Doing Business in Poland: 2012 Update by Attorney Jaroslaw Kruk Part 2 of 2

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Limited Joint-Stock Partnership (Spó?ka komandytowo-akcyjna; S.K.A)

Overview

Limited Joint-Stock Partnershipis a specific merger of a partnerships and a capital companies features consequently it is devoid of legal personality. At the same time this form of business allows the entrepreneur to raise capital by issuing shares without having to sacrifice the personal character of the company.

Limited Joint-Stock Partnership operates under its own business name and it’s usually formed for a larger-scale business, for example large family enterprises.

It must be founded by at least two natural or legal persons or organizational units without legal personality which were granted a legal capacity on the basis of specified act. The Limited Joint-Stock Partnership has no legal personality, but it has been granted a legal capacity by law therefore it may acquire rights in its own name, undertake liabilities, sue or be sued.

The minimum nominal capital should amount to at least 50.000 pln and it’s divided into shares.

There are no additional requirements with respect to foreign investors incorporating the Limited Joint-Stock Partnership.

Liability

At least one shareholder is liable to the creditors for debts and obligations of the partnership without limitation (‘partner’) and at least one shareholder is not liable for debts and obligations of the partnership. Nevertheless, if a business name of the Limited Stock-Joint Partnership includes a name or a business name of a shareholder, this shareholder is liable for obligations of the partnership without limitation.

Representation

Limited Joint-Stock Partnership is represented by a partners who was not deprived of the right to represent a partnership under an articles of association or by the valid court decision. Shareholder may represent the partnership only as an attorney. The Limited Joint-Stock Partnership may be also represented by a proxy.

Supervisory Board in the Limited Joint-Stock Partnership is not obligatory, however if the number of shareholders exceeds 25, the Supervisory Board is compulsory.

Special tax provisions

This legal form of doing business is very attractive due to specific tax provisions which enables to limit tax obligations. Each partner in the Limited Joint-Stock Partnership pays taxes separately (Personal Income Tax PITor Corporate Income Tax CIT). Act on corporate income tax of February 15, 1992 Dz. U.; Polish Journal of Laws of 2011 No. 74, entry 397 as amended in article 6 enables to exempt invest funds and common investment funds with their seat in UE from the CIT tax. On 4th December 2011 an amendment concerning requirements for investment fund entered into force. The scope of the investments conducted by common investment funds shall be limited, as well as new restrictions concerning the supervision by domestic supervisory body has been set. Having considered this regulations, Partnership articles of association may allow to redistribute 98-99% of the Partnership profit to the fund, which is not obligated to pay the CIT tax. Described solution substantially limits the tax duties.

Limited Liability Company (Spó?ka z ograniczon? odpowiedzialno?ci?; Sp. z o.o.)

Overview

Limited Liability Companyas one of the most common form of running a business is a form of capital company. As the rest of a capital companies, described below, mains feature of a Limited Partnership are:

· legal personality;

· liability for debts is limited to the company’s capital;

· formation of the company is effective as of the date of entry into the National Court Register

· it’s established for the purpose of conducting business activity under its own business name.

A Limited Liability Company may be established for any purpose allowed by law. It may be established by one or more natural or legal persons (as long as it is not incorporated solely by another single-member limited liability company) or organizational units without legal personality which were granted a legal capacity on the basis of specified act (for example a partnership).

The Limited Liability Company has a legal personality what makes it a separate legal entity.

The minimum capital of the company used to amounted to50 000 pln. It is now reduced to the amount of 5000 pln in order to increase the number of emerging companies and investments from abroad.There are no additional requirements with respect to foreign investors incorporating a Limited Liability Company.

The Limited Liability Company is a subject to theCorporate Income Tax CIT.

Liability

The shareholders are not liable for the company’s obligations, they bear a risk up to the value of shares contributed. Members of the management board may also in some cases be liable for the company’s obligations when the execution against the company has proved ineffective.

Bodies of a company

Meeting of Shareholders is a superior authority of a company. An ordinary meeting of shareholders should be held no later than six months after the end of each financial year.

The Limited Liability Company is represented by a Management Board (consisting of at least one person). It may also be represented by a proxy. The Management Board shall be appointed and recalled under a resolution of shareholders. The Management Board member’s right to conduct the company affairs and to represent the company cannot be subjected to limitations against third parties.

“24 hours" Limited Liability Company

On 1st January 2012 an amendment to the Code of commercial partnerships and companies which facilitated the registration of the Limited Liability Company entered into force. Since the beginning of 2012 the Limited Liability Company might be registered via internet by using the form specimen published on the internet site of the Ministry of Justice. The Register Court shall examine the form within just one day (therefore the “24 hours Company"). The certified digital signature is not required.

In comparison to the standard registration of the Company, initial capital do not need to be fully made before lodging the petition for registration.

Joint-Stock Company (Spo?ka akcyjna; S.A.)

Overview

Legal construction of a Joint Stock Company is adapted to carry out large business projects and allows the accumulation of substantial financial resources. Generally, the company's capital comes from the numerous persons - the future shareholders, which as a result makes an establishing of this company more formal than it is in the case of a Limited Liability Company The partners have a much less freedom in shaping company’s bodies.A Joint-Stock Company has a legal personality what makes it a separate legal entity.

This form of business may be founded by one or more persons although it may not be established solely by a single-member Limited Liability Company.The minimum nominal capital amounts to100.000 pln.

There are also no additional requirements with respect to foreign investors incorporating a Joint-Stock Company.The Joint-Stock Company is a subject to theCorporate Income Tax CIT.

Liability

The company is liable for its debts and obligations with the whole property without any limitation. The shareholders are not liable for the company’s obligations, they bear a risk up to the value of shares taken up.

Organs of the company

A General Assembly is a superior authority of the Joint-Stock Company.

The Company is represented by a Management Board, which consist of at least one person, according to principles laid down in company’s statute. It may be also represented by a proxy.

In this kind of a company, a Supervisory Board must be appointed.

Both in Join-Stock Company and Limited Liability Company only a natural person with full capacity for acts in law can be a member of a management board, supervisory board, audit commission, or a liquidator.

Branch Office (Oddzia?)

Overview

The business activity of a branch office must overlap with foreign entrepreneur business activity. Nevertheless, its objectives do not have to be wider than a foreign entrepreneur’s business activity carried out abroad: the business pursued by the branch office may constitute only a part of the entire business operations conducted by the foreign entrepreneur.

The Branch Office does not possess a legal capacity.

Obligations of a foreign entrepreneur

A foreign entrepreneur is obliged to:

· appoint a person who represents a foreign entrepreneur in the branch office;

· use the original name of the foreign entrepreneur, together with the Polish translation of the entrepreneur’s legal form of operating with the phrase ‘oddzia? w Polsce’;

· keep separate books in Polish in accordance with the provisions of Polish accountancy laws;

· notify the Minister of the Economy of any factual and legal changes (such as a winding-up of the foreign entrepreneur which established the Branch Office or a loss of his right to conduct business activity) within 14 days following the occurrence of such changes.

Additional Resources

For more information on Doing Business in Poland, contact my colleage Jaroslaw Kruk in Warsaw, Poland at jaroslawk@legalkw.pl.

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