Joint-stock company is the only type of company in Polish legal system which can be listed on stock exchange. Therefore, it is very important to know the rules of its functioning. In my article I describe how a joint-stock company operates, what elements it must have in its statute, how the liability of its shareholders looks like and what needs to be done to establish it.
What is a joint-stock company (spółka akcyjna) in Poland?
A joint-stock company is a commercial company, classified as a capital company, which has legal personality. It may be established by one or more persons, both natural and legal, except that it may not be entered into solely by a single-member limited liability company. A joint-stock company may also be formed by organizational units which are not legal entities and which have legal capacity (e.g. by a general partnership). The most important document of a joint-stock company, the articles of association, must be drawn up in the form of a notarial deed. Shareholders, who are not liable for the company’s debts, are partners in a joint stock company. The share capital of a joint-stock company is at least PLN 100,000 and is divided into shares of equal nominal value.
Functioning of a joint-stock partnership
The operation of a joint stock company is the responsibility of its governing bodies. The management board conducts the company’s affairs and represents it before third parties. The supervisory board continuously supervises the company’s operations and appoints the members of the management board, while the general meeting of shareholders makes decisions of strategic importance for the company’s operations, including, among others, examination and approval of the financial statements, appointment of the members of the supervisory board, decisions on the acquisition and disposal of real estate and decisions on the issue of convertible bonds, bonds with priority rights, and subscription warrants.
The stock exerts a large influence on the operation of a company, as its ownership usually determines the direction in which the company is moving. They are an embodiment of participation in the company and allow the shareholder to, among other things, participate in the company’s profit (dividend), or participate with the right to vote in the general meeting. It is worth mentioning that they are divided into different categories such as registered and bearer shares, or ordinary and preferred shares.
Decision-making in a joint-stock company
Unless the articles of association provide otherwise, resolutions of the management board and the supervisory board shall be adopted by an absolute majority of votes. Resolutions of the general meeting are also passed – in principle – by an absolute majority of votes, but for some of its resolutions, a qualified majority is required by law. This requirement concerns, among others, a significant change in the company’s activity (2/3 of votes) or redemption of shares, as well as dissolution of the company (3/4 of votes). The articles of association may set stricter conditions for passing these resolutions, but – importantly – they cannot relax them.
Representation in a joint-stock company
In a joint-stock company, as in the case of a limited liability company, the company’s management board is the only body entitled to represent it. In the absence of contrary provisions in the articles of association, if the management board consists of more than one member, the company shall be represented by two members of the management board acting jointly or by a member of the management board acting together with a proxy.
Articles of association of a joint-stock company
The articles of association of a joint-stock company must be concluded in the form of a notarial deed. The conclusion of the articles of association is tantamount to the establishment of a new entity, i.e. a joint-stock company in organization, which becomes a full-fledged joint-stock company upon its entry into the National Court Register. The articles of association must specify:
- the company’s name and registered office;
- the subject of the partnership’s activity;
- define the duration of the partnership, if it is fixed;
- the amount of share capital and the amount paid before registration to cover the share capital;
- the nominal value of shares and their number with an indication whether the shares are registered or bearer shares;
- indicate the number of shares of each class and the related rights, if shares of different classes are to be introduced;
- the surnames and forenames or business name of the founders;
- the number of members of the management board and the supervisory board or at least the minimum or the maximum number of members of these bodies and the entity authorized to determine the composition of the management board or the supervisory board;
- a letter for announcements if the company intends to make announcements also outside the Court and Commercial Gazette.
Amendments to the company’s articles of association are made by the general meeting by way of a resolution adopted by a 3/4 majority (the articles of association may set stricter conditions). Importantly, an amendment to the articles of association must be recorded by the management board in the registry.
Liability for the company’s debts
In principle, neither shareholders nor members of joint-stock company’s bodies are liable for its debts. An exception applies to the obligations of a company in organization, for the obligations of which, in the case of ineffective enforcement against the company’s assets, the shareholders are liable only up to the value of the contribution not made to cover the shares subscribed for.
Differences between a joint-stock company and a simple joint-stock company (prosta spółka akcyjna)
Establishing a simple joint-stock company is much simpler. The minimum share capital is only PLN 1, which, compared to the requirements of a joint-stock company (PLN 100,000), greatly facilitates its establishment. In addition, it can also be established under a template agreement available in the S24 system. Importantly, it does not require the appointment of a supervisory board. It is also worth noting that a simple joint-stock company cannot – unlike a joint-stock company – be listed on the stock exchange.
How to establish a joint-stock company in Poland – step by step
- First, the incorporation agreement consisting of the articles of association in the form of a notarial deed is concluded. Subsequently, partners make unilateral declarations expressing their intent to join the company. Then, they accept the wording of the articles of incorporation and subscribe the shares.
- Next, the shareholders make contributions to cover the share capital.
- Later, a management board and a supervisory board are appointed.
- Then, an electronic application for company registration through the Court Registers Portal is filed (as of July 1, 2021, registry courts in Poland will no longer accept paper applications).
- Finally, the company is registered in the National Court Register by a registry court.