Poland Company Formation

Poland Company Formation

Poland

Introduction

Poland, officially the Republic of Poland   is a country in Central Europe situated between the Baltic Sea in the north and two mountain ranges (the Sudetes and Carpathian Mountains) in the south. Bordered by Germany to the west; the Czech Republic and Slovakia to the south; Ukraine and Belarus to the east; and the Baltic Sea, Kaliningrad Oblast (a Russian exclave) and Lithuania to the north. The total area of Poland is 312,679 square kilometers making it the 69th largest country in the world and the 9th largest in Europe.

Population

The total estimated population is 39 million, the 8th largest in Europe and the 29th in the World. Urban population comprises some 62% of the total population. Poland’s work force is one of the youngest in Europe with 60% of the population of working age. The majority of Poles (90%) are Roman Catholics.

Language 

The official and spoken language is Polish. The use of English has become widespread and knowledge of other European languages is common.

Economy

The economy of Poland is the largest economy in Central Europe, sixth largest in the EU, and the largest among the ex- real socialist members of the European Union. ince 1990 Poland has pursued a policy of economic liberalization and its economy was the only one in the EU to avoid a recession through the 2008-2009 economic downturn. Before the late-2000s recession, its economy grew at a yearly rate of over 6.0%. Poland is ranked 20th worldwide in terms of GDP and classified as high-income economy by World Bank. The largest component of its economy is the service sector (62.3. %), followed by industry (34.2%) and agriculture (3.5%). With the economic reform of 1989 the Polish external debt increased from $42.2 billion in 1989 to $365.2 billion in 2014. Poland shipped US$198.2 billion worth of goods around the globe in 2015, up by 5.4% since 2011 and down 7.6% from 2014 to 2015. The top Poland exports include machinery, electronic equipment, vehicles, furniture, and plastics.

Currency

Polish zloty – PLN.

Exchange Control

The foreign exchange dealings are regulated by the Foreign Exchange Law, which aims to defend the domestic convertibility of the PLN.

Type of Law

Civil Law.

Principal Corporate Legislation

  • Commercial Company Code, 2000
  • Civil Code, 1964 (as amended)
  • Business Activity Law, 1999

 

Business Entities and Formation of Company in Poland

The citizens of foreign countries who hold the right of permanent residence in Poland make use of the same rights as Polish citizens in terms of undertaking and conducting business activity in Poland. Foreign persons may undertake and conduct business activity in Poland according to the principle of reciprocity insofar as the international agreements ratified by Poland do not stipulate otherwise, just like entrepreneur who maintains his/her permanent residence or seat in Poland. Faced with a lack reciprocity foreign may establish only limited partnership (sp. komandytowa), limited liability companies (sp. z o. o.) and joint-stock companies (sp. akcyjna) in order to undertake and conduct business activity in Poland and they may join such companies and purchase interest and shares of stock therein.

Poland is a country that is constantly evolving. Investors have a wide range of business opportunities here and those who choose to open companies in Poland have a variety of types of legal entities from which they can choose the one best suited to their needs. The Commercial Companies Code stipulates the types of structures that can be set up in Poland. The types of companies in Poland are similar to those in other European countries. Commercial companies can be either corporations or partnerships. Incorp International can help you choose the type of company that is best suited for your specific business needs.

Types of Corporations in Poland

There are two types of corporations available in Poland: the limited liability company and the joint-stock company.

The Polish Limited Liability Company

It is abbreviated as “sp. z o.o.” is the most common form of legal entity and can be established for any kind of activity. It requires a minimum share capital of 5,000 PLN and the nominal value of a share must be of at least 50 PLN. The share capital can be divided into shares of equal or unequal nominal value. The shareholders are not liable for the company’s obligations and they can be natural or legal persons or organizational units without legal personality. The members of the management board can be liable towards the company’s creditors. A limited liability company must pay corporate income tax and VAT in Poland.

The Polish Joint-Stock Company

The Polish joint-stock company is mainly destined for large businesses and can be founded by one or more entity (natural or legal persons). The minimum share capital for this type of company is 100,000 PLN and the nominal value of one share cannot go below 0.01 PLN. This company also has a management board, an additional supervisory board and is a VAT and corporate tax payer. The joint-stock company also has to be registered at the National Court Register.

Foreign Companies Operating in Poland

Apart from the types of Polish companies mentioned above, foreign companies can also set up branch offices and representative offices in Poland. These two types of business vehicles, however, offer limited possibilities. In the case of a branch office, its activity will be the same as the parent companies. The representative or the liaison office will only be allowed to carry out research and marketing activities in Poland. The main advantage of these types of companies is that the liability will remain on the parent company. The branch must also register for VAT in Poland.

Additionally, companies registered in an EU country may also register European companies or European Economic Interest Groups.

Partnerships in Poland

The Polish Limited Partnership

The limited partnership is suitable for a business of any scale. It is a commercial partnership with no legal personality but with legal and judicial capacities. There are no minimum share capital requirements for this business form but it must have at least two founders, legal or natural persons. The limited partnership has two types of partners: a general one with unlimited liability and a limited partner that is liable only for a specific amount, as detailed in the Articles of Association. This partnership must be registered at the National Court Register.

The Polish Civil Partnership

The civil partnership is suited for small-scale businesses conducted by at least two entities, natural or legal. The civil partnership does not have separate legal entity, only its partners have, and it must not be registered at the National Court Register. There is no minimum capital and its assets can be contributed by the partners (movable, immovable assets). The partnership does not pay any taxes itself, instead the partners must pay income tax. The partnership can pay VAT.

The Polish Registered Partnership

The registered partnership (or general partnership) is also suitable to smaller businesses in Poland conducted by at least two entities, natural or legal entities. It does not have legal personality but has legal and judicial capacity and must be registered at the National Court Register. There is no minimum capital requirement. This type of partnership is a VAT payer and income tax applies on its individual partners (personal income tax or corporate income tax, depending on the partner’s legal status).

The Polish Limited Joint-Stock Partnership

The limited joint-stock partnership has an active partner (one who possesses the know-how for example) and a shareholder (provider of capital) who is a passive partner. It does not have legal personality but has legal and judicial capacity and it too must be registered at the National Court Register. The minimum share capital for this type of partnership is 50,000 PLN, with the minimum nominal share value of 0.01 PLN. The partnership is a VAT payer. The general partner will have unlimited responsibility for the partnership’s obligations while the shareholders are not liable for its obligations.

The Polish Sole Proprietorship

The sole proprietorship, or individual business activity, is the simplest form of business and is destined for individual small-scale businesses. It is conducted by a natural person with legal capacity, the capacity to take legal actions and judicial capacity. There is no minimum share capital and the person conducting this type of activity is subject to personal income tax. The founder bears full liability with all personal assets.

The Limited Liability Partnership

It can be established by at least two partners who have the right to practice a freelance procession (physician, architect). It has no legal personality and it requires no minimum share capital. The partners are liable for the partnership’s obligations.

 

Procedure to Incorporate

Submission to the Register Court of the following Limited Liability Company documentation:

  • Public Deed of Incorporation executed before a Notary Public
  • Declaration by all members of the board of directors stating that either cash contributions or contributions in kind have been made to the company on registration
  • Evidence of appointment of the first officers of the company, together with a list of persons, if they have not been appointed by the deed of the company formation.
  • Statement of the shareholders, specifying the full names of individual shareholders or corporate name of the shareholders detailing the number and value of shares held by each and signed by the Board of Management. Specimen signatures of the members of Board of Directors made in the presence of a court or certified by a notary.

Joint-Stock Company additionally must submit:

  • Full name of the Members of the Supervisory Board and specimens of their signatures made in the presence of a court or certified by a notary.
  • In the case of agreement between dominant company and submissive company about managing by the first one or transferring profit, submit this statement of agreement with range of dominant company’s responsibility for any action being detrimental to the submissive company.
  • In the future: notice of reaching or loosing dominant position in Joint-Stock Company.

Joint-Stock Company additionally must submit:

  • Full name of the Members of the Supervisory Board and specimens of their signatures made in the presence of a court or certified by a notary.
  • In the case of agreement between dominant company and submissive company about managing by the first one or transferring profit, submit this statement of agreement with range of dominant company’s responsibility for any action being detrimental to the submissive company.
  • In the future: notice of reaching or loosing dominant position in Joint-Stock Company.

Restrictions on Trading

Licenses are required for exploration of minerals, manufacturing and trading in explosives, weapons, etc., trading in fuels and energy, protecting persons and property, air transportation, building and operating toll roads, managing rail lines, broadcasting of radio and TV programs, banking, insurance, assurance, reinsurance, fund management, collective investment schemes or any other activity that would suggest an association with the banking or finance industries.

Powers of Company

A company incorporated in Poland has the same powers as a natural person.

Language of Legislation and Corporate Documents

Polish.

Registered Office Required

Yes, must be maintained in Poland.

Shelf Companies Available

No.

Time to Incorporate

Subject to name approval by the Commercial Register, and incorporation criteria being met, a company can be established within four to six weeks.

Sp. Z.o.o. must register with the National Court Register (Krajowy Rejestr S±dowy) within six months of the date of incorporation.

SA must register with the National Court Register (Krajowy Rejestr S±dowy) within three months of the date of incorporation.

Name Restrictions

A name that is identical or similar to an existing name. A name that may imply government patronage. A name that in the opinion of the Registrar may be considered undesirable or misleading.

Language of Name

The name of a body corporate shall use Polish language.

Suffixes to Denote Limited Liability

Sp. z o.o.

Disclosure of Beneficial Ownership to Authorities

  • SA. – Information is available in the Register Court.
  • Sp. z o.o. I information is available in the Register Court.
  • Sp.k. – Information is available in the Register Court.