KIELTYKA GLADKOWSKI knows everything about the law related to the Polish limited liability company, the main source of which is the Polish Code of Commercial Companies. This is due to the fact that the corporate team of lawyers of our law firm receives daily inquiries from our foreign clients with legal problems related to the management of a Polish limited liability company. This is due to the fact that the legal form called POLSKA SPÓŁKA Z OGRANICZONĄ ODPOWIEDZIALNOŚCIĄ is the most frequently chosen form by foreigners to run a business in Poland, particularly business with international shareholding structure.
KIELTYKA GLADKOWSKI’s knowledge of all legal problems of a Polish limited liability company concerns the very deep sources of Polish law regulating this form of a Polish capital company, which include:
A.THE BASIC LEGAL SOURCE consists of about 150 extensive basic provisions from the Polish Commercial Companies Code, regulating the principles of the full process of functioning of a Polish limited liability company in business transactions in Poland:
– starting from the procedure of establishing such a company, creating Articles of Association (i.e. a company agreement or an act of establishing a company by a sole shareholder of the company),
– through the rules of conducting decision-making processes in a Polish limited liability company, including convening shareholders’ meetings, adopting shareholders’ resolutions and concluding agreements with other business entities on behalf of and for the benefit of such a Polish limited liability company;
– by resolving disputes between shareholders in the form of procedures for appealing against resolutions of shareholders of a Polish limited liability company to the Polish commercial court; submitting claims by minority shareholders to the Polish commercial court for invalidation of resolutions, annulment of shareholders’ decisions as to the company’s assets, distribution of profit in the company, multiplication of additional shares, creating an advantage in voting, i.e. exercising voting rights from shares in a limited liability company;
– through all issues of civil and criminal liability of managers of a limited liability company for the abuse of power in the company and bad financial decisions; all legal problems of the appointment to the company’s management board and other governing bodies;
– through all matters related to the financial movements in the share capital of a limited liability company;
– through all legal problems related to the merger of the company with other entities; division and subdivision as well as amalgamation of the companies;
– finally, through all the issues related to the entire complex process of liquidation of the company.
B.ADDITIONAL LEGAL SOURCES OF LAW CONSIST OF APPROXIMATELY 50 DIFFERENT IMPLEMENTING ACTS, i.e. legal documents issued by Polish legislators which constitute more detailed provisions on a Polish limited liability company, including government regulations;
C. THE POLISH LAW OF A LIMITED LIABILITY COMPANY IS ALSO SUPPLEMENTED BY:
1. widely commented on by lawyers in Poland ORDERS (RULINGS) OF POLISH COMMERCIAL COURTS, which concern various legal situations and disputes in Polish limited liability companies; available in internet databases to which KIELTYKA GLADKOWSKI lawyers have access, there are about 21.5 thousand anonymized cases that show how Polish courts assess the rights of plaintiffs and defendants in Polish courts on the basis of the legal practice of Polish limited liability companies;
2. widely commented on by lawyers in Poland DECISIONS AND GUIDELINES OF POLISH AUTHORITIES, including several hundred basic ORDERS OF THE POLISH STATE AND TERRITORIAL ADMINISTRATION regarding fiscal, tax and social security issues, as well as a FEW THOUSANDS OF REGULATORY OFFICIAL DOCUMENTS, especially in the operational sector of KIELTYKA GLADKOWSKI’s foreign clients from the pharmaceutical, IT, commercial, real estate and energy industries;
3. EUROPEAN UNION LAW, including implemented legal acts of the European Union, including IN PARTICULAR IMPLENENTED ACTS ESTABLISHED BY THE BODIES OF THE EUROPEAN UNION;
4. OTHER LEGAL DOCUMENTS, INCLUDING MORE THAN 5 POLISH AMENDING ACTS OF LAW, IN THE WAY OF WHICH THE POLISH PARLIAMENT OVER THE YEARS MODIFIED THE POLISH CODE OF COMMERCIAL COMPANIES AND THE POLISH BASIC LAW REGULATING THE PRINCIPLES OF COOPERATION OF LIMITED LIABILITY COMPANIES;
5. Due to the fact that the main initiator of the Polish legislative process is the Polish government, official justifications of the draft amendments to Polish regulations are also important, especially in advising on court disputes.
D.KIELTYKA GLADKOWSKI also advises foreign clients on the basis of all Polish and EU accounting and tax regulations, including:
– provisions concerning the law of keeping accounting books, financial statements;
– tax and accounting regulations concerning the regulation of capital flows in capital companies operating on foreign markets within capital groups;
– provisions of Polish tax law in the field of POLISH CORPORATE AND PERSONAL INCOME TAX LAW;
– provisions of Polish tax law in the field of POLISH VAT TAX and related EU regulations.
Operational and business matters related to running a business in Poland based on the legal structure of a Polish limited liability company include:
Therefore, legal advice from KIELTYKA GLADKOWSKI regarding the legal form of running a business in Poland in the form of a Polish limited liability company includes:
The first step in creating a limited liability company in Poland is to conclude a limited liability company agreement. KIELTYKA GLADKOWSKI offers legal advice in the preparation and editing of the content of a limited liability company agreement, which can be established in Poland both online via a special portal of registration courts of the Polish Ministry of Justice, and by the conventional method before a Polish notary public.
As part of consultancy, KIELTYKA GLADKOWSKI analyzes the following legal issues with a foreign client:
All the above legal issues are regulated in the articles of association of a limited liability company, even if the AoA does not directly regulate such legal structures, because in this case the standard solutions provided for in the Code of Commercial Companies will apply.
The regulations of the Polish Commercial Companies Code provide entrepreneurs with numerous opportunities to shape the internal operation of their companies. However, the legal consequences of placing individual provisions or their lack are not always known to entrepreneurs beforehand. Legal support on how to structure a limited liability company to ensure its optimal operation may prove decisive for its effectiveness on the market as well as protection of the shareholders’ assets and position in the company.
KIELTYKA GLADKOWSKI advises its foreign clients on issues related to the company’s existence. Examples of legal issues that KIELTYKA GLADKOWSKI renders current legal assistance include:
If the contribution to the company in order to cover the shares is to be in whole or in part a non-cash contribution (in-kind contribution), the articles of association should specify in detail the subject of the contribution and the person of the shareholder making the in-kind contribution, as well as the number and nominal value of the shares taken up in exchange.
KIELTYKA GLADKOWSKI advises on all issues of a practical approach to contributing non-monetary assets to the company:
KIELTYKA GLADKOWSKI advises on the basis of the principle of equal rights of shareholders and on the issues of preference shares in a limited liability company.
We advise on all legal problems concerning shareholders in situations where the law (the legal provisions) or the articles of association give to the shareholders specific rights and obligations in the company.
If the articles of association provide for shares with special rights, these rights should be specified in the AoA (preference shares). KIELTYKA GLADKOWSKI has ready-made solutions related to the rights of shareholders in a limited liability company.
KIELTYKA GLADKOWSKI advises foreign clients on privileging shares in a limited liability company, which may relate, in particular, to voting rights, the right to dividends or the method of participation in the division of property in the event of liquidation of the company. Preference in terms of voting rights may only apply to shares with an equal nominal value.
KIELTYKA GLADKOWSKI also advises on legal issues of in-kind revaluation.
As a rule, in a Polish limited liability company, the management board is entitled to represent and manage the company’s affairs. This applies to all court and out-of-court activities of the company. The AoA must specify the manner of representing the company, especially if the management board is composed of more than one person.
KIELTYKA GLADKOWSKI has ready-made legal solutions based on many years of legal experience regulating the issues of the decisive vote of the president of the management board in voting on the resolutions of the management board of a limited liability company. The AoA may define the decisive power of the vote of the president of the management board, and such solutions are used by our law firm for the benefit of our foreign clients.
KIELTYKA GLADKOWSKI supports foreign clients in decisions regarding the company’s direction of operations, which are taken by the shareholders’ meeting. The resolutions of this body require one of the most important matters of the company. Shareholders’ meeting, among others, approves the management board’s report on the company’s operations for the financial year, decides on the sale or lease of the enterprise, as well as on the purchase and sale of real estate, or on the return of subsidies.
KIELTYKA GLADKOWSKI prepares a decision – making procedure in a limited liability company when disposing of the right or incurring an obligation to provide a benefit exceeding the amount of the share capital.
Our offer also covers legal services for companies established via the Internet in the S24 system. KIELTYKA GLADKOWSKI organizes all formalities for its clients through the ICT system, including the creation of interactive forms for all necessary documents on the website of the Polish Ministry of Justice S24 website.
Also in the case of an interactive online procedure, there are many possibilities for creating internal relations of the company, for example:
KIELTYKA GLADKOWSKI advises on all issues of virtual (remote) board meetings, which can be held online, using means of distance communication, unless the AoAs provide otherwise. The Management Board may adopt resolutions remotely in this manner or in writing.
Our law firm advises foreign clients on creating virtual decision-making environment for the company’s shareholders’ meeting.
It is also possible to take part in the shareholders’ meeting online via electronic means of communication. However, the notification must provide information on the manner of participation and expression at such a meeting. In addition, the Supervisory Board, or if there is no such Supervisory Board, the shareholders are required to adopt regulations specifying the rules of the online meeting.
We advise on all legal aspects of the circular procedure of written meetings of shareholders; we advise on shareholders’ resolutions which may also be adopted without convening a meeting. All shareholders must then agree in writing to the decision or to vote in writing.
Despite many benefits, running a business as a limited liability company is associated with double taxation. The company must pay CIT on the income earned, and the shareholders pay PIT on the dividend paid.
One of the ways to reduce the costs incurred in this way consists in establishing two companies, a limited liability company and a general partnership. The general partnership would transfer the assets to the limited liability company or conclude agreements with its shareholders. In this way, the limited liability company will obtain lower income, which will result in lower CIT settlements. The partners of a general partnership will only settle the PIT tax return on their shares.
A popular solution in limited liability companies is the employment of a manager as a board member. Discrepancies appear on the basis of what contract should be between such a person and the company.
The employment contract means relatively high employment costs for the company; from the perspective of a shareholder employed in the company, however, such a solution creates many positive opportunities to derive profits from a limited liability company. KIELTYKA GLADKOWSKI advises on the employment processes in a limited liability company, such as: paid leave, sickness benefit, maternity benefit, permanent social protection, regardless of the source of income generated in the company.
KIELTYKA GLADKOWSKI has ready-made legal structures for the circulation of documentation in a limited liability company related to employment, because remuneration is tax deductible cost in the company. Conclusion of an employment contract between a Polish limited liability company and a shareholder as the managing director of this company creates the necessity to report such employment of a manager as an employee to the Polish social insurance system.
KIELTYKA GLADKOWSKI has ready-made legal structures for the circulation of documentation in a limited liability company related to a different form of paying remuneration to the managers in the company than employment under the Polish Labor Code, in the form – for example – of a mandate contract – such a contract differs from an employment contract mainly in that it can be terminated at any time, without having to indicate the cause, as a rule. In addition, claims for the payment of remuneration expire after 2 years, as opposed to the 3-year period under the employment contract. Above all, however, the principal does not have to grant holiday leave or pay remuneration for the period of illness.
The company often concludes civil law contracts with shareholders performing functions in the company’s management bodies. The management board is, as a rule, a body authorized to representation of the company. In some cases a situation may arise where a management board member concludes a contract with himself – such situation is not allowed. The provisions of the Polish Commercial Companies Code provide that in the conclusion of such an agreement, the company shall be represented by the supervisory board or an appointed attorney (proxy). It can only be an attorney (proxy) who has been granted a generic or specific power of attorney. The power of attorney must be in the form of a shareholders’ resolution.
KIELTYKA GLADKOWSKI cares about due diligence in the performance by foreign clients of all general information obligations regarding mandatory publications in the official judicial and economic journals. The court and economic journal includes all data entries about the limited liability company, including:
We offer day-to-day legal services for the company in the course of its operations, including in particular the MOST COMMONLY REPORTED PROBLEMS:
An important aspect of the operation of a limited liability company, which usually requires legal service, are disputes within the company. Sometimes conflicts between shareholders are inevitable, which can paralyze the effectiveness of the company’s operations.
We offer support in resolving such conflicts.
The Commercial Companies Code provides for the possibility of appealing against shareholder’s resolution if it is inconsistent with the articles of association or good practice and is detrimental to the interests of the company or is intended to harm a shareholder.
Such an action may be brought by the management board, the supervisory board or the audit committee and their individual members, a shareholder who voted against the resolution, a shareholder unjustifiably prevented from voting, a shareholder who was not present at the meeting, in the event of a defective convocation or adoption of a resolution on an issue not included in the agenda. In the event of a written vote, a shareholder who was omitted during the vote or who did not agree to a written vote or who voted against the resolution and raised an objection may also lodge the claim upon receipt of the information about the said resolution.
The action shall be brought within one month from the date of receipt of the information on the resolution, but not later than within 6 months.
The same entities as mentioned above have the right to bring an action for the declaration of invalidity of a resolution that is inconsistent with the law. It should be noted that this is not about the content of the resolution being inconsistent with the articles of association, but with a generally applicable law. Violation of the law by a company’s resolution applies to both substantive and formal regulations. Often the subject of an appeal for the invalidation of a resolution is the defectiveness of an entry in the share ledger (register). Non-compliance with the law may also concern not only the content of the legal transaction, but also failure to comply with other statutory requirements, such as the deadline. Likewise, convening a shareholders’ meeting by incorrectly appointed persons is qualified as a violation. However, formal deficiencies may be the grounds for appeal only if they had an impact on the content of the resolution.
In proceedings for the repeal of a resolution and declaration of invalidity, the company is represented by the management board or an attorney (proxy), if appointed for this purpose. If the management board cannot act for the company, the court appoints a curator.
A final judgment on this resolution is binding between the company and the shareholders, as well as between the company and the members of the governing bodies. However, when the company has performed a legal action dependent on this resolution, its revocation has no effect on third parties acting in good faith. The judgment on revocation must be reported to the registry court.
In practice, the most frequently challenged resolutions are additional payments, redemption or sale of shares for profit distribution. To a lesser extent, these are conflicts in the company’s bodies, disputes over powers and matters of managing the company’s assets as well as resolutions approving the end of the financial year or granting discharge to members of the management board.
The Polish court may order the exclusion of a shareholder from the company for important reasons, at the request of all other shareholders, if they together constitute more than half of the share capital. The articles of association may grant this right to a smaller number of shareholders, if their shares constitute more than a half.
The excluded shareholder shall be paid the price with interest. The court sets an appropriate deadline. If the amount is not paid, the exclusion is ineffective. If this happens, the shareholder who was to be excluded will have a claim for damages against the others.
This solution is used primarily in the event of a conflict that paralyzes the operation of the company. Important reasons are not defined in the statute, but most often it is a conflict between the company’s bodies, disputes over powers, lack of agreement between shareholders in many areas and conflicts on the basis of profit distribution, additional payments and redemption or sale of shares.
KIELTYKA GLADKOWSKI takes care about the interests of foreign clients in particularly complex matters related to mergers, dissolution and liquidation of limited liability companies.
We offer our legal support in the field of company mergers, including cross-border mergers. Our services include:
We also advise on the dissolution and liquidation of companies; we prepare complex and comprehensive documentation needed in the liquidation process, in particular:
The legal offer of KIELTYKA GLADKOWSKI includes representing foreign clients before the Polish National Registry Court. As part of this service, we offer comprehensive legal services in the field of preparing, reviewing and submitting applications to the Polish National Court Register, and preparing as well as submitting entries made via the ICT system, which are currently held by three online portals, in particular operated by the Polish Ministry of Justice, the Court Registers Portal and the portal “S24”.
In particular, we prepare and analyze:
Our law firm also offers services in the field of accounting and bookkeeping matters. A limited liability company is obliged to keep full accounting. This means that the company must in particular:
• have a special corporate bank account set up;
• disclose entries in the books of accounts;
• prepare financial statements at the end of the financial year;
• keep records of all proceeds passing through the company.
When making a registration in the National Court Register, limited liability company in Poland needs to present a registered address (office) in Poland. As a rule, this office may be a virtual office, having address for registration and service of documents purposes. KIELTYKA GLADKOWSKI assists at all stages of choosing the office and signing the relevant rental agreement.