General partnership (Spółka jawna) in Poland

General partnership (Spółka jawna) in Poland

General partnership in Poland

When you open a company in Poland you may wonder on what principles partnerships operate in Poland and which of them is considered to be the most basic. In my article I will introduce you to the most basic, which is the general partnership. I will describe what it is, on what principles it operates, what liability of partners assumes and how to establish it.

What is a general partnership (spółka jawna) in Poland?

A general partnership is a commercial company, classified as a partnership, that conducts business under its own name. It may own property, including real estate. It may be established by natural persons, legal persons, as well as organisational units which are not legal persons and which are granted legal capacity by the law. It is established upon being entered in the National Court Register. Importantly, a general partnership does not have legal personality, but it does have legal capacity and the capacity to perform acts in law.

Functioning of a general partnership in Poland

The partners are responsible for the day-to-day operation (management of the affairs) of a general partnership. It is worth noting that the partners may entrust the conduct of the partnership’s affairs to, for example, only a few partners (or only one). It should be emphasized, however, that regardless of the provisions of the articles of association or shareholders’ resolutions, the conduct of the partnership’s affairs may not be entrusted to third parties to the exclusion of the partners.

It is worth remembering that the issues belonging to the sphere of internal relations of the partnership are – with the exception of entrusting the conduct of the partnership’s affairs to third parties without the participation of the partners – of a dispositive nature, meaning that particular regulations are valid only if there is no specific provision in the articles of association or in shareholders’ resolutions.

Decision-making in a general partnership

In the case of matters of ordinary management, i.e. matters qualified as current activities connected with running the enterprise, each partner may carry out activities independently, without a prior resolution of the other partners. Importantly, if such an action is opposed by even one of the remaining partners, it requires a prior resolution of all partners entrusted with the conduct of the partnership’s affairs. In the case of matters exceeding ordinary management, i.e. in the case of actions of a very important nature for functioning of the partnership in the future (e.g. purchase of real estate in order to change the partnership’s general office), a resolution of all partners is absolutely required, including those who were not entrusted with running the affairs of the partnership. In the case of an urgent action that poses a risk of serious damage to a partnership, the partners who have the right to manage the partnership’s affairs may carry it out without a prior resolution of the other partners.

Representation in a general partnership

Each partner is authorized to represent the partnership, i.e. to make binding statements on its behalf. The articles of association may also specify the manner of representation in a different way, in particular by granting the right of representation to only some of the partners, or by introducing a model of joint representation requiring a partner to cooperate with another partner or with a proxy when making statements on behalf of the partnership. Importantly, under the articles of association and following a final court decision, partners may also deprive a partner of the right to representation altogether.

Partnership Agreement in a general partnership

A general partnership agreement must: include the partnership’s name and registered office, define the contributions made by each partner, indicate the value of the contributions, define the subject of the partnership’s activity and the duration of the partnership, if it is fixed. A partnership agreement must be concluded in writing under the pain of nullity. The partners may also use a template of an agreement. Unless its wording indicates otherwise, a general partnership agreement may only be amended by a unanimous resolution of the partners.

Liability for the general partnership’s debts

Partners in a general partnership are jointly and severally liable for the obligations of the partnership. It should be emphasised, however, that execution from their personal assets may take place only after the execution from the partnership’s assets proves ineffective (subsidiary liability model). Persons who acted on behalf of the partnership after its incorporation and before its entry in the National Court Register are jointly and severally liable for obligations arising from their actions during that period. It is also worth emphasising that persons joining a general partnership during its duration, are also liable for the partnership’s obligations arisen before that person joined the partnership.

Differences between a general partnership and a limited partnership (spółka komandytowa)

The main difference concerns partners. While there is one group of partners in a general partnership, partners in a limited partnership are divided into general partners and limited partners. General partners, like partners in a general partnership, are liable for the company’s obligations with all their personal assets. On the other hand, limited partners are liable only up to the amount of the commendam sum, with the proviso that they are released from this liability within the limits of their contribution (i.e. in the case of a commendam sum of PLN 15,000 and a limited partner’s contribution of PLN 5,000, the limited partner is liable for the company’s debts up to the amount of PLN 10,000). Other differences between companies include the right of representation, to which in a limited partnership only general partners are entitled (this right may be revoked only by a final court ruling). Limited partners may only represent the partnership as proxies.

How to set up a general partnership in Poland step by step

  1. A partnership agreement must be concluded in writing under the pain of nullity. The partners may also use a template of an agreement in the S24 system.
  2. Filing an electronic application for company registration (as of July 1, 2021, registry courts in Poland will no longer accept paper applications). If the agreement is in paper form, the request is made through the Court Records Portal. If the agreement was concluded using a template, the application must be submitted through the S24 IT system.
  3. Registration of the company in the National Court Register by the registration court.