Are you planning to enter the Polish market or are you already operating on it and wondering what legal form would be best for you? Have you heard about a civil law partnership but don’t know what is it? In my article I describe what a civil law partnership is, on what principles it operates, how does the issue of liability looks like and what you have to establish it.
What is a civil law partnership (spółka cywilna) in Poland?
It is one of the contracts regulated by the Civil Code, by the conclusion of which the partners undertake to pursue a common economic goal, which may be, for example, both the running of a store and the renovation of a specific facility used by the partners. A civil law partnership has much in common with a partnership (spółka osobowa). The similarities concern issues of contributions, conduct of affairs, and representation of the partnership. Its partners may be both natural persons and legal entities. It should also be remembered that a civil law partnership is not an entrepreneur (the status of an entrepreneur is held by its partners) and that it does not have legal capacity.
Decision making in a civil law partnership
According to the provisions of the Civil Code, each partner is entitled and at the same time obliged to manage the affairs of the partnership, i.e. to perform both factual and legal actions aimed at realizing a common economic goal, as specified in the agreement. Within the scope of ordinary activities connected with the functioning of the partnership, each partner may perform them independently, provided that none of the other partners opposes the action. For if there is an objection, a shareholder resolution is required. It is also required for activities that exceed the scope of ordinary activities. Importantly, in the case of urgent actions that, if omitted, would threaten the partnership with irreparable losses, the action may be taken by any shareholder without a prior resolution.
Representation in a civil law partnership
In principle, partners are entitled to represent the partnership, i.e. they are authorized to perform legal acts binding on the partnership to the same extent as they are authorized to manage its affairs. However, this issue may be regulated differently in both the articles of association and the shareholders’ resolution.
Partnership Agreement in a civil law partnership
It is the most important document of the partnership. It forms the framework of its operation and is the main principles of the relationship between the partners. It should also set out the contributions to be made by the partners, as well as other matters that the partners consider important, such as details of representation and issues relating to participation in profits and losses. A partnership agreement should be in writing as it serves as evidence.
Liability for the partnership’s debts in a civil law partnership
In a civil law partnership, all partners are liable jointly and severely. This regulation is absolutely binding, which means that the articles of association may not limit the liability to only some of the partners or to a certain amount. What is important, unlike in the case of a partnership, the liability of partners is not subsidiary, which means that it is possible to satisfy oneself from the personal assets of a partner without using the common assets.
It should also be emphasized that on the basis of article 870 of the Civil Code, if during the last six months unsuccessful execution was carried out from the partner’s movables, their personal creditor who obtained an attachment of the partner’s rights in the event of their withdrawal from the partnership or its dissolution, may terminate their participation in the partnership.
Differences between a civil law partnership and a registered partnership (spółka jawna)
A registered partnership, unlike a partnership and capital companies, does not have legal personality. It is also not allowed to own its own assets – all rights acquired and liabilities incurred are co-owned by the partners and in this form constitute part of their personal assets. There are also differences as far as liability is concerned (explained above). Importantly, in the event of amendments to the general partnership agreement, the company is obliged to notify the registry court of the amendments made. Such an obligation, due to the nature of the partnership, does not arise in the case of a civil partnership, as it is not subject to registration in the National Court Register.
How to set up a civil law partnership in Poland step by step
- Submitting an application and making entry in the Central Registration and Information on Business (pol. CEIDG) by partners who are natural persons.
- Concluding a partnership agreement in writing (for evidentiary purposes).
- Filing an application with the Central Statistical Office (GUS) to obtain a REGON number and to the Tax Office to obtain a NIP number.
- Completion of information concerning REGON number and NIP number in the Central Registration and Information on Business.