Company Incorporation and Registration in Poland
Although company law regulations are based on similar principles in most countries, each of the national systems has its own specifics that have a great influence on the market functioning. In my article I present an outline of Polish company law. I show its sources, on what to pay attention when you choose a proper form of company, how to transform its form and I also describe the differences between partnerships and capital companies.
What is corporate law?
Corporate law should be understood as any legal regulation covering the area of activity of natural persons or legal entities based on contract or statute, the purpose of which is usually to conduct business. Polish law defines several types of companies. The main division comes down to a simple distinction between partnerships and commercial companies. The latter are divided into partnerships (general partnerships, professional partnerships, limited partnerships, limited joint-stock partnerships) and capital companies (simple joint-stock companies, limited liability companies and joint-stock companies).
What is the source of corporate law?
There are many different sources of corporate law in Poland. These are mainly statutory laws, contractual regulations created by the parties and relevant provisions of international agreements. The most important laws include:
- the Act of 15 September 2000 – the Commercial Companies Code
- the Act of 23 April 1964 – the Civil Code
- the Act of 17 November 1964 – the Code of Civil Procedure
- the Act of 28 February 2003 – the Corporate Bankruptcy and Reorganisation Law Act
- the Act of 20 August 1997 – the Act on the National Court Register
- the act of 29 September 1994 – the Accounting Act
How to choose the right form of business?
One of key decisions made before starting a business is choosing the most feasible legal form. It determines such issues as the scope of duties and personal responsibility for the obligations incurred by the company or the amount of tax and the period of its payment. There are many different factors to consider when choosing the right form of partnership, such as:
- the type of activity,
- the form of taxation,
- the scale of operations,
- the means of raising capital,
- the number of partners,
- the extent of liability for the company’s liabilities from personal assets and capital risk,
- the type of accounting,
- the opportunities to finance business,
- the scope of company’s supervision.
The right choice of business form will allow us to avoid excessive tax and lead to increased profit. It is also crucial in terms of securing assets in case of financial losses.
Possibilities of transformation of companies
Transformation of a company is understood as a change of its legal status. This operation does not create a new entity nor does it result in liquidation. A company being transformed and a transformed company are essentially the same entity. The reason for the transformation may be, for example, a change in its scope of activity or adjustment to current regulations.
Importantly, as a result of the transformation, the NIP and REGON are not changed. Under the so-called Continuation Principle, a transformed company retains the rights and obligations of the original company. The purpose of informing third parties about the change of the company form is to add the addition “formerly” to the new company name along with the former company name.
All of the previously mentioned types of companies can be transformed. A partnership can be transformed into any type of a capital company. Similarly, any capital company may be transformed into another type of capital company. However, it is impossible to transform a capital company into a partnership.
Differences between partnerships and capital companies
- Partnerships must be formed by a minimum of two partners, while a capital company may consist of one partner.
- Partners of a partnership are personally liable for its obligations. Partners of a capital company are liable only up to the amount of invested contributions.
- Partners in partnerships cannot be changed (unless the partners themselves have excluded this rule in their articles of association). The composition of capital companies may be modified.
- The articles of association of partnerships are based mainly on the relationship between partners, while in capital companies the most important element of establishing the company is capital;
- Partners in partnerships typically manage the affairs of the partnership personally and represent the partnership externally. Special bodies like the management board, the supervisory board, etc. are appointed in capital companies.
Corporate law in Poland – Linke Kulicki Law Firm
Professional legal services for companies guarantee a sense of security. A lawyer oversees how business is conducted, which allows the company to avoid difficult situations that often lead to legal actions and immense stress, as well as financial consequences. For this reason, it is beneficial to work closely with a professional law firm from the very beginning of a company’s operations. Company Law and Corporate Legal Services in Poland.
The key to success is choosing lawyers with expertise in the desired field. Only a counsel with experience in the scope of companies law is able to secure your interests. The Linke Kulicki Law Firm has been supporting entrepreneurs for many years and companies law is one of our key areas of expertise.