Poland Company Formation of a Limited Liability Company

A Limited Liability Company (LLC) is the most popular type of commercial company in Poland. It allows conducting business activities with a limitation of financial risk for shareholders to the extent of the contribution made to the business. As a capital company, it does not entail personal liability of partners for its debts. Simultaneously, it imposes fewer requirements and restrictions on partners compared to a joint-stock company. Therefore, individuals considering starting a business or seeking an alternative to registering as a sole proprietorship (CEIDG) should consider this form of business in Poland.

A commercial law company is one of the forms of conducting business activities. Partnership companies provide a way for several (at least two) people willing to cooperate to join forces. On the other hand, capital companies, including LLC, can be established and operated even by a single person.

By establishing an LLC, a legal entity is created - an entity that is legally separate from its owners (or owner) and independently liable for its obligations. As mentioned above, and as the name suggests, the liability of partners for its obligations is limited only to the value of the contribution (cash or other assets) made to the company at its establishment or when increasing the share capital. For example, if an investment fails and the company is obligated to repay a debt, this contribution can be used to satisfy the debt. However, creditors of the company cannot demand repayment of its receivables from the personal assets of the partners. The total value of contributions from all partners cannot be less than five thousand zlotys – the minimum share capital of an LLC, although it can be higher if you want the company to be a more credible partner for potential contractors.

The share capital of the company constitutes its financial base and determines the nominal value of the shares of individual partners. When establishing an LLC, the share capital is usually divided into a specified number of shares of equal value, not less than fifty zlotys. For example, a share capital of 100,000 zlotys can be divided into one hundred, one thousand, or two thousand shares, with a value of 1,000 zlotys, 100 zlotys, or 50 zlotys each, respectively. In this model, these shares are indivisible - a partner cannot divide one share with a value of 100 zlotys and, for example, give half of it, worth 50 zlotys, to their spouse. However, if a partner owns more than one share, they can dispose of them independently, for example, give ten out of twenty shares, each with a nominal value of 100 zlotys, to their spouse. It is also possible to stipulate that each partner in an LLC can only own one share – in this case, the nominal values of the shares of individual partners may differ depending on the contribution made to the company by each shareholder. One partner may own a share worth 1000 zlotys, while the other two may own shares worth 2000 zlotys each.

The affairs of the LLC are managed by the management, which may or may not include its shareholders. The management represents the Poland company externally and acts on its behalf; therefore, its liability for the company's debts is greater than that of the partners themselves. If the company incurs a debt it cannot repay, creditors can turn to a member of its management unless they have timely filed for the bankruptcy of the company. A member of the management can free themselves from personal liability for the company's debts in other ways, but, in principle, their vigilance and ongoing care for the financial condition of the business are crucial. Despite the aforementioned lack of liability of a partner for the debts of their company, if the shareholder of the company holds a position in its management, they are liable like any other person in that position under the principles mentioned above.

How to open a company in Poland (LLC)?

Once you have decided that a limited liability company is the appropriate form for your business, it is time to prepare the necessary documents for your company formation in Poland and register the company in the National Court Register.

Initially, besides the business idea and potential partners, you need at least five thousand zlotys in cash or non-cash assets of that value, as well as a name (i.e., a company name) for your company. Then you can proceed to prepare the articles of association. It should be drawn up in the form of a notarial deed  or electronic form and, in addition to the above-mentioned information on the amount of share capital and the company, should also include information about:

• The subject of the Poland company's activity,
• The location where its registered office will be (the street name or number shall not be included),
• Whether each share in the company will have equal value and whether, therefore, partners will be allowed to have more than one share in the company (special requirements such as unequal share value can be only included into the notary deed,
• The number and nominal value of shares of each partner,
• The duration of the company, if you decide to establish a company for a specific period (although companies are usually established for an indefinite period).

The above list does not exhaust the issues that can be regulated in the founding deed or company agreement of a polish Limited Liability Company. Many provisions of the Commercial Companies Code concerning LLCs are of a relative nature – meaning they apply if the partners do not decide otherwise in the company agreement or founding deed. Some provisions of the LLC Code are absolute, determining the immutable rules of operation of this type of entity.

In the articles of association, you can specify, for example, whether specific rights or benefits should be granted to any of the partners (e.g., more votes in the voting on resolutions of the shareholders' meeting or the right to a greater share in the profits of the company). Additionally, it can determine whether any additional obligations should be imposed on any of the partners towards the Poland company (e.g., working for the company or lending their real estate to the company). Partners can also be obliged to make additional contributions to the company under specified conditions, proportionally to their shares. Alternatively, as part of the planned development of the company at the stage of its creation, it may be necessary to increase its share capital, which will facilitate the later process of capitalization. The company agreement may determine whether the sale of shares by a partner should be subject to the consent of the management or other partners of the Poland company, or whether they should have the right of first refusal if a partner wishes to sell, thus giving the partners the ability to influence the personal character of their joint venture.

Upon conclusion of the company agreement, the intermediate form of the Poland company is created - a limited liability company in organization. At this stage, the company can already incur obligations on its behalf and be a legal entity, for example, a party to a bank account agreement or a lease agreement. However, it is not yet a legal entity, so individuals acting on its behalf are also liable for its obligations. Subsequently, the shareholders of the newly established company in Poland should contribute the agreed contributions to it and – if the agreement does not specify otherwise – appoint its management and, if necessary (except for companies where the share capital is higher than PLN 500,000, and there are more than twenty-five partners), a supervisory board or audit committee.

The next step is to submit an application for registration of the company to the relevant local National Court Registry. In addition to the Poland company agreement, the application must be accompanied by the following:

• A statement by the members of the management that the contributions of the partners have been paid in full,
• Consents of the members of the management to their appointment (except for the person who, as a member of the management, signs the application to the National Court Register or has given a power of attorney for this specific matter, who expressed consent to their appointment in the resolution of the shareholders' meeting appointing them to the management, or who gave consent in the company agreement),
• A list of the shareholders of the company, signed by the management, along with their addresses for mail delivery,
• Evidence of the appointment of the management itself (if it is not in the articles of association), e.g., a resolution of the shareholders,
• A list including the names and surnames (or names and registered office of the entities not being individuals) and addresses for delivery of persons authorized to appoint the management – in the case of an LLC, these will most often be the data of all shareholders of the company (although in many cases, the persons listed on this list will be identical to those mentioned earlier on the list of shareholders, to avoid complications at the registration court, it is best to do it with two separate documents.

The application to register a company in Poland (LLC) should indicate:

• The name (firm), registered office, and address of the Poland company,
• The subject of its activity,
• The amount of its share capital,
• Information about whether a shareholder can have more than one share,
• Names, surnames, and addresses of the members of the management and the rules for representing the Poland company externally,
• Names and surnames of the members of the supervisory board or audit committee, if appointed,
• The fact that the shareholders are contributing non-cash assets to the company, if applicable,
• The duration of the company, if specified,
• The designation of the journal intended for the company's announcements, if the company agreement specifies it.

Stamp duty fees for the company must be paid, and a mandatory announcement of the registration of the company must be placed in the Court and Economic Monitor. The company will automatically receive its tax identification number (NIP) and statistical number (REGON) after registration, without the need for additional applications.

The process of registering an LLC can take from several days to several weeks. After registration, it remains to carry out any necessary official procedures, such as submitting supplementary data to the tax office (indicating the entity responsible for the company's accounting if it is outsourced) or reporting the company as a VAT taxpayer, if applicable or required.