Limited partnership (Spółka komandytowa) in Poland

Limited partnership (Spółka komandytowa) in Poland

Limited partnership in Poland

Limited partnership is one of the most popular types of companies operating in the Polish legal system. In my article I will describe on what principles it operates, what elements its contract must have, how it regulates the liability of its partners and what needs to be done to establish it.

What is a limited partnership (spółka komandytowa) in Poland?

A limited partnership is a commercial company, classified as a partnership, that conducts business under its own name. It may own property, including real estate. It is established upon being entered in the National Court Register. Importantly, a limited partnership does not have legal personality, but it does have legal capacity and the capacity to perform acts in law. It is characterised by the presence of two types of partners: general partners and limited partners. What should not be omitted is the fact that it is not possible for a partnership to have general partners alone or limited partners alone. Each limited partnership must have at least one general partner and at least one limited partner.

Functioning of a limited partnership

At the outset, it should be emphasised that the provisions related to the internal relations within a limited partnership are of a dispositive nature, i.e. they apply only in the absence of contrary provisions in the articles of association. The article aims to discuss the statutory model, i.e. the one described in the Commercial Companies Code. In this model, each general partner is responsible for the day-to-day operation of the partnership (managing its affairs). It is worth noting, however, that limited partners may also obtain the right to manage the partnership’s affairs under the articles of association.

Decision-making in a limited partnership

In the case of matters of ordinary management, i.e. matters that qualify as current activities connected with running the partnership, each partner entitled to manage the partnership’s affairs may perform such activities without a prior resolution of the other partners who have the right to manage the partnership’s affairs, unless at least one of them objects to such an activity being performed. In such a case, a resolution of all the partners conducting the partnership’s affairs is required.

In matters that exceed ordinary management, the consent of all other partners, including those who do not manage the affairs of the partnership – both general and limited partners – is required before any action is taken. In the case of an urgent action that poses a risk of serious damage to the partnership, the partners who have the right to manage the partnership’s affairs may carry it out without a prior resolution of the partners.

Representation in a limited partnership

As a general rule, a limited partnership is represented by all general partners. They have the right to represent the partnership independently, however, it is worth emphasising that under the articles of association or a valid court ruling, this matter may be regulated differently. Limited partners may only represent a limited partnership as proxies. This is important because if a limited partner makes a legal transaction on behalf of the partnership without disclosing their power of attorney, they are liable for the effects of that transaction towards third parties without limitation.

Limited partnership agreement

The agreement of a limited partnership must include: the partnership’s name and registered office, the subject of its activity, the duration of the partnership (only if specified), identification of contributions made by partners together with their value and identification of the commendam sum, i.e. the scope of limited partners’ liability for the company’s debts. The limited partnership agreement is concluded in the form of a notarial deed or using a template agreement available in the S24 system, and unless the partnership agreement provides otherwise, it may be amended only with the consent of all partners (i.e. also limited partners).

Liability for debts of a limited partnership

The amount of liability of a partner in a limited partnership depends on their status, i.e. whether they are a general partner or a limited partner. General partners are liable to the company’s creditors without limitation with all of their personal assets, while limited partners are liable only up to the amount of the commendam sum, with the proviso that they are exempt from this liability within the limits of their contribution. That is, if the maturing debt of the partnership is PLN 100,000, the commendam sum is PLN 20,000 and the contribution of both general and limited partners is PLN 5,000, the creditor can execute:

  • from general partners: the whole amount, i.e. PLN 100,000 (in this case the value of the contribution and the commendam sum are irrelevant);
  • from limited partners: the difference between the commendam sum and the value of the contribution made by the limited partner, i.e. PLN 15,000

It should also be noted that the liability for the partnership’s debts is based on the subsidiary liability model, i.e. the execution from the partners’ assets is possible only if the execution from the partnership’s assets fails.

Differences between a limited partnership and a limited liability partnership (spółka z ograniczoną odpowiedzialnością)

A limited partnership is much easier to establish and operate than a limited liability company, which is related to its personal nature, assuming personal involvement of general partners in the partnership’s activities. The matter of liability for the company’s debts is also very important. The above-described liability for debts of a limited partnership is very broad and often times assumes unlimited liability of a partner. This is a broad difference compared to the liability for the debts of a limited liability company, in which the partners, as a rule, are not responsible for its liabilities at all. A limited liability company has legal personality, which makes it – in contrast to a limited partnership – a completely separate legal entity.

How to establish a limited partnership – a to-do list

  1. A partnership agreement must be concluded in writing under the pain of nullity. The partners may also use a template of an agreement available 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 form of a notarial deed, the request for establishment 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.