Professional partnership in Poland
In Polish law, some of the professions can be performed in a special type of partnership, which is a professional partnership. In my article I will explain what it is. I will describe on what principles it operates, which elements its contract must have, what liability of partners it assumes and what you should do to establish it.
What is a professional partnership (spółka partnerska) in Poland?
A professional partnership is a commercial company formed by partners for the purpose of practising a liberal profession (or several liberal professions, unless industry regulations do not permit it). The partners can only be natural persons who are authorized to pursue liberal professions, which on the basis of the provisions of the Commercial Companies Code and special laws are, among others, the following professions: advocate, pharmacist, architect, construction engineer, certified auditor, insurance broker, tax advisor, stockbroker, investment advisor, accountant, doctor, dentist, veterinarian, notary, nurse, midwife, physiotherapist, legal advisor, patent agent, property expert and certified translator. A professional partnership operates a business under its own firm (name). It is established upon being entered in the National Court Register.
Functioning of a professional partnership in Poland
The most important matter related to the functioning of a professional partnership is the choice of a management model, i.e. whether a classic model for partnerships is adopted, in which partners are directly responsible for running the affairs and representing the partnership, or a model known from capital companies is adopted, i.e. a management board is established, which in this case assumes the above-mentioned responsibility. It is worth noting that at least one partner must be a member of the management board of a partnership (the other members of the management board do not have to be partners in the partnership).
In the case of the classic model for partnerships, as a rule, the right to conduct the affairs of the partnership is vested in all partners. The articles of association may, however, freely shape the rules of the day-to-day functioning of the partnership, including, among others, granting the right to conduct the affairs of the partnership to some partners only, or to both partners and third parties. However, it is not permissible to appoint only third parties to the board.
Decision-making in a professional partnership
How decisions are made in a partnership depends on the adopted management model and the type of activity. In matters pertaining to the daily operation of the partnership (ordinary management), each partner/member of the management board may act independently, without a prior resolution of the other partners. It should be noted, however, that if at least one of the other partners/management board members objects to this action before it is carried out, a prior resolution of all the partners who are entrusted with the management of the partnership’s affairs (or all the other management board members, if the partnership has a management board) is required.
In the case of matters exceeding ordinary management, i.e. in the case of actions of a nature important for functioning of the partnership (e.g. purchase of an expensive piece of machinery), a resolution of all partners/members of the management board is absolutely required, including those who were not entrusted with running the affairs of the partnership.
In the case of an emergency action that poses a risk of serious damage to the partnership, the partners who have the right to manage the affairs of the partnership (or members of the management board if the partnership has a management board), may carry out the action without a prior resolution of the other partners/members of the management board.
Representation in a professional partnership
Representation of the partnership also depends on the management model adopted by the partnership. Appointing the management board involves authorising this body to represent the partnership. The method of representation is the same as in capital companies, i.e. in the absence of contrary contractual provisions, if the management board has more than one member, the binding method of representation is the cooperation of two members of the management board or a member of the management board with a proxy.
On the other hand, if no management board has been appointed in the partnership, and the partnership agreement does not provide otherwise, each partner has the right to represent the partnership independently and make binding statements on its behalf. A partner may be deprived of this right only for material reasons, by a resolution of the partnership (a 3/4 majority vote in the presence of at least two-thirds of the total number of partners is required, provided that the agreement may provide for stricter conditions).
Professional partnership agreement
A partnership agreement must:
- define the freelance work performed by the partners within the partnership;
- define the subject of the partnership’s activity;
- include the names of the partners who voluntarily assume unlimited liability for the partnership’s obligations;
- include the names of the partners who represent the partnership;
- include the company’s name and registered office;
- define the duration of the partnership, if it is fixed;
- identify the contributions made by each partner and their value.
The partnership agreement is concluded in writing under the pain of nullity. The articles of association are amended by the partners by unanimous resolution.
Liability for the partnership’s debts
Regulations concerning liability for partnership’s debts can be regarded as exceptional in the context of other forms of partnerships operating in the Polish legal system. The aforementioned uniqueness stems from the nature of the company’s partners, i.e. persons pursuing a liberal profession.
In principle, partners in a partnership are liable for the partnership’s debts without limitation, with all their personal assets. An exception is the lack of a partner’s liability for the company’s obligations arising out of the other partners’ professional activity in the partnership, as well as for the company’s obligations resulting from actions or omissions of persons employed by the partnership under an employment contract or another contract, who were under the management of another partner while providing services related to the partnership’s object.
It is worth mentioning, however, that the Polish Commercial Companies Code provides for a possibility of a partner (or several partners) to voluntarily undertake, in the articles of association, to bear unlimited liability for the partnership’s debts from their personal assets.
Differences between a professional partnership and a limited partnership
Three important differences might be identified between these types of partnerships. The first concerns the possibility of appointing a management board in a professional partnership – a body that is not permitted in a general partnership. Another important aspect is the difference in the scope of liability, because in a general partnership all partners are liable without limitation for all liabilities of the company, including those resulting from a material error of another partner contributed.
When discussing the differences, it is also worth mentioning the professional nature of a partnership, i.e. the requirement to have the appropriate credentials. In a general partnership, not only are there no such requirements, but at the same time it can also be established by legal persons or organisational units with legal capacity.
How to establish a professional partnership – a to do list
- Concluding an agreement in writing under the pain of nullity.
- Filing an electronic application for company registration through the Court Registers Portal (as of July 1, 2021, registry courts in Poland will no longer accept paper applications).
- Registration of the company in the National Court Register by a registry court.