Investing in Poland – types of entity
You’re probably reading this article because all you have on your mind right now is nothing other than investing in the Polish economy. In the last few years investments and attention from investors from around the world show that it may be a good move. However, before you take the first step towards building an empire in Poland, it’s good to go through the basics.
Business activities in Poland may be started freely by any investor with sufficient capital and without a criminal record. People from the EU and investors from EPTA do not require any special permits to start investments within Poland (in the case of people from other countries, some kind of permit may be required depending on the type of investments they want to make). The procedure depends on whether the investor is an individual or a corporate team.
In the case that you are an individual investor every situation will be different. Everything depends on the company you want to invest in. Although the situation for a corporate investor is much more structured and can be divided into a few forms. Polish law allows a number of forms of business entity, including:
Sole traders
Sole trader is typically used for small businesses. It is very simple to establish and may be undertaken by any qualifying person. The person who conducts business activity in this manner is personally liable for all obligations arising from such activity. It may not be the easiest type of investment but it is the quickest one.
Registered partnerships
A registered partnership require cooperation between at east two individuals or two business entities. It is established by means of a partnership agreement registered with the National Court Register. All partners are jointly and severally liable for the partnership’s obligations but creditors are initially obliged to seek satisfaction (don’t get too far with thoughts on this one!) from the partnership assets. Partners’ personal liability may not be waived and all partners are obliged and entitled to manage and represent the partnership, which means a lot of responsibility!
Limited partnerships
Limited partnerships are generally regarded as tax – transparent vehicles which contribute to their popularity for numerous types of business activity. Such a partnership distinguishes between two types of partner who differ in terms of liability. The limited partner’s liability extends up to the amount agreed in the partnership agreement. The general partner is subject to unlimited liability and may be an individual or a corporation. The partnership is represented only by the general partner. The limited partners may only represent the partnership if granted proper power of attorney.
Professional partnerships
This structure is restricted to self – employed professionals, such as lawyers, dentists, architects, accountants, etc. Partners in this partnership must be licensed in their discipline. All partners are responsible for themselves,independent from each other but working together to achieve some goals. The partners are personally liable, however, liability is limited to the obligations arising from errors and omissions of the partner or co-workers working under the supervision of the said partner. The partnership can be represented by any partner. This is probably the best solution if you’re a freelancer!
Limited joint stock partnerships
This structure is similar to limited partnerships (you’re independent mostly on paper…). The partnership also has a general partner, but with shareholders who are not personally liable for partnership obligations, in the same manner as shareholders in a joint stock company. The minimum share capital of such partnerships is 50 thousands PLN to be paid up in cash or in kind. The partnership is represented only by the general partner.
Limited Liability Companies
Limited Liability Companies are a highly popular form of structuring business activity in Poland. The LLC registration process is quick, requiring only a few formalities. A limited liability company becomes operational directly after the articles of association have been signed. The nominal value of one share may not be lower than 50 PLN. Polish law permits a sole shareholder. A combination of ordinary and preference shares are also an option. Easy? Just as we thought.
Joint stock companies
Joint stock companies are similar to Limited Liability Companies. However, they are more formalized and complex in terms of statutory governance. Operations of a joint stock company may not commence until registration has been completed with the National Court Register. The minimum share capital is 100,000 PLN. The nominal value of one share may not be less than 0,01 PLN. The articles of association should prescribe the rules for the company’s representation. A supervisory board must comprise at least three members or, if the company is listed on the Warsaw Stock Exchange, at least five. The articles of association may provide that the management board requires consent of the supervisory board in the case of certain decisions.
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