Menu Close

Sole entrepreneur and civil – law partnership

Mediacje 1

An entrepreneur being a natural person may undertake economic activity after having been entered in the Register of Economic Activity. The Register is kept by a commune competent for the entrepreneur’s residence. For persons having their residence abroad, the commune of competence is that of the principal place of economic activity registered.

By the deed of civil-law partnership, the partners undertake to promote the attainment of a common economic objective by acting in a specified manner and, in particular, by making contributions. The deed of partnership needs to be made in writing. The partners and not the partnership are subject to registration – individuals are registered in the Register of Economic Activity, whereas corporations and other entities are registered in the register of entrepreneurs held in the National Court Register.

Capital requirements ofcivil – law partnership

The contributions may be made by partners in cash or in kind; the in-kind contributions may include provision of services or work for the partnership. There are no requirements as to the minimum level of contributions. All assets contributed or acquired by partnership constitute the common property of the partners. The partner cannot make any disposition of his share in the common property or of his share in particular assets and cannot demand the division of the common property.

Management of civil – law partnership

Unless the deed of partnership states otherwise, each partner is entitled and obliged to manage the affairs of the partnerships. Each partner may, without a prior resolution of the partners, manage the affairs within the ordinary business of the partnership. However, where prior to conclusion of such a matter at least one of the partners objects to the conclusion of the matter, a prior resolution of the partners is required. In matters which fall outside of the ordinary course of business, a resolution of all partners is required.
Each partner may, without any previous resolution of the partners, perform an urgent act, the default of which would expose the partnership to an irreparable loss.

Representation of civil- law partnership

As a rule each partner is entitled to represent the partnership within the limits to which he is entitled to conduct its affairs.

Przeczytaj również:  Commercial partnerships and companies - general characteristics

Transfer of the rights and obligations of a partner in civil – law partnership

The rights and obligations of a partner in a civil-law partnership may not be transferred to another person by one legal act – separate assignments of receivables and rights and of debts and obligations needs to be executed in agreement with the specific provisions of the civil code and such assignments are subject to consent of all other partners.

Share in profits and participation in losses of civil- law partnership

Each partner is entitled to an equal share in the profits and shares the losses in the same proportions notwithstanding the nature and the value of his contribution. The deed of partnership may provide for a different proportion of the partners shares in the profits and losses, in particular some partners may be exempted from their sharing in the losses. A partner cannot be excluded from his sharing in the profits.
A partner may claim the division and payment of the profits only after the dissolution of the partnership. Where, however, the partnership has been formed for a longer period, the partners may demand the division and payment of the profits at the end of each financial year.

Accounting

Under the Accounting Act of 29 September 1994, the obligation to keep accounting books and to prepare financial statements on their basis applies to civil – law partnerships whose partner is a legal person, and single-party entrepreneurs, as well as civil-law partnerships of natural persons, if their net revenue from the sales of goods, products, and financial transactions for the preceding financial year amounted to the Polish currency equivalent of at least EUR 1200000. The obligation to have their annual financial statements audited by certified auditors and published applies to single-party entrepreneurs and civil-law partnerships keeping full accounting in compliance with the Act which, in the financial year preceding the year for which the financial statements are prepared, fulfilled at least two of the following conditions: a) average annual full-time employment reached at least 50 persons, b) total balance-sheet assets at the end of the year amounted to Polish currency equivalent of at least EUR 2000000, c) net revenue from sales the sales of goods, products, and financial transactions for the preceding financial year amounted to the Polish currency equivalent of at least EUR 4000000.

If a single-party entrepreneur or a civil-law partnership is not obliged to keep accounting books under the Accounting Act of 29 September 1994, it is obliged to keep a revenue and costs register and other records kept for tax purposes.

Przeczytaj również:  Joint stock company (spółka akcyjna)

The income tax payers in a civil-law partnership are its partners and not the partnership itself. Subject to income tax is the share in profit of a partner in a civil-law partnership.

Liability for the obligations of civil- law partnership

The partners are jointly and severally liable for the partnerships obligations.

Withdrawing from civil- law partnership

Where the partnership has been established for an unlimited period of time, each partner may withdraw from the partnership by giving the notice of withdrawal of his share three months before the end of the financial year. For important reasons, a partner may give the notice of the withdrawal of his share without observing the term of notice, even if the partnership has been established for a definite time.

Where during the last six months an execution on a partner’s movables has been ineffective, his personal creditor who has received an attachment order in respect of the rights to which the partner would be entitled in the event of withdrawing from a partnership or of dissolution of the partnership, may give a notice of withdrawal of the partner’s share from the partnership three months in advance even if the partnership has been established for definite time.

Upon a partner’s withdrawing from the partnership the things which he has brought into the partnership for use are returned to him in kind, while the value of his contribution specified in the deed of civil-law partnership, and in the absence of such specification the value of his contribution at the time of its making, is paid to him in cash. The value of the contribution which consists in providing services or in using by the partnership the things belonging to the partner, are not returnable. Furthermore, the withdrawing partner is paid in cash such a part of the value of the common partners property remaining after the deduction of the value of all the partners contributions, which is adequate to the proportion in which the withdrawing partner has shared in the partnerships profits.

Dissolution of civil – law partnership

The reasons for dissolving the civil partnership are the following:1/ the reasons set out in the deed of civil-law partnership, 2/ a unanimous resolution of all partners to this effect, 3/ a final court decision.

Upon dissolution of the partnership the partners become co-owners in fractional parts of all the assets contributed or acquired for the partnership. After paying off the partnerships debts the partners have their contributions returned, and the provisions relating to the return of contributions upon a partners withdrawal from the partnership apply respectively. The remaining surplus of the common property is divided among the partners in proportion to their shares in the partnerships profits.

Related Posts