A limited liability company may be incorporated by one or more persons for any purpose allowed by law. A limited liability company may not be formed solely by another single-shareholder limited liability company. The articles of association of a limited liability company must be made in the form of a notarial deed. Upon conclusion of the articles of association, a limited liability company in organization is created. The company in organization may acquire rights in its own name, including the right of ownership of real estate and other rights in rem, incur obligations, sue and be sued. Upon registration in the register of entrepreneurs held in the National Court Register a limited liability company in organization becomes a limited liability company and acquires legal personality. The limited liability company becomes a party to the rights and obligations of the company in organization.
Capital requirements of limited liability company
The share capital of a limited liability company must be at least 5000 PLN. The share capital of the company is divided into shares, which may be of equal or non-equal nominal value. The nominal value of a share may not be lower than 50 PLN.
The articles of association must determine whether a shareholder may have one or more shares - if a shareholder may have more than one share, all shares in the share capital must be equal and indivisible. No bearer documents, registered documents or documents to an order may be issued for shares or rights to profits in the company. The shares may be privileged in particular as to the right to vote, the right to dividends or participation in the division of assets in the event of liquidation of the company. Such privileges in respect of the right to vote may attach only to shares of equal nominal value and may not grant to the entitled party more than three votes per one share.
The shares may not be subscribed for below their nominal value. Contributions for the purpose of financing the shares may be made in cash or in-kind and must be made in full before the registration of the company. An inalienable right or the provision of work or services may not constitute a contribution to the company. If the value of in-kind contributions has been considerably inflated in relation to their sale value as at the date of the conclusion of the articles of association, the shareholder who made such a contribution and members of the management board who, knowing this, filed the company in the register are jointly and severally liable to make good the outstanding balance to the company.
A shareholder’s claim under a loan extended by the shareholder to the capital company is deemed to be the contribution of that shareholder to the company in the case where its bankruptcy is announced within two years of the date of the loan agreement. The shareholder may not set off his receivables against the receivables of the company concerning the payment for the shares, unless such set-off is contractual.
The shareholders are obliged to provide only the performances stipulated in the articles of association. The articles of association may obligate the shareholders to make additional contributions up to a certain specified amount in proportion to their share in the company. The additional contributions shall be imposed and paid by the shareholders equally in proportion to their respective shares.
Transfer of shares in limited liability company
The shares are transferable. A transfer or encumbrance of the shares must be effected in writing with signatures certified by a notary. The articles of association may provide that the consent of the company is necessary for the transfer of shares. The transferee and the transferor are jointly and severally liable to the company for the outstanding performances due to the company in respect of the share transferred. The transfer of a share needs to be notified to the company by the parties involved and becomes effective with respect to the company as of the moment when the company receives from one of the involved parties the notification of transfer together with a proof of the transaction.
Management and representation of limited liability company
The management board manages the affairs of and represents the company. The management board includes one or more members. A member of the management board may be dismissed at any time. The competencies of the management board cover all company matters excluding those which are reserved to the supervisory board or meeting of shareholders. In relation to the company, the members of the management board are subject to the limitations stipulated in the articles of association and in resolutions of the shareholders.
If the management board comprises several members, and the articles of association do not provide otherwise, each member of the management board has the right and obligation to manage the affairs of the company. Each member of the management board may, without a prior resolution of the management board, manage the affairs which do not exceed the ordinary affairs of the company. However, if prior to the conclusion of any such matter, at least one of the remaining members of the management board objects to its conclusion or if the matter falls outside the ordinary affairs of the company, a prior resolution of the management board is required.
The right of a member of the management board to represent the company may not be restricted with a legal effect as against third parties. If the articles of association do not include any provisions in this respect, representations in the name of the company may be made by two members of the management board acting jointly or by one member of the management board acting together with a holder of the commercial power of attorney.
Supervisory board and audit committee of limited liability company
As a rule, the right to individually control the company’s activities may be exercised by each shareholder. For this purpose, a shareholder may at any time inspect the books and documents of the company, draw up a balance sheet for his use or request explanations from the management board.
The articles of association may create a supervisory board or an audit committee or both. The supervisory board or the audit committee needs to be created in companies whose share capital exceeds 500.000,00 PLN and where there are more than twenty-five shareholders. If the supervisory board or the audit committee are created, the articles of association may exclude or limit the exercise of individual control by the shareholders.
Members of the supervisory board and the audit committee are appointed for at least one year and may be dismissed at any time. The supervisory board exercises permanent supervision over all areas of the activities of the company. The special duties of the supervisory board include evaluation of the annual management board report on the operations of the company and of the annual financial report with regard to their conformity with the books and documents, as well as with the actual state of affairs, and proposals of the management board concerning the division of profits or the financing of losses, as well as submitting to the general meeting an annual written report on the results of such evaluation. The articles of association may expand the powers of the supervisory board.
The duties of the audit committee include evaluation of the annual management board report on the operations of the company and of the annual financial report with regard to their conformity with the books and documents, as well as with the actual state of affairs, and proposals of the management board concerning the division of profits or the financing of losses, as well as submitting to the general meeting an annual written report on the results of such evaluation. The articles of association may expand the duties of the audit committee in a company which does not have a supervisory board.
General meeting of shareholders of limited liability company
The following matters require a resolution of the shareholders: 1/ consideration and approval of the annual management board report on the operations of the company and of the annual financial report, 2/ granting of approval of the performance of duties by the members of the company governing bodies, 3/ adoption of a resolution on the distribution of profits or the financing of losses, 4/ decisions on claims for redress of damage caused upon formation of the company or its management or supervision, 5/ disposal of or tenancy of the enterprise or its organized part and the creation of a limited right in rem over them, 6/ acquisition and disposal of real estate, the right of perpetual usufruct, or a share in real estate, unless the articles of association provide otherwise, 7/ repayment of additional contributions, 8/ amendment of the articles of association.
Share in profits of limited liability company
A shareholder is entitled to a share in the profits specified in the annual financial report and allocated under a resolution of the general meeting for division. The sums to be divided among the shareholders may not exceed the profits for the previous financial year, increased by the undivided profits from previous years and by the sums drawn from the supplementary and reserve capitals created out of profits which may be divided. That amount must be reduced by uncovered losses, own shares and by the sums which should be allocated, from the profits for the previous financial year, to the supplementary or reserve capitals. Unless the articles of association provide otherwise, the profits allocated for the shareholders are divided proportionately to their shareholdings. Each preference share as regards dividends may give entitlement to dividends larger by not more than half than the dividend payable on non-preference shares. The articles of association may authorise the management board to pay the shareholders an advance on the expected dividends for the financial year if the company has sufficient funds for such payment.
Liability for the obligations of limited liability company
A limited liability company is a legal person and the shareholders are not liable for the obligations of the company. In the event when enforcement against the company proves ineffective and in appropriate time a petition for bankruptcy is not filed, the members of the management board become jointly and severally personally liable for the company’s obligations, including tax obligations.
Liquidation of limited liability company
The liquidation of a limited liability company is conducted in the event of its dissolution, unless the partners agree on another mode of bringing the operations of the partnership to an end. The reasons for dissolving the company are the following:1/ the reasons set out the articles of association, 2/ a resolution of the shareholders on dissolution of the company or on the transfer of the seat of the company abroad, recorded in the minutes recorded by a notary, 3/ a declaration of bankruptcy of the company.
The liquidators draw up a balance sheet as at the date of the opening and as at the date of closing liquidation. The assets of the company are used first of all to pay the obligations of the company. The remaining assets are divided among the shareholders in accordance with the provisions of the articles of association. If bankruptcy of the company is declared, the company is dissolved following the bankruptcy procedure.