts."

Scenario 3 – Foreign investor's Polish subsidiary, Mazowieckie. A German parent appoints a local director to run its Polish subsidiary. The director's exposure includes both Polish corporate liability and potential cross-border claims. The programme should include a global D&O master policy with a local admitted policy in Poland, ensuring that Polish mandatory insurance law requirements are met. Cross-border insolvency issues – for example, where the parent enters German proceedings affecting the Polish entity – require specific policy language.

We secured a reversal of a personal liability claim exceeding PLN 1.5m for a manufacturing client in Silesia (autumn 2025), where the insurer had initially declined cover on the basis of an alleged intentional misconduct exclusion. The severability clause in the policy proved decisive.

What are the most common mistakes Polish directors make with D&O coverage?

The most damaging mistake is treating D&O insurance as a procurement exercise rather than a risk management decision. Directors sign the renewal without reading the policy wording, discover the gaps only when a claim arrives, and find that the exclusions are broader than they assumed. By that point, the window for renegotiating terms has closed – and the consequence is uninsured personal liability.

Four specific mistakes appear repeatedly in practice:

  • Inadequate limits. A PLN 1m limit is insufficient for a company with PLN 50m in creditor exposure. The limit should be benchmarked against the company's total debt and the realistic worst-case claim.
  • Missing run-off. Directors who resign without securing run-off coverage lose protection for claims arising from acts committed during their tenure. The 30-day insolvency window means claims can arrive years later.
  • No severability clause. Without severability, one co-director's fraud can void the entire policy – including cover for innocent board members.
  • Failure to notify promptly. Claims-made policies require notification within the policy period. Late notification – even by one day – can forfeit coverage entirely, an irreversible consequence that no court will easily reverse.

A subtler mistake involves the interaction between D&O insurance and restructuring proceedings. When a company enters postępowanie układowe (arrangement proceedings) or sanacja, the board retains management powers but operates under court supervision. Claims arising during that period may fall into a gap between the pre-restructuring D&O policy and any new coverage arranged after the proceedings begin. Directors should notify their insurer immediately upon opening restructuring proceedings – ideally before the court publishes its decision.

Our team obtained interim measures protecting assets worth over EUR 3m for a foreign investor's subsidiary in Lower Silesia (spring 2026), in a case where the local director had failed to notify the D&O insurer of a pending creditor claim. The case required parallel white-collar defence and civil litigation strategy.

What to prepare before purchasing or renewing D&O coverage?

Before approaching insurers, directors should prepare a structured submission package. Insurers underwrite D&O based on the quality of corporate governance, financial condition, and claims history. A well-prepared submission reduces premium costs and improves policy terms. Budget for the process: a comprehensive D&O programme for a mid-sized Polish company typically costs between PLN 20,000 and PLN 80,000 per year, depending on limit, sector, and risk profile.

Checklist – what to prepare:

  • Last three years of audited financial statements and current KRS extract
  • Corporate governance documentation: articles of association, board resolutions, internal audit reports
  • Description of all pending litigation, regulatory investigations, and tax disputes
  • Details of any restructuring proceedings or prior insolvency filings
  • List of all current board and supervisory board members, with tenure dates

The submission should also address cross-border exposure. If the company operates in multiple jurisdictions – for example, a Polish entity with Ukrainian or Czech subsidiaries – the insurer needs to understand the full group structure. Cross-border insolvency involving Poland and Ukraine, or cross-border insolvency involving Poland and the Czech Republic, creates jurisdictional complexity that standard Polish policies may not address. A global master policy with local admitted policies in each relevant jurisdiction is the standard solution.

Directors operating in sectors subject to EU sanctions frameworks should also disclose any sanctions-related exposure in the submission. Insurers are increasingly excluding sanctions liability from standard D&O wording, and a director who fails to disclose known sanctions risk at inception may find the entire policy voidable.

For companies with cross-border insolvency exposure involving multiple EU jurisdictions, including Poland and Ukraine, the cross-border insolvency guide provides additional procedural context relevant to structuring run-off coverage.

Specific company circumstances require tailored analysis before any D&O programme is finalised. A gap in coverage – whether from a missing run-off clause, an undisclosed claim, or an ambiguous exclusion – can foreclose all personal asset protection at precisely the moment it is most needed.

To receive an expert assessment of your D&O coverage structure under Polish law, contact info@kordeckipartners.com. Our team will review your current policy, identify gaps, and recommend specific amendments before your next renewal.

Frequently asked questions

Q: How long does a director remain exposed to personal liability claims after leaving the board?

A: Under Polish civil law, the general limitation period for tortious claims is three years from the date the claimant learns of the damage and the identity of the liable party, with an absolute long-stop of six years from the date of the wrongful act. In insolvency-related claims, the limitation period runs from the date the creditor's claim against the company becomes unsatisfied. Directors who resign without run-off coverage remain personally exposed for the full limitation period. A run-off extension of at least six years is the standard recommendation.

Q: Does D&O insurance cover tax liability imposed on board members personally?

A: This is a common misconception. The Tax Ordinance allows the tax authority to hold board members jointly and severally liable for company tax arrears when enforcement against the company has failed. Some D&O policies cover the defence costs of challenging such assessments before the tax court (Wojewódzki Sąd Administracyjny, WSA) and the Supreme Administrative Court (Naczelny Sąd Administracyjny, NSA). However, the underlying tax debt itself is typically excluded from coverage. Directors should verify whether their policy includes a specific sublimit for tax authority proceedings and whether it covers the appeal process through both administrative court tiers.

Q: Can a company purchase D&O insurance after restructuring proceedings have already begun?

A: Yes, but with significant limitations. Insurers will treat the commencement of restructuring proceedings as a material fact that must be disclosed. Most insurers will exclude any claims arising from facts known at the time of policy inception – which, in practice, means that the restructuring itself and any related creditor claims will be excluded. The value of a post-commencement policy lies in covering new acts of management during the proceedings. The far better approach is to maintain continuous D&O coverage before any restructuring need arises, ensuring that pre-restructuring acts remain covered under the existing policy.

About KORDECKI & Partners

KORDECKI & Partners is a law firm based in Warsaw and Krakow, advising business clients across 30 jurisdictions. Our team combines expertise in Polish and international law with a practical approach to restructuring, insolvency, and board liability defence. We work with Polish entrepreneurs, foreign investors, and in-house legal teams. To discuss your situation, contact info@kordeckipartners.com.

Disclaimer: This publication is provided for informational purposes only and does not constitute legal advice. The information herein should not be relied upon as a substitute for professional legal counsel tailored to your specific circumstances. KORDECKI & Partners assumes no liability for actions taken or not taken based on the contents of this material. For advice regarding your particular situation, please contact info@kordeckipartners.com.