From this blog post you will learn:
- whether a simple public limited company in Poland (Prosta Spółka Akcyjna) is actually a more affordable form of public limited company (Spółka Akcyjna) for budding entrepreneurs, including in particular those seeking start-up funding.
Advantages and disadvantages of the simple public limited company (PSA) in Poland
The simple public limited company is a new legal form of business. The premise behind its introduction was to make business easier for start-ups. The company is intended to be a simpler form of joint-stock company while offering the possibility of raising finance through the issue of shares.
This facilitation is already present at the registration stage. With regard to the simple joint-stock company (PSA), the legislator has provided for the possibility of its establishment in the s24 system using a model contract available in this system (which you will read below).
Another undoubted advantage is that the minimum share capital in the company is PLN 1.00. This is a significant difference to a joint-stock company (which you will read about here), where the minimum share capital is PLN 100,000.00. Shareholders can make contributions within three years of the company’s registration. A major novelty is the possibility for shareholders to make contributions in the form of work. This type of contribution has so far only been allowed in partnerships (you can read about the general partnership here).
Another advantage of PSAs is the introduction of a new type of share – founders’ shares. The purpose of founder shares is to protect the holders from dilution in the event of subsequent share issues in the PSA.
In PSAs, a new body – the board of directors – has appeared for the first time in Polish legislation. This body is primarily familiar to foreign legal solutions. With regard to this body, the legislation has also introduced facilitations for the conduct of shareholder meetings. They do not have to be minuted by a notary public, as is the case with general meetings of a joint-stock company.
It should be noted that a PSA is a completely new legal form of company. Consequently, the practice of its operation and conduct of business is only just being established. Those who decide to establish a PSA may therefore encounter many problems, which are difficult to foresee at this point. Of the disadvantages of a PSA, it is mentioned first and foremost that the liability of the administrators of a PSA is analogous to that of the members of the management board of a limited liability company. (which you can read about here). This means, therefore, that the managers will have the burden of proving the grounds for exemption from liability. Of the other disadvantages, it is also pointed out that the PSA will not be able to admit its shares to public trading – i.e. to become a listed company.
What taxes apply to a Polish simple public limited company (PSA)?
A simple public limited company is a limited liability company and consequently its taxation rules are analogous to those of other limited liability companies. A PSA is therefore a corporate income tax (CIT) payer. The CIT rate is 19%. If the PSA is a small taxpayer, then it is possible to be taxed at a rate of 9%.A small taxpayer will be a PSA whose sales revenue (together with the amount of output VAT) did not exceed in the previous tax year an amount expressed in PLN equivalent to the equivalent of EUR 2,000,000.
Subsequently, if the dividend is paid to shareholders, it is subject to taxation by them at a rate of 19%. Each shareholder must therefore bear in mind that it is his or her responsibility, in the first place, to pay to the tax authority the income tax due on the profit he or she has received in connection with participation in the PSA.
In a PSA there is also the possibility of applying the dividend exemption. This possibility exists if the shareholder of the PSA is another limited company, if this limited company has held no less than 10% of the shares in the capital in the PSA for at least two years.
A simple joint-stock company is entitled to take advantage of the reliefs provided for in the CIT Act, such as the IP BOX or the R&D relief. A PSA may also become a taxpayer of lump-sum tax on the income of capital companies (the so-called Estonian tax).
Non-monetary contributions in the form of non-transferable rights, provision of labour or services, do not constitute income for the PSA resulting in PIT liability.
As a general rule, limited liability company partners and shareholders are not required to pay social security contributions (unless there is a single shareholder in the limited liability company, which you will read about here). However, due to the fact that the PSA provides for the possibility of providing services or labour as a contribution (which we write about in more detail above), the legislator has decided that shareholders making contributions of this kind will be treated as persons conducting a non-agricultural business activity. Such persons are therefore obliged to pay full social and health insurance contributions.
In the case of contributions with a different object, including above all the most common cash contributions, the shareholder in question will not be subject to compulsory social insurance.
What is the health contribution rate in a simple joint stock company in Poland?
As indicated above, in certain cases PSA shareholders will be required to pay a social security contribution and a health contribution.
The shareholder will pay the health contribution on a declared basis, but not less than 75% of the average monthly salary in the corporate sector in the fourth quarter of the previous year, including profit distributions (in 2021, this amount is PLN 4,242.38). A shareholder of a simple joint-stock company also pays social insurance contributions on the declared amount, however, not lower than 60% of the projected average monthly remuneration adopted to determine the amount of the limitation of the annual basis for the assessment of pension contributions (in 2021 it is the amount of PLN 3,155.40).
What accounting rules apply to a simple joint-stock company in Poland?
A simple joint-stock company, as a limited liability company, is also an entity required to keep full accounts. All economic events must therefore be recorded in the PSA, and the PSA itself is obliged to annually prepare and submit to the relevant authorities financial statements that meet the requirements provided for in the accounting regulations.
Who represents the simple public limited company in Poland?
A simple public limited company offers two models of representation, which shareholders must decide on. This is because it is possible either to set up a board of directors or a board of directors. This choice is made within the framework of the articles of association. It is therefore possible to change the model once chosen during the life of the company.
The board of directors of a simple public limited company is the board of directors familiar to other limited companies. The board of directors of a PSA therefore manages the affairs of the company and represents it externally. The board may consist of one or more persons. If a supervisory board is not established in a PSA, in principle the right to appoint, remove or suspend members of the board of directors is vested in the shareholders. If a board of directors is established, it may also be decided that the supervisory board will function within the structure of the PSA. Then, unless the agreement provides otherwise, the supervisory board will have the power to appoint and dismiss the management board. In this case, we have a clear separation of the body performing management functions from the body performing supervisory functions.
Shareholders may also choose to appoint a board of directors, a body that is typical of companies operating in Anglo-Saxon systems. The board of directors combines management and supervisory functions in a single body. The board thus manages the affairs of the company, represents it and performs supervisory functions.
Who is liable for the debts of a simple limited company in Poland?
Also in the PSA, the basic principle applies with regard to liability to the shareholders of a limited company. As a general rule, its shareholders are not liable for its debts. In certain cases, however, shareholders may be liable to the company, e.g. if a shareholder fails to make a contribution to which it has committed itself or if it overstates the declared value of an in-kind contribution. In addition, as in a joint-stock company (which you will read about here), the following are jointly and severally liable for the obligations of a PSA in organisation: the company, the persons who acted on its behalf and the shareholders, with the shareholders only being liable up to the value of the contributions not made by them to cover the shares subscribed for.
The members of the management board or the board of directors of a simple joint-stock company are liable for the obligations of a simple joint-stock company on analogous terms to the members of the management board of a limited liability company . The basic condition for this liability to exist is the ineffectiveness of enforcement conducted by the creditor against the company. These persons may free themselves from liability if they show that:
– a bankruptcy petition was filed in due time; or
– at the same time an order was issued to open restructuring proceedings or to approve an arrangement in proceedings for the approval of an arrangement;
– the bankruptcy petition was not filed through no fault of the bankrupt;
– despite the failure to file an application for bankruptcy and the failure to issue a decision to open restructuring proceedings or to approve an arrangement in the proceedings for the approval of the arrangement, the creditor has not suffered any loss.
If false data is provided by members of the management board or the board of directors in the declaration on:
– on making contributions to cover shares in the part provided for in the articles of association – when filing the company in the register;
– on making contributions to cover new shares in the part provided for in the resolution on the issue of shares or agreements on taking up shares – when issuing new shares
the members of these bodies are liable to the company’s creditors jointly and severally with the company for three years from the date of registration of the company or registration of the issue of new shares.
When is a Polish simple public limited company formed?
A simple joint stock company (like a general partnership or limited partnership) can also be established via the s24 system. If the founders do not choose to use the template agreement and register the company using s24, they will have to conclude the agreement in the form of a notarial deed. In such a case, once the notarial deed has been concluded, it will be necessary to separately apply for the registration of the PSA electronically via the court registry portal.
As soon as the PSA is concluded (irrespective of how it is concluded), a simple joint stock company in organisation is created. From that moment on, the entity may acquire rights, incur liabilities, sue and be sued in its own name. In turn, when the company is entered into the Register of Entrepreneurs of the National Court Register, the simple joint-stock company acquires legal personality.
PSA shares, like shares in a joint-stock company, are a property right and may be traded, including being encumbered by, for example, a pledge. The transfer or encumbrance of shares requires at least documentary form on pain of nullity. The articles of association of a simple joint-stock company may contain provisions by virtue of which there will be a restriction on their disposal. A classic example of such a restriction is the requirement to obtain the consent of the authority concerned.
In addition, shareholders should bear in mind that the disposal of shares that are not fully paid up requires the company’s consent until they are fully paid up. As in a joint-stock company (which you can read about here), the disposal of shares in a simple joint-stock company involves the obligation to make an entry in the shareholders’ register (which entry has the effect of the disposal of shares).
Model articles of association of a simple public limited company in Poland
As indicated at the outset, undoubtedly one of the advantages of a PSA is that it can be incorporated using the model articles of association available in s24. In such a case, it is also mandatory to use this system in order to prepare and submit an application for registration of the entity in the Register of Entrepreneurs of the National Court Register.
Are you considering setting up a simple joint stock company?
Contact our team. We will be happy to help you.