12 November 2020
A simple joint-stock company – legal form attractive for start-upsAll
Starting from 1st July 2021 a new form of business activity will be possible in Poland – a simple joint-stock company. As assumed by the legislator this kind of company will be attractive especially for start-ups and other innovative projects. It is supposed to be far more flexible less expensive and easier to manage than an LLC or a regular joint-stock company. In my next articles I will comment on this new form of entity in more detail.
How the company may be created?
A simple joint-stock company may be created by one or more founders in two ways:
- online, on a dedicated website conducting by the Ministry of Justice https://ekrs.ms.gov.pl/s24/or
- traditionally, in a form of a notarial deed signed before a notary public.
Both options will have their advantages and disadvantages.
The first option will be much cheaper and quicker. The founders do not need a lawyer – they may create w company online themselves, provided that they do have a Polish speaking person at hand. A simple joint-stock company will be registered in the National Court Register in only 24 hours.
It should be noted, though, that the creation of the company on-line will require the use of a template of the Articles of Association, available only in the Polish language. Only some modifications of the Articles of Association will be allowed. The founders will solely have a possibility to choose from among the options available in the system.
All founders of the company will be obliged to sign the electronic version of the Articles of Association with their qualified electronic signature or ePUAP profile. The signatories may use either a Polish electronic signature (e.g.”Szafir” issued by KIR - https://www.elektronicznypodpis.pl/ or an internationally renowned signature issued in one of the EU countries.
In case of the online creation of the company the share capital may be covered only by cash contributions. It cannot be covered by contributions in-kind such as know-how, patents, trademarks or other IP rights, movable or immovable property. Such a contribution, may, however, be brought to the company at a later stage.
Therefore in case if the founders need a more sophisticated, tailor-made Articles of Association or need to bring a contribution in-kind from the company’s inception, the creation online will not be a good choice. In such a case it is recommendable to create the company in the traditional way, before a notary.
A simple joint-stock company cannot be created by only one founder being a limited liability company with only one shareholder. Usually, what the investor does in such a case is that the LLC subscribes for the majority of shares whereas the investor (at the same time the sole shareholder of this LLC) subscribes for the minority of the shares. Immediately after the registration of the simple joint-stock company it is possible to transfer the minority shares to the LLC.
The share capital in the simple joint-stock company is not the same legal concept as the share capital in the LLC or in the regular joint-stock company. The amount of the share capital will not be indicated in the Articles of Association. Moreover, the shares will not be the part of the share capital. Consequently, the increase or decrease of the share capital will not require the amendment of the Articles of Association. It will require, by contrast, the registration in the National Court Register. The share capital in the simple joint-stock company will be more flexible. In particular, shareholders will be able to obtain a refund of the contribution brought to the company’s share capital.
A minimum share capital will be just PLN 1. The contributions may be brought in cash or in-kind. Contrary to the limited liability company or the joint-stock company, performance of work or services may constitute contributions in kind. Such a contribution, however, will not be accounted for the company share capital in the financial statement. Still, it does allow to offer shares to the persons who make efforts and contribute to the development of the business by working for the simple joint-stock company.
The share capital does not need to be covered in total from the very beginning. The shareholders may bring them within a period of 3 years after the creation of the company.
Shares will not have a form of documents. They will be registered only in a digital form in the shareholders register conducting by a brokerage house or a notary public.
The shareholders of the simple joint-stock company form the General Meeting of Shareholders.
This corporate body will decide which type of management model should be chosen:
- a traditional model with two separate bodies: the Management Board that manages the company’s affairs and the facultative Supervisory Board that supervises this management or
- a new model with only one body: the Board of Directors that combines characteristics of the Management Board and the Supervisory Board. Some Directors manage the company’s affairs whereas others supervise the company’s activity
The corporate bodies will be entitled to adopt resolutions without the actual presence of their members, via emails, conference calls or video conferences. This will significantly reduce the formalities and the costs.
Dissolution of the company
The simple joint-stock company will be easier to wind-up and liquidate than an LLC or a classical joint-stock company. Therefore if the business does not develop as expected the shareholders will have no problems getting rid of the unwanted structure.
There will be two ways of winding-up the simple joint-stock company:
- a simplified liquidation procedure or
- regular liquidation procedure.
The simplified liquidation procedure is initiated by a resolution of the General Meeting of Shareholders on the transfer of all company’s assets to one designated shareholder. This shareholder will be then obliged to satisfy the creditors of the company and distribute the remaining assets among the shareholders. The Management Board or the Board of Directors cease to manage the company’s affairs, they are entitled only to notify the registry court about the dissolution and the subsequent formalities. They are also obliged to undertake necessary actions to protect the company’s assets. The simplified procedure requires the acceptance of the registry court who makes sure that the rights of the company’s creditors will not be adversely affected.
The regular wind-up procedure also requires the adoption on a resolution by the General Meeting. During the liquidation period respectively the Management Board Members of the Directors are substituted by the liquidators. They are obliged to satisfy the creditors of the company and distribute the remaining company’s assets among the shareholders. The regular wind-up procedure has been shortened in comparison to the liquidation of the regular joint-stock company. It requires only one public announcement which means that the procedure is less costly and less time consuming.
In my next articles you will read more about the simple joint-stock company!
12 November 2020 | Magdalena Korta-Łach
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