08 Kwi Doing business in Poland. Forms of economy activity in Poland
For the people starting their business in Poland most important is the legislation related to allowed methods and forms of the economy activity in Poland. Since 1989, the political changes in Poland, there was serval acts related to the economy activity in Poland. In consequence of legislation changes there remain two basics acts which state this issue:
- Act on economy activity freedom (Polish: Ustawa o swobodzie działalności gospodarczej), and
- Commercial Companies Code (Polish: Kodeks Spółek Handlowych).
Those two acts regulate the issue of forms of economy activity in Poland by creating three main forms:
- Single-Man Business (PL: Jednoosobowa działalność gospodarcza)
- Partnership (PL: Spółka osobowa)
- Company (PL: Spółka kapitałowa)
This form of the economy activity is regulated in Act on Economy Activity Freedom, and is most basic form. The main idea of this form is that, as its name says, the natural person becomes also an businessman in scope of Polish Law, and provides an economy activity in his own name. Most important for this form is that there is no any new entity. Natural person who already existed just converts itself into a businessman, and can on the market act as consumer (if for example he buys something for his own needs not related to his business activity), and as businessmen, but in both form using his own name.
This form is also the fastest form to start business in Poland. Registration in the Central Record and Information about Economic Activity (CEIDG) is digitalized, and it is only necessary to sign the final document. Since the registration Businessmen can starts his activity.
However this form has also its disadvantages. In this form businessman acts as himself, so in case of failure of business there is no any company which bankrupt, but businessman must pay on himself. In this form there is also no division of the risk between partners or shareholders, because Single-Man Business is undivided and all risk, costs, but also are profits are burden and gain of one man who is a businessman.
In Poland we can often meet with the Civil Partnership (Spółka Cywilna) which also usually uses shortcut S.C. – Civil Partnership is not a form of the Economy Activity it is a agreement between two or more persons which do not need to have a business activity on its own. Civil Partnership had no legal personality, and do not act as independent businessman, each of its partners acts on his own business, and Civil Partnership agreement is important only for its partners. However this agreement must be registered in CEIDG.
Second type of the form of the economy activity in Poland are Partnerships. Those agreements form an new entity of law, which can act on its own as a businessman, what is most important it has its own assets which can be divided between Partners only after the dissolution of the partnership. This form is regulated in Commercial Companies Code, and we got four types of Partnership:
- Registered Partnership (PL: Spółka Jawna, Sp. J.)
- Professional Partnership (PL: Spółka Partnerska, Sp. P.)
- Limited Partnership (PL: Spółka Komandytowa, Sp. K.)
- Limited Joint-Stock Partnership (PL: Spółka Komandytowa-Akcyjna, SKA)
Those are still not a legal persons but partnership may, in its own name, acquire rights, including ownership of immovable property and other rights in rem, incur obligations, sue and be sued. Also, what is important, Partnership acts under its own name with addition of the Partners names.
What should be pointed out is that the Professional Partnership is reserved for the specified scope of Partners which perform a specific form of business activity i.e. Solicitors, Barristers, Notary, but even an Architects or Nurses.
Other types can be formed by any person, and it do not need to be a businessman by any of partners. Interesting form of Partnership is Limited Partnership which divide Partners between General Partner (which gain all rights and obligation), and Limited Partner (which is limited in his rights but also in his obligation), this form of Partnership is very often used for the tax optimization in Poland.
Acting in form of Partnership requires and registration in National Court Register, and Partnership may act as businessman since the day that registration is completed. If Partners acts before the registration is completed they are obligated to repair any damage on their own.
Last form of the economy activity in Poland is Company. Those similar to Partnership are regulated in Commercial Companies Code. Companies are highly organized, and most complicated of all economy activities type, but also had the biggest credit trustworthy, and highest prestige. In Poland there are three types of the companies:
- Limited Liability Company (PL: Spółka z ograniczoną odpowiedzialnością, Sp. z o.o.)
- Joint-Stock Company (PL: Spółka akcyjna, S.A.)
- Societas Europaea (SE)
The last one is an EU form of the company, which is common for all EU countries.
Limited Liability Company and Joint-Stock Company, are both legal persons, so they are an individually legal entities which act on their own. What is most important in case of companies assets of the company and assets of shareholders are completely separate, Shareholders are obligate to pay on the share capital, or supplementary charges, but they do not hold any other risk of company activity than loss of their future income.
Companies require their share capital which must be paid as they start they activity. Minimum share capital are regulated in Commercial Companies Code and it is 5 000 PLN (around: 1 180 EURO) for Limited Liability Company, 100 000 PLN (around: 23 570 EURO) for Joint-Stock Company, and 120 000 EURO for SE.
What is more important as an legal persons all companies need their bodies. There are three types of bodies ownership body (General Shareholders Meeting), management body (Board), and control body (Supervisory Board). Limited Liability Company generally is only obligated to have its ownership and management body, Joint-Stock Company has to have all three of them without exception. Companies acts by their Board, but with own assets and own name.
All information about companies must be registered in the National Court Register. However unlike the partnerships Company may act since signing it act as the company in organization.
Those are basic information about the forms of the Business Activity in Poland which may allow you to create a business plan for the economy activity in Poland. For the further assistance and information we are glad to invite you to one of our offices in Katowice (Warszawska Street 17) or Warsaw (Aleje Jerozlimskie 96). One of our specialist will provide you an necessary information and help you register an Single-Man Activity, Partnership or Company in Poland.