Limited liability company

Since the beginning of 2012 there has been a possibility to use, apart from the traditional method of forming and registering a limited liability company, a simplified method, the so-called S24 mode. It is available both to Polish citizens and to foreigners. The formation and registration of a S24 limited liability company is done online through the Ministry of Justice website https://ems.ms.gov.pl. The articles of association are made up with the use of a model agreement and not in notarial form. To execute the documents only a simple electronic signature is required (login and system password).

Preferred form of activity	For shareholders who want: to limit their liability for the company’s obligations up to the value of assets engaged in the company by way of contributions; to keep the right to co-determine the company’s future – a shareholder may co-determine the company’s future by attending meetings and exercising the right to vote; to keep direct supervision over the management of the company’s affairs – shareholders have the right to individual control and the articles of association may only exclude or restrict it if a supervisory board or an auditors’ committee have been established.
Purpose	A limited liability company may be established for any legitimate purpose unless the law provides otherwise.
Company	The business name of the company may be discretionary, but with the additional designation „spółka z ograniczoną odpowiedzialnością” (limited liability company).
Appropriate register	The register of entrepreneurs of the National Court Register (KRS). A regional court adequate to the company’s registered office.
Shareholders	One or more entities which may be natural persons, legal persons, as well as organisational units without legal personality to whom the law grants thereof Note: A limited liability company may not be formed by – as a sole shareholder – another single-member limited liability company. A single-member limited liability company may secondarily become a sole shareholder through taking up of all shares of a limited liability company. A limited liability company may be formed by a single natural person, but ZUS costs similar to those of a single-member company must be taken into consideration in this case.
Type of contract	As a rule – in a notarial form, otherwise it shall be null and void. However, the articles of association (the so-called S24) may also be executed using a model available in the information and communication technology system (https://ems.ms.gov.pl). Execution of such articles of association requires registration (setting up an account) in the Ministry of Justice information and communication technology system, filling in a form with required data and signing with an electronic signature.
Representation of a company in organisation (prior to KRS registration)	It is represented by a management board appointed by the articles of association or by a later adopted resolution of shareholders. Nothing prevents the management board appointed at company in organisation stage from continuing to act in the same composition even after the company’s registration in the KRS. A limited liability company in organisation may also be represented by an attorney appointed by an unanimous resolution of shareholders.
Shareholders' contributions	May be in cash or in kind. However, in an S24 company only cash contributions may be made at the stage of registration. Only after the company has been entered in the register, share capital may be increased with cash or in-kind contributions. An in-kind contribution may be something which has a certain business value, is transferable, may be an asset in the company’s balance sheet, and may be subject to execution. An in-kind contribution may be, among other things, ownership rights (to things and real estate), perpetual usufruct rights, or an enterprise. The object of a contribution cannot be a non-transferable right or a performance of work or services. As a rule, contributions must be made in full prior to KRS registration. However, in an S24 company, contributions may be made after the company’s registration, but not later than 7 days from obtaining a KRS entry.
Shareholders' shares in profits and losses	A shareholder has the right to participate in profit shown in the annual financial statements and intended for distribution according to a resolution of the shareholder’s meeting. Profit attributable to shareholders is distributed in proportion to the number of shares held. The articles of association may provide for other methods of profit distribution. Shareholders do not participate directly in covering the company’s losses. However, the profit intended as shareholders’ pay-out in a given year shall be reduced by unabsorbed losses.
Share capital	The share capital amounts to at least 5 000 PLN. The nominal value of a share is not less than 50 PLN. The share capital of a company is divided into shares of equal or unequal nominal value (as stated in the articles of association). Shares of equal value are more common – in such cases a shareholder may hold more than one share. Shares of unequal value are much less common – in such cases a shareholder may hold only one share. As a rule, the share capital has to be fully paid prior to company’s KRS registration.
Authorities	A board of management – manages the company’s affairs and represents it; is composed of one or more natural persons; there are no time restrictions regarding term of office. A shareholders’ meeting - has jurisdiction to resolve affairs provided by law or by the articles of association; as a rule, the minutes from a shareholders’ meeting is made in writing; for resolutions amending the articles of association to be recorded in the minutes a notarial deed is required. A supervisory board or an auditors’ committee – exercises permanent supervision over the company’s activities in all aspects of its business (the obligation to appoint a supervisory board or an auditors’ committee occurs only in companies whose share capital exceeds 500 000 PLN and at the same time there are more than 25 shareholders).
Taxation	The company is a commercial income tax payer (CIT), a value added tax (VAT) payer and an excise tax payer.
ZUS premiums	A shareholder in a limited liability company is not subject to obligatory social and health insurance and is not obliged to pay premiums. The obligation to settle with ZUS will occur when a shareholder is the company’s employee or its contractor. However, a sole shareholder in a limited liability company is considered by the Social Insurance System Act to be an individual pursuing non-agricultural activity and, in consequence, is subject to obligatory social and health insurance; in that case, ZUS costs similar to those in single-member companies must be taken into consideration. The company shall be a premium payer only if it engages employees or contractors.
Company liability	The company bears liability for its obligations unlimitedly, with all assets
Shareholders\'liability	Shareholders bear no liability for the company\'s obligations. Their risk is limited to assets engaged in the company in the form of contributions or additional payments.
Managment board members\' liability	Liability towards the company’s creditors: arising from false information provided in the statement on share capital coverage (if the contributions were not fully made, were simulated, in-kind contributions were excessive, etc.) – jointly and severally for a period of 3 years following the registration of the company or an increase in the share capital, arising from an ineffective execution of company’s assets, unless: a petition in bankruptcy was timely filed or bankruptcy proceedings were initiated, a failure to file the petition in bankruptcy or to initiate arrangement proceedings occurred through no fault of a management board member, the creditor suffered no damage despite a failure to file the petition in bankruptcy or to initiate arrangement proceedings.

Actions necessary to establish a limited liability company:

1. Execution of articles of association in the form of notarial deed.

A notarial deed form of articles of association does not apply to an S24 company, the formation and registration of which is done online.

Note: While executing the articles of association, management board members appointed pursuant to the provisions of the articles (or those who will be appointed as members of the management board) may put notarised signature samples, which have to be attached to the company’s application in the registry court.

Notary fees:

A notary’s remuneration, the so-called notarial fee, depends on the value of the company’s share capital. With a minimum share capital the notarial fee will amount to 160 PLN (plus VAT);
Preparation of official copies (at least three copies). The cost of making official copies amounts to 6 PLN (plus VAT) for every commenced page of the deed. Some notaries charge extra 30 PLN (plus VAT) for each copy when the deed of partnership is longer than five pages;
The notary will collect a tax on civil-law transactions, and thereafter pay it to an adequate Inland Revenue Office. The taxable base shall be the value of a company’s share capital. The tax rate on the articles of association is 0.5%;
Notarising signature samples of members of the management board – 20 PLN (plus VAT) per signature. The alternative is to set your signature in the presence of a clerk of a registry court, which is free of charge.

2. Payment of contributions by shareholders to cover the entire share capital.

In case of an S24 company, contributions may be made after the company’s KRS registration, but not later than 7 days from obtaining a KRS entry

3. Limited liability company KRS registration.

The entry application has to be submitted to a registry court (a regional court, a commercial department of the KRS) adequate to the company’s registered office.
The application may be submitted no earlier than on the day of the company’s formation and no later than within six months of the execution of the articles of association. In case of exceeding this date, the articles of association shall be terminated and the application shall be dismissed.
Every official document submitted to the KRS has to be signed by all members of the management board. In this case, the company’s representation by an attorney appointed by a unanimous resolution of shareholders is inadmissible.

Limited liability company registration - traditional method

The main application form is the KRS-W3. It has to be appended with KRS-WE, KRS-WK, KRS-WM and potential extra forms depending on the actual facts of the case, e.g. KRS-WL - obligatory when a commercial proxy (proxies) is appointed. In such a case, the management board’s resolution appointing the proxy and an official letter informing him of the appointment have to be enclosed as well. KRS-WA – useful when a company will have a branch or branches.
„Paper” attachments – documents on the basis of which an entry in the KRS is made have to be submitted in original or as legally authenticated transcripts or extracts .

Articles of association – an official copy of the notarial deed,
a statement by all members of the management board that contributions to the share capital have been fully made by all shareholders (e.g. “Acting as the management board of a limited liability company under the business name of XYZ with its registered office in ABC, we hereinafter declare, according to art. 167 § 1 point 2 of the Code of Commercial Companies, that contributions to the share capital were fully made by all shareholders”.),
a document evidencing the appointment of the company’s management board, including a specification of the members thereof in case when it was not included in the articles of association (a resolution of the shareholders’ meeting),
a list of shareholders signed by all members of the management board, specifying their names and surnames (or business names) and the number and nominal value of shares held by each shareholder. The application for registration of a single-member company has to contain an annotation that he is the sole shareholder of the company,
Signature samples of management board members and proxies - certified by a notary or set before a court,
a list of all members of the management board and their addresses of residence ,
In case of appointing a commercial proxy – the management board’s resolution appointing the proxy and an official letter informing him of the appointment ,
A proof of payment: of the court’s fee (500 PLN), and for an announcement in the Court and Business Monitor (100 PLN). The total amount has to be transferred into the bank account of an adequate registry court (regional court) or paid in person at the court counter.

Limited liability company registration - S24 method

The system enabling registration in an S24 mode is available on the Ministry of Justice website.

The system is available to Polish citizens and to foreigners. While setting up an account in the system, foreigners must indicate that they do not have a Polish citizenship in which case PESEL number is not required. However, in each case it is required to specify the type of identity document used by a natural person. Besides an identity card, the system allows the use of a temporary identity card, a temporary identity certificate, a permanent residence card, a foreigner’s proof of identity, a temporary residence card and a passport.

1) User registration in the system:

A person who wants to use the system has to be registered (set up an account).
While setting up an account, the user gives his personal data and authenticates them with a login and password

Note! The login and password are a simple electronic signature, which may be used both to log in and to sign documents.

2) Execution of the articles of association and entry application.

An entry application, articles of association and other required documents are created directly in the system and sent to the court afterwards.
The execution of the articles of association happens after all the required data is given and approved with an electronic signature.
During the registration, co-operation between shareholders (deciding on the wording of the articles of association and signing it) and members of the management board (signing of the list of shareholders, statements on the contributions made, and the application form) is necessary.
Note: At the time of submitting the application all persons signing the documents (the application) have to be present at the same computer.
Upon signing by the first shareholder, any changes to the articles of association become impossible.
In proceedings regarding submitting a KRS application, management board members may be replaced by an attorney, who, in his user\'s account, prepares all the documents which are later signed by shareholders and members of the management board. An agent for litigation pays for and signs the application afterwards.
The freedom of determining the wording of articles of association is limited to options available in the system. To be able to consciously select from what is available, at least a basic knowledge of authorities which are regulated in the articles of association is necessary

3) Payment for the application and sending it to court.

Payment for the application is one of the stages of applying through the system and is done via the eCard system. Currently, the handling fee amounts to about 14 PLN. It is added to the company\'s registration fee (500 PLN) and to the fee for the first announcement in the Court and Business Monitor (100 PLN).
As a rule, the registry court takes 24 hours to consider the application – this is where the abbreviation “S24” comes from.

4) After obtaining an entry in the KRS, a newly established limited liability company shall:

Submit an application for management board members’ signature samples put in the presence of a court or notarized to be accepted into registration files. This is when contributions were made during the formation and registration of a limited liability company. The application is free of charge.
Make contributions (if they were not made upon the company\'s registration) within 7 days of the date of the KRS entry. In such a case, together with the application for management board members’ signature samples put in the presence of a court or notarized to be accepted into registration files, a statement by all members of the management board has to be attached, stating that contributions to the share capital have been fully made by all shareholders. The application is subject to a court fee amounting to 40 PLN. Proof of payment also has to be attached to the application.
Submit the PCC-3 declaration, and calculate and pay the tax on civil-law transactions within 14 days of the date of execution of the articles of association.

4. Submitting supplementary data to the Inland Revenue Office.

Supplementary data are the data essential for the Inland Revenue Office, the Central Statistical Office (GUS), and the ZUS. Such data are undisclosed in the KRS or the entrepreneur does not have them at the moment of submitting an application to this register. Supplementary data are provided on the NIP-8 form and submitted to an adequate Inland Revenue Office within 7 days of the date of the KRS entry. The Inland Revenue Office passes the supplementary data on to ZUS and GUS on the company’s behalf.

5. ZUS registration.

ZUS will open a premium payer’s account for the partnership which will be used to calculate particular insurance premiums of all employees subject to insurance. ZUS will also prepare insurance declarations (ZUS ZPA, ZUS ZAA, ZUS ZBA) on condition that the basic data on the KRS application form were duly and precisely filled in and the NIP-8 form was submitted to the Inland Revenue Office within 7 days of the date of the KRS entry. After a premium payer’s account is open, all engaged persons and their family members have to be reported for insurance within 7 days of the inception of an insurance obligation.
A sole shareholder is subject to premiums on the same grounds as entrepreneurs. A shareholder, as a person insured, is obliged to pay his own insurance premiums. He has to submit the ZUS ZUA declaration if he is subject to social and health premiums or the ZUS ZZA if he is subject only to the health premium. Reporting oneself for insurance has to be done within 7 days of the inception of an insurance obligation. Sickness insurance is voluntary for an entrepreneur.
There is no social and health premium obligation for shareholders in a two- or multiple-member limited liability company.