The Polish legal system proposes many legal forms of doing business, including commercial companies. There are significant differences between the types of companies as regards both formal and financial matters, contribution requirements, owners' liability and the way of representation. They also allow for the tailoring of the internal structure, the role of the founders in the company's activities and the rules of interaction between the management and supervisory bodies.
A person wishing to conduct business in Poland can choose from the following legal forms of activity:
1. SOLE PROPRIETORSHIP AND CIVIL LAW PARTNERSHIP
Sole proprietorship is the simplest form, which can be established by any natural person. Its establishment does not require Polish citizenship — citizens of countries outside the European Economic Area may conduct business on the same basis as Polish citizens if they have an appropriate residence title (e.g. permanent residence permit). Entrepreneurs operating as sole proprietors are liable with all their assets.
Entrepreneurs who decides to establish a sole proprietorship can start to operate as early as the day they submit the application for entry in the Central Registration and Information on Business (CEIDG) and do not need a PESEL number (identification number) to do so. However, individuals with a PESEL number can benefit from additional simplifications, such as the ability to set up a business completely online and access e-government services.
Two or more entrepreneurs may also conduct business within the framework of a civil partnership, which, although it does not have a separate legal entity, constitutes a special type of agreement between entrepreneurs undertaken to achieve a common economic purpose. In order to establish a civil partnership, it is necessary to conclude an agreement (in writing) and submit an appropriate application to the register (CEIDG).
2. PARTNERSHIPS
Partnerships are entities that have a separate subjectivity from their partners — this means that partnerships can acquire rights in their own name, including ownership of real estate, incur liabilities and take action before the courts.
Any partnership may be established by at least two partners, who may also be foreigners. Partnerships are characterised by the personal involvement of partners in the business and mutual trust. A partner's contribution to the partnership may be in cash or in kind (transfer or encumbrance of property and rights), other considerations for the benefit of the partnership (e.g. provision of work) may also constitute a contribution.
There are four types of partnerships:
General partnership (spółka jawna)
A general partnership is the basic type of partnership. The partners may be both natural persons and other companies or partnerships. All partners are liable for the company's obligations with all their assets; however, enforcement against a partner's assets is only possible if enforcement against the company's assets proves ineffective.
The articles of association can be concluded either in the form of a notarial deed or online using the state-run S24 service and e-government services for identity confirmation. Regardless of the form in which the contract is concluded, registration of the company in the Register of Entrepreneurs (KRS) takes place online. While it is not necessary to have a PESEL number when concluding the articles of association with a notary public, the obtaining of a PESEL number will be required to confirm the identity of partners when registering online. Therefore, we often recommend our clients to obtain a PESEL number (nationality is not a limitation here). For partners who do not have and do not wish to obtain a PESEL number, the application can also be submitted by a professional attorney.
Professional partnership (spółka partnerska)
A professional partnership is a partnership that can be formed to practice certain liberal professions.
Partners of a professional partnership are liable on different basis than partners of a general partnership, in particular they are not liable for the partnership's obligations arising in connection with the professional activities of other partners.
The establishment of a partnership requires the execution of a articles of association (in writing) and its registration in the register of entrepreneurs (KRS).
Limited partnership (spółka komandytowa)
There are two types of partners in a limited partnership. The general partners are the partners who have unlimited liability for the company's obligations and also manage the company's affairs and represent it. The second type of partners are limited partners, whose liability is limited to a certain amount and who cannot represent the partnership. Unless the articles of association state otherwise, limited partners also do not have the right to manage the affairs of the company and have more limited ownership rights.
A common model for the operation of these companies is a structure in which the unlimited liability partner (general partner) is a limited liability company (controlled by the other partners and acting as a buffer) and the limited liability partners (limited partners) are natural persons.
The limited partnership agreement, as in the case of a general partnership, can be concluded either in the form of a notarial deed or online (S24 system).
Limited joint-stock partnership
A limited joint-stock partnership also has two types of partners — general partners, who have unlimited liability, and stockholders, who are not liable for the partnership's obligations (a general partner may also be a stockholder of the partnership as well).
This partnership combines the features of a limited partnership and a joint-stock company. In a limited joint-stock partnership, the most important decisions (e.g. profit distribution) are taken by the general meeting, in which all partners may participate. In certain cases, the partnership also has a supervisory board whose task is to supervise its activities on a regular basis.
A limited joint-stock partnership has share capital, which is divided into stocks. The establishment of a limited joint-stock partnership requires the conclusion of the articles of association in the form of a notarial deed and the contribution of share capital of at least PLN 50,000.
3. COMPANIES
While in the case of partnerships the involvement of the partners is of the greatest importance for their functioning, in the case of companies the most important significance is attributed to capital.
Companies, in contrast to partnerships, have a completely separate subjectivity, as a result of which the partners are not financially liable for the company's obligations (they only risk their contributions).
The founder of any company may be even one natural person or a legal entity, regardless of citizenship and place of establishment. In the articles of association, the founders, in particular, determine their contributions to the company (contributions cannot be services and non-transferable rights), the object of the company's activities and decide on the model of its operation, including the mutual relations and powers of the corporate bodies. The shareholders may also decide to privilege certain shares with regard to voting rights, profit participation or other special rights in the company.
Limited liability company
A limited liability company is the most common type of company in Poland. The company operates through its organs — the management board, the supervisory board (if appointed or required by law) and the shareholders' meeting. This form of business is particularly suitable if you wish to retain oversight of the company's affairs and limit the risk to your contribution only.
In order to establish a limited liability company, it is necessary to conclude articles of association before a notary public or in the S24 system, appoint the members of the bodies, make contributions to the share capital of at least PLN 5,000 and enter the company in the register of entrepreneurs (KRS). If the articles of association are concluded online, the company can be established even within 2 days.
In exchange for contributions, shareholders include shares of a certain nominal value (representing part of the share capital).
Joint stock company
A joint-stock company, to some extent, is similar to a limited liability company. Stockholders participate in the company as a result of taking up issued stock. A feature of the joint-stock company is the high degree of anonymity of the stockholders (the stockholders are not publicly disclosed in the register of entrepreneurs). It is a suitable form of business in particular for large business ventures, including companies planning to go listed on the stock exchange.
In order to establish a joint-stock company, it is necessary to conclude a memorandum of incorporation, which specifies, inter alia, the wording of the company's articles of association (the form of a notarial deed is required), as well as to make contributions to the company, to establish the bodies (management board and supervisory board) and to register the company in the register of entrepreneurs. The company's stock does not have a physical form and is recorded in the stockholders' register, which is open only to the company and the stockholders.
The minimum amount of share capital is PLN 100,000, but a payment of at least 25% of the minimum amount is sufficient to register the company.
Simple joint stock company
A simple joint stock company is the latest type of capital company that has been created in response to the needs of innovative businesses and start-ups. The company can be incorporated online and the minimum stock capital is PLN 1. This type of company offers greater flexibility in terms of structure and rules for the functioning of the bodies (e.g. adoption of resolutions by email or instant messaging).
Importantly, stock in this company have no nominal value, do not form part of the stock capital and may be taken up in exchange for work or services. The company may also issue founder stock, which guarantee stockholders a fixed percentage of voting rights and are not diluted in subsequent issues.
The variety of the above-mentioned forms of business makes the choice of the most suitable form for the specifics of the business not an easy task — in this regard, we see an important field of cooperation between partners and legal advisors, who will help to find the most favourable solutions.
Karol Przemski — Junior Associate at Osborne Clarke Poland specializing in corporate law, including in particular M&A and Venture Capital transactions. Karol has experience in advising companies, including public companies, on corporate law and regulatory issues concerning the TMT and FMCG industries. Karol also provides pro bono legal services to NGOs.
The editors are not responsible for the content of the material and may not support the opinion of its author
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