attorney Igor Bąkowski
Bakowski Law Firm, Warsaw, Poland
The most popular and often optimal form of company for subsidiaries of foreign companies or capital investors from abroad is a limited liability company (spółka z ograniczoną odpowiedzialnością, sp. z o.o.).
An alternative in case of a larger scale of operations, larger number of investors or a view to attract new investors or list the company on the stock exchange may be the joint stock company (spółka akcyjna, S.A.).
Innovative companies wanting to attract investors can also consider a relatively new form which is the simple joint stock company (prosta spółka akcyjna, PSA).
EU companies may also consider operating as a branch of an EU company in Poland.
Limited liability company (spółka z ograniczoną odpowiedzialnością, sp. z o.o.)
A limited liability company as a subsidiary of a foreign company is most widely chosen by foreign investors in Poland.
The minimum share capital for a limited liability company is PLN 5.000, however for operational and credibility purposes it is usually better to have a higher share capital from the start or at a later time when the operations are growing.
Foreign nationals can be members of the management board and represent the company. They do not have to speak Polish. They do not have to reside in Poland.
Decision making by the management board is relatively straightforward. The articles of association may require a representation of the company by two or more members of the board, or may require resolutions of the management board or the shareholder(s) to be adopted for certain actions.
Actions such as the purchase or sale of real estate, purchase or sale of an operating business (przedsiębiorstwo) generally require a resolution of the shareholder(s), unless the articles of association remove such obligation.
There is generally no need for apostilled decisions or decisions signed in the consulate.
If the company would like to grant a power of attorney to purchase or sell real estate to a person other than management board (in a standard representation), than such power of attorney would require the form of a notarial deed.
The sale of shares in a limited liability company requires the form of a document certified by the notary public.
The resolutions of the shareholder(s) do not require special forms – only a paper document form.
The management board must organise documents summarising each financial year (generally the same as calendar year) after the end of the financial year, including financial reports, profit and loss report, management summary (can be a 1-page short document), and organise an obligatory yearly shareholder meeting to approve the financial statements, reports and summaries, grant the vote of acceptance to the management board members, if necessary, appoint members of the board for next term.
Joint stock company (spółka akcyjna, S.A.)
A joint stock company has the advantage of limiting the responsibility of the management board members to a greater extent than in a limited liability company, and is easier in case of entities that want to attract other investors. Otherwise, it is more complicated and expensive to operate and is not an optimal form for a single-owner subsidiary company.
In a limited liability company the members of the management board generally are not responsible for the obligations of the company, except when the company becomes insolvent (bankrupt) and despite that they do not file for bankruptcy (or there are no sufficient funds to cover the cost of the bankruptcy proceedings and the bankruptcy motion is denied for the lack of funds to cover the bankruptcy procedure). Even in such case, the creditors’ claims can be limited to the amounts that they did not obtain due to the lack of filing the motion for bankruptcy in time.
Simple joint-stock company (prosta spółka akcyjna, PSA)
This relatively new type of company should suit mostly start-ups and smaller innovative companies open to attracting investors as shareholders.
The PSA allows for elastic shaping of its structure by adjusting the articles of association and establishing relations between the shareholders, the management and the supervisors.
The PSA has a combination of elements typical of a limited liability company and a joint-stock company.
As an alternative to the company’s management board (and supervisory board), a PSA can have a Board of Directors inspired by Anglo-Saxon legal systems.
The PSA puts a strong emphasis on facilitating the use of electronic means of communication and is far easier and cheaper to manage than a standard joint-stock company.
The minimum share capital of a PSA is only 1 PLN.
The PSA regulations also provide for a simplified liquidation and the possibility for taking over the company’s assets and liability by at least one shareholder.
Branch of an EU company
A branch of an EU company could be sufficient in case of planning a limited activity in Poland and no considerable investments. A branch of a foreign company’s business activity may not exceed the scope of the business activity of a foreign company and may only run the same type of business. The articles of association of a foreign company (with sworn translation into Polish language) would need to be provided to registry court in for verification. A branch would need to have its Polish local representative appointed by the EU company. A branch in Poland has no legal personality under Polish law, it is only a separate organizational and financial unit of a foreign company conducting business activity in Poland. A branch may not act independently in economic relationships, agreements with third parties would be signed in the name and on behalf of the foreign company. A branch does not provide for liability limitation in Poland, which is provided in case of establishing a subsidiary company. In some highly regulated industries, it may sometimes be easier to open a branch rather than a subsidiary, and rely of already existing licenses, rather than going through a process of obtaining new local licenses for Polish subsidiary.
In practice, such form is treated with some reservations by Polish partners and as less dependable than a local subsidiary company.
The choice of the suitable form of doing business in Poland should result from an analysis of the particular case and planned business operations to best suit your needs.
Bakowski Law Firm (bakowski.net.pl) provides specialized services focused on the entry of companies to the Polish market and conducting business activity by them. For over 15 years we have been providing comprehensive services that allow our clients to save time related to completing many formalities.
We have extensive experience in multi-national company structures, including off-shore companies, holding companies and other corporate arrangements.
We advise in the area of corporate and trade law as well as tax law to help our clients to operate in the most effective way.
We cooperate with accounting offices, real estate agencies, translation offices and HR companies.
Our website dedicated to company formation, running and closing a business in Poland is:
companyinpoland.net
For more information please contact
attorney Igor Bąkowski
tel. +48 22 633 67 66
or other lawyers from Bakowski Law Firm
bakowski.net.pl