Doing business in Poland is becoming more and more common. Both citizens and foreign investors are making the decision to start their business. Therefore, it is worth to briefly discuss the most popular forms of business financing available on the Polish market. The characteristics of these forms are made by Paweł Dyrduł, lawyer from KG Legal Kiełtyka Gładkowski Sp.p with its registered office in Cracow.
Division of forms of financing
Forms of financing business activity can be divided in terms of many criteria. However, the basic division is the division into internal forms and external forms. As the name implies, internal financing is based on increasing the capital of an enterprise by looking inside it. External financing is, in turn, the conclusion of contracts with entities operating on the market, which, under appropriate conditions, agree to make available to the enterprise financial means for running a business.
Running a company in the form of a limited liability company in Poland entails the obligation to prepare the financial statements for the financial year. The obligation to prepare the financial statement, its elements and main principles are analysed by Paweł Dyrduł, associate lawyer from Polish law firm KG Legal Kiełtyka Gładkowski Professional Partnership with its registered office in Krakow.
Limited liability company
Limited liability company (Ltd.) is one of the legal forms provided for conducting business activity in Poland. It is a share-holding company and therefore has legal personality. The establishment, operation and liquidation of this company are governed by the provisions of the Act of 15 September 2000 Commercial Companies Code. It is regulated in articles from 151 to 300 inclusive.
Establishing business proxies is a common practice. It allows entrepreneurs to save time as well as relieve the company management of excess responsibilities. It is assumed that in a limited liability company a proxy is equated with a member of the board of directors. However, it is worth considering if proxy is responsible for his actions or negligence. Pawel Dyrduł, lawyer from law office KG Legal Kiełtyka Gładkowski Sp.p with its registered office in Krakow, discusses the issues of proxy’s liability in Ltd.
Proxy is a special kind of power of attorney. It can be granted only to an entrepreneur who is subject to compulsory entry in the register of entrepreneurs. The grant of a proxy should be made in writing under pain of nullity and registered in the register of entrepreneurs. The method of establishing a proxy may be regulated by the company’s statute. If this is not then the general rules will be apply. Proxy may only be a natural person with full legal capacity. This means that the principal cannot appoint a legal person as a proxy. As a general rule, proxy shall include the authority for the procurator to carry out judicial and extrajudicial actions that are linked to the conduct of the business. It therefore grants the proxy the right and duty to represent and act on behalf of the company in most situations.
The current situation on the labour market has forced employers to look for new methods of remunerating employees. The basic salary for a job is no longer the primary determinant of the employee’s choice of work. Currently, the growth popularity of incentive programs prepared by the employer is noticeable. Paweł Dyrduł, lawyer from KG Legal Kiełtyka Gładkowski Sp.p, based in Krakow, discusses the issue of incentive programs in the context of tax optimization.
What are incentive programs?
The incentive programs that an employer creates are usually financial instruments. Very often these are simply shares or derivatives. The employee (beneficiary) has the possibility to purchase the financial instrument on preferential terms, for a nominal fee or free of charge. The beneficiary is usually a member of the management team. The financial instrument he acquires grants him the right to receive cash in the future. Generally, the amount of benefits received depends on the economic performance of an enterprise, such as the achievement of specified value of EBIT (operating profit). At the end of the period for which the financial instrument (incentive program) was issued, it is settled. Settlement is simply the payment of cash due to the employee. So the employee receives cash, which in a very simplistic way can be called as bonus.
Understanding the proxy as a special kind of power of attorney and the common practice of establishing it should not create problems. However, as the practice shows, entrepreneurs (especially foreigners) encounter problems with establishing a proxy. Paweł Dyrduł, lawyer from law firm KG Legal Kiełtyka Gładkowski Sp.p, based in Krakow, discusses the essence and basic regulations related of the proxy.
The essence of the proxy
One of the principles adopted in Polish civil law is the principle that any legal act can be done through a representative. Exceptions in this respect may be provided by a law or legal action specifics. As a rule, the legal action performed by the representative on behalf of the representative produced effects directly on the latter.
Analyzing the provisions of the Civil Code, we will find a separate chapter dedicated to the proxy (Articles 1091 – 1099). Polish law treats the proxy as a special type of power of attorney granted by an entrepreneur subject to compulsory registration in the register of entrepreneurs. The represented person (the principal) enters into an agreement with a procurator under which he authorizes him to engage in court and extrajudicial activities connected with running the business. This means that a proxy is a commercial power of attorney on the basis of which the procurator represents the company in most situations.