Simple joint-stock company in Poland
Simple Joint Stock Company (PSA) is the latest type of company operating in the Polish legal system. It was established mainly for startups and other new and innovative businesses. In my article I will describe on what principles a PSA operates, what elements it must have in its statute, how the responsibility of its shareholders looks like and what you need to do to establish it.
What is a simple-joint stock company (prosta spółka akcyjna) in Poland?
A simple joint-stock company is a commercial company, classified as a capital company, which has legal personality. It was introduced into the Polish legal system on 1 July 2021, which makes it the youngest of all commercial companies operating in the Polish legal system. It can established by one or several persons – being both natural persons, legal persons (however, it cannot be formed exclusively by a one-person limited liability company) and organizational units which are not legal persons and which are granted legal capacity by the law – for any purpose which is permitted by the law. Share capital in a simple limited joint-stock company is divided into shares and must be at least PLN 1. Partners in a simple joint-stock company are its shareholders. A simple joint-stock company is established upon its entering into the National Court Register (earlier, i.e. between concluding the articles of association and entering of the company into the register, it operates as a “company in organization”)
Functioning of a simple joint-stock partnership
A simple joint-stock company operates through its governing bodies. It is up to the shareholders to determine in the articles of association which bodies will operate in the company, whether they adopt a dualistic model, appointing a management board together with an optional supervisory board, or a monistic model, where instead of a management board and a supervisory board they establish only a board of directors, which combines the tasks of both these bodies.
However, the key and obligatory body of a simple joint-stock company is the general meeting, which is responsible for making strategic decisions concerning the company, such as, among others, sale and lease of enterprise, purchase and sale of real estate or review and approval of the company’s financial statements. Another important competence of the general meeting is the appointment of the members of the board of directors, the supervisory board and the management board (unless a supervisory board has been established in the company, in which case it assumes this competence).
It is worth to consider for a moment the issue of the board of directors, a body recently introduced into Polish legal system. It can be established exclusively within a simple joint-stock company, in which it can replace both the management board and the supervisory board. Therefore, its responsibilities include both the management of the company’s affairs and its representation as well as the supervision over its operation. Directors can be divided into executive directors, whose responsibilities generally overlap with those of directors, and non-executive directors, whose responsibilities are generally similar to those of members of supervisory boards.
A very clear influence on the functioning of the company is also exerted by the shares, whose ownership structure in principle determines the direction taken by the company. They are the embodiment of participation in the company and allow a shareholder to exercise their shareholder rights.
Decision-making in a simple joint-stock company
To adopt resolutions, as a rule, the absolute majority of votes is required. Exceptions apply to resolutions of the general meeting, which impose stricter requirements when adopting resolutions concerning, among others, sale of the enterprise and dissolution of the company (3/4 of votes), depriving shareholders of pre-emptive rights (4/5 of votes) or amending the articles of association, assuming an increase of benefits for shareholders or diminishing their rights (the consent of all shareholders concerned is required).
Representation in a simple joint-stock company
The entity responsible for representing a simple joint-stock company – depending on the adopted model of governance – is the the management board or the board of directors. If they consist of more than one member and the articles of association do not stipulate specific provisions on the manner of representation, the joint action of two members of the management board/board of directors or one member of the management board/board of directors together with a proxy is required to make declarations of will binding on the company.
Articles of association of a simple joint-stock company
The articles of association of a simple joint-stock company must be concluded in the form of a notarial deed, or by using a template agreement. It must specify:
- the company’s name and registered office;
- the subject of the partnership’s activity;
- the number, series and numbers of shares, the related preference, the shareholders taking up each share and the issue price of the shares;
- if the shareholders make contributions in kind – the subject of those contributions, the series and numbers of shares taken up for the contributions in kind and the shareholders who take up those shares;
- if the subject of the contribution in kind is the provision of work or services, also the type and duration of the work or services;
- bodies of the company;
- the number of members of the management board and the supervisory board, if appointed, or at least the minimum and maximum number of members of these bodies;
- the duration of the partnership, if it is fixed;
Amendments to the articles of association are made by the general meeting by way of a resolution passed by a 3/4 majority vote (no quorum required), which must be included in the minutes drafted by a notary public. In the case of the articles of association concluded using a template agreement, it is also possible to amend it using a model resolution. Importantly, an amendment to the articles of association should be filed with the registry.
Liability for the company’s debts
In the event of unsuccessful enforcement of the debt from the assets of a simple joint-stock company, the liability is transferred to the members of the management board/board of directors, who, if the prerequisites set forth in the Commercial Companies Code are met may, however, free themselves from this liability. It should be emphasized that the shareholders are not responsible for the liabilities of a simple joint-stock company. The only exception is the liabilities of a company “in organization”, for which all shareholders who acted on its behalf are jointly and severally liable, with the proviso that they are only liable to the value of the contribution not made to cover the shares subscribed.
Differences between a simple joint-stock company and a joint-stock company (spółka akcyjna)
A simple joint-stock company is the simplest form of a capital company. This is manifested, among others, in the amount of share capital, which in case of a limited liability company is PLN 5,000 and in case of a joint stock company is as much as PLN 100,000. The share capital of a simple joint-stock company is minimal and may be as little as PLN 1. Due to, among other things, the more fluid nature of share capital management and the legislator’s more flexible approach to establishing bodies within the company (the possibility of performing management and supervisory tasks through a single body, i.e. the board of directors), running a simple joint-stock company is easier, especially for small entrepreneurs or start-ups. However, this flexibility can be an obstacle for large simple joint-stock companies aiming to attract new investors due to lower collateral and the associated fear.
How to establish a simple joint-stock company in Poland – step by step
- The articles of association must be concluded in writing under the pain of nullity. The partners may also use a template available in the S24 system.
- The shareholders subscribe a sufficient number of shares of the company.
- Corporate bodies, i.e., a board of directors, or a management board and (possibly) a supervisory board are appointed.
- Shareholders make a contribution to cover the share capital.
- 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.
- Registration of the company in the National Court Register by a registry court.