Joint – stock company pol. “spółka akcyjna” or “S.A.” (later in this article: „JSC” or „Polish JSC”) is a popular form of doing business in Poland on a larger scale. We distinguish public JSC (in which at least one share was entered to public trading) and private JSC (none of the share was entered to public trading). Below we explain how to set up a joint – stock company in Poland.
How to register a joint – stock company in Poland?
There are mainly two ways of setting up this type of company in Poland:
- traditionally – by concluding a company statute (articles of association) in front of the notary public in Poland;
- remotely – with the assistance of an attorney.
What is important is that there are no restrictions in Polish law regarding the nationality of persons establishing joint – stock companies – these companies may be set up also by for example non EU-residents.
Traditional incorporation of a Polish joint – stock company
Traditional way of setting up a joint – stock company requires the founders to sign articles of association in front of a notary (company statute requires form of notarial deed). The Polish JSC may be set up by one or more persons. Upon signing the statute the company “in organization” is established and that allows the company, for example, to hire employees. However, to acquire full legal personality, JSC must be in the Polish companies house (National Court Register – “KRS”).
The company’s articles of association should include, among others: company name and its registered seat, scope of its activity, the amount of share capital, (which may not be less than 100.000 PLN) and nominal value of one share (which cannot be lower than 0,01 PLN). The stock capital has to be covered by contributions, either in cash or in-kind. The contribution cannot consist in providing work or services by the stockholders for the company.
Prior to company registration, it is also mandatory to:
- cover company share capital – at least in ¼ of its total value;
- appoint members of the company bodies, i.e. members of the Management Board and Supervisory Board.
After fulfilling all these conditions, the Polish JSC should be registered in KRS, which takes usually 2-3 weeks.
Remote procedure of registering a joint-stock company in Poland
At any time, you can set up a Polish JSC with the assistance of an attorney. In this case, you will have to grant an attorney in Poland with notarized power of attorney in the country of your residence. Next, you need to send the original of such document to the attorney in Poland – this way your attorney will handle all the formalities before the notary in Poland!
Who can be a stockholder in Polish joint – stock company?
A stockholder of a Polish JSC can be, with some reservations, a natural or a legal person. The exception is a single-member limited liability company (a company in which there is only one shareholder) – you can’t set up a JSC by such entity. However, nothing stands in the way of such single-member company acquiring 100% of the shares in Polish JSC after its registration in the KRS.
The main stockholder’s obligation is (obviously) to make an agreed contribution. As mentioned earlier, 1/4 of the shares taken up for money contributions must be made before the company is registered, the rest of the contributions can be covered later. However, non-cash contributions must be made within a year from the company’s registration.
This is the only economic risk in which stockholders are involved. Stockholder is not liable for company debts or obligations. Although, what should be remembered is that company statute may impose some other obligations on the stockholders.
We divide stockholders’ rights into financial and corporate rights.
Financial rights are among others:
- The right to dividends, i.e. participation in the company’s profit;
- The right to share in the post liquidation surplus, i.e. the assets remained after satisfying the claims of the liquidated company;
- The possibility of subscribing to shares issued in subsequent company share emissions;
Corporate rights consist of for example:
- The right to dispose of the share (e.g. to sell or to pledge the share);
- The right to vote at the shareholders’ meeting;
- The right to participate in the shareholders’ meeting;
- The right to contest company shareholders resolutions;
Moreover, that Polish law provides a possibility to issue preference shares, which may consist in the right to more votes at shareholders’ meetings or the right to a higher dividend.
Polish joint – stock company bodies
It’s one of two of mandatory company’s bodies and may consist of one or more members. Management board has two main functions: to represent the company towards third parties and to run internal the company’s affairs. Members of the management board in Polish JSC are appointed and dismissed by the supervisory board (but it is possible to set the rules for the appointment of the board members differently in the articles of association, e.g. by granting such a right to specific stockholders).
Member of the management board of Polish JSC must fulfil three conditions:
- be a natural person;
- be over 18 years old;
- have a non – criminal record.
It is not necessary to be a stockholder in the company or Polish citizen to become board member.
Unless the company statute provides otherwise, if there is more than one person on the board, the company is represented either two members acting jointly or one of the board members acting together with a commercial proxy (pol. “prokurent”).
It’s the second company’s body, which needs to be established in every Polish joint – stock company (unlike Polish limited liability company, where the appointment of a Supervisory Board is generally not mandatory). Supervisory board holds constant supervision over the company’s activities in all areas of its operations. In particular, it evaluates management board’s report on the company’s activities and the financial statements for the previous financial year. In certain situations, the Supervisory board may suspend individual or all management board members in their duties and delegate members of the Supervisory Board to temporarily perform the duties of members of the Management Board.
The supervisory board must consist of at least three members in private JSC and at least five members in public JSC. In general, every natural person can be a member of the supervisory board, apart from company’s management board member, a commercial proxy, company’s chief accountant.
The last body – Stockholders’ meeting, is the most important of them all. It consists of company’s stockholders and is responsible for the most important decisions in JSC.
There are two types of stockholders’ meeting:
1) ordinary – which should take place within 6 months after the end of each financial year. Its subject matter should be three main issues:
- approval of the management report on the company’s activities and the financial statements for the previous financial year;
- adoption of a resolution on the distribution of profit or coverage of loss;
- granting a discharge to members of the company’s governing bodies for the performance of their duties.
2) extraordinary – which takes place in particular cases specified in Commercial Companies Code, in the statute or when stockholders find it necessary to consider an issue concerning the company and make a decision in the form of a resolution.
Taxation of joint – stock company in Poland
A joint – stock company is, like all legal entities, a payer of corporate income tax (CIT). The CIT tax rate in Poland is accordingly: 19% or 9% in case of a reduced CIT rate (reduced CIT rate applies by companies who in given tax year did not exceed the amount of revenue of EUR 2.000.000 expressed in Polish currency).
Moreover, stockholder of the company, who is a natural person and received dividends has to pay another tax – PIT – personal income tax. In this case the tax rate is one and amounts to 19%.
It is also worth mentioning about the “Estonian CIT” – or officially corporate income tax lump sum – which is available for Polish capital companies, including the JSCs.
It is a type of corporate income taxation that allows the business to be ran income tax-free as long as their owners do not consume profits on private purposes nor transfer them to their personal accounts. This solution is based on regulations previously introduced in Estonia – that’s why it is so called “Estonian corporate income tax”. When choosing this regime of taxation the Polish company does not pay any income tax unless dividends are distributed to the shareholders. In this way the company itself determines the time and amount of tax to be paid. Moreover, the rate of Estonian CIT is 10% for small taxpayers and for taxpayers starting a business, and 20% for others.
The application of the Estonian CIT requires the fulfilment of several conditions, among others: employing at least 3 persons during the tax year, not generating income of up to 50% of the total income of the company from specific sources (e.g. income from credits and other passives) and submitting an appropriate statement to the tax office on the choice of taxation with Estonian CIT. The Estonian CIT applies only to companies whose stockholders are natural persons only.
How to register a joint – stock company in Poland – summary
So, to sum up – the most important information about Polish JSC you may find in the table below:
|Who can set up a JSC?||at least 1 stockholder (legal or natural person)|
|How?||by singing a statute in front of the notary or remotely, with the assistance of attorney|
|What is the minimal JSC capital?||100 000 PLN|
|What is the minimal nominal value of one share?||0,01 zł|
|Is it necessary to make contributions before company registration?||Yes, at least in 1/4|
|What company bodies are obligatory?||Management Board and Supervisory Board|
|What taxes does the JSC pay?||9% or 19% of CIT,|
(optionally Estonian CIT solution)
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