Poland is indicated as one of the most attractive countries for foreign investors in Central and Eastern Europe1. Although many factors influence investment attractiveness of the Polish market, national legislation governing business is of major interest. The general rule of entrepreneurial freedom set forth in the Polish Freedom of Commercial Activity Act is reinforced by the freedom of establishment guaranteed by the European Union’s treaties. As regards Polish law, there are several forms of conducting business suitable for foreign investors: 1. a) b) 2. 3.
Commercial companies including: partnerships: general partnership, professional partnership, limited partnership, limited joint-stock partnership companies: limited liability company, joint-stock company Branch of a foreign entrepreneur Representative office of foreign entrepreneur
In general, companies are designated for activities of a larger scope, whereas partnerships are suitable for smaller projects. According to statistics, the most popular forms of these both types of commercial companies are general partnerships and limited liability companies. As regards foreign investors, branches of foreign entrepreneurs are also chosen. Foreigners may act in Poland through representative offices, however such entities can only advertise and promote a foreign entrepreneur and cannot conduct business. On the contrary, joint-stock companies are suitable for large projects and are the only commercial companies that can be quoted on a stock exchange. However, there are numerous legal requirements for setting up and managing their affairs, for instance, minimum initial capital of PLN 100,000 (approx. EUR 23,800). The most popular forms of business by foreign investors are limited liability companies and branches of foreign entrepreneurs. The table below presents their main characteristics with special reference to issues to be dealt with by foreign investors. Full registration of a limited liability company or a branch of a foreign entrepreneur may take approx. 1.5-3 months. However, investors may also buy a shelf company, which is a swifter process (approx. two weeks). Costs of these both options are comparable. No. 1
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Issue General
Limited liability company Branch of foreign entrepreneur A limited liability company is an individual entity A branch of a foreign entrepreneur does not possess legal possessing legal personality, independent of its owners, personality and is not considered to be an entity separate to a i.e. shareholders. foreign entrepreneur.
EY’s attractiveness survey. Europe 2014. Back in the game.; available at: http://www.ey.com/Publication/vwLUAssets/EY-2014-European-attractiveness-survey/$FILE/EY2014-European-attractiveness-survey.pdf
No.
Issue
2
Scope of activity
3
Setting up an entity founding deed
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Required documents to establish an entity
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Actions to be taken to register the entity
Limited liability company A limited liability company with a sole shareholder cannot be established by another limited liability company with a sole shareholder. In such case at least one share must be acquired by another shareholder. The scope of activity of a company is defined in its Articles of Association and can be freely chosen by shareholders. For the purpose of registration it must be systematized pursuant to the Polish Activity Classification (i.e. classification of types of socioeconomic activities). A company is established on the basis of Articles of Association in the form of a notarial deed drawn-up by a Notary Public in Poland.
Articles of Association concluded in Poland before a notary public. The notary public must be provided the following: - excerpt from the commercial register for the shareholder - original or notarised copy; - power of attorney in the form of a notarial deed if the shareholder is not represented by persons indicated in the excerpt.
Branch of foreign entrepreneur
The scope of activity of a branch cannot extend the activity of the foreign entrepreneur. For the purpose of registration it must be systematized pursuant to Polish Activity Classification (i.e. classification of types of socioeconomic activities). A branch is established on the basis of a resolution adopted by a relevant body of the foreign entrepreneur (as dictated in its by-laws or pursuant to the laws of the country of its origin). Signatures on such resolutions should be confirmed by a notary public. - Resolution of a relevant body of the foreign entrepreneur (as mandated in its by-laws or pursuant to the laws of the country of its origin) with signatures confirmed by a notary public. - By-laws/Articles of Association of a foreign entrepreneur - Certificate of incorporation of a foreign entrepreneur
Some of the documents must be apostilled. Foreign Some of the documents must be apostilled. Foreign language documents should be provided in sworn language documents should be provided in sworn translation. translation. - conclusion of Articles of Association and - adoption of a relevant resolution appointment of the members of the management - filing of a motion with the registration court for registration board of the branch (together with attachments) - opening of a bank account to pay in share capital - a motion to the registration court should also contain - payment of share capital applications to the statistical office and tax office
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No.
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Issue
Costs of establishment
Limited liability company - filing of a motion with the registration court for company registration (together with attachments) - a motion to the registration court should also contain applications to the statistical office and tax office - VAT registration takes place on the basis of a separate motion - arrangement for a lease agreement (or other title to the company)
Branch of foreign entrepreneur - VAT registration takes place on the basis of a separate motion - a bank account and lease agreement for a registered office are arranged by a foreign entrepreneur for its future branch
For the purpose of effecting the above actions, several additional tasks must be performed, e.g. specimen signatures of management board members (before a notary public), acquiring of corporate documentation of shareholder(s), whereby additional statements must be signed by all Management Board members, etc.
For the purpose of effecting the above actions, several additional tasks must be performed, e.g. specimen signatures of branch office representative (before a notary public), acquiring of corporate documentation of shareholder(s), etc.
- payment of share capital (minimum PLN 5,000, approx. EUR 1200) - court registration fee: PLN 500 (approx. EUR 120) - obligatory publication of branch office registry in the Official Commercial and Legal Gazette: PLN 100 (approx. EUR 25) - notarial fees depending on the value of share capital, (to be confirmed by the notary involved) - civil law transaction tax (“PCC�) at the rate of 0.5% of share capital - costs of sworn translations of appropriate documents - cost of notarized specimen signatures of company management board members - VAT registration of PLN 170 (approx. EUR 40), if applicable
- court registration fee: PLN 500 (approx. EUR 120) - obligatory publication of branch office registry in the Official Commercial and Legal Gazette: PLN 100 (approx. EUR 25) - costs of sworn translations of appropriate documents - cost of notarized specimen signatures of the branch office representative - VAT registration of PLN 170 (approx. EUR 40), if applicable.
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No. 7
Issue Time of establishment
Limited liability company Branch of foreign entrepreneur Upon signing the Articles of Association, the limited The foreign entrepreneur may commence activity through its liability company receives the status of a company “in branch only upon its full registration in the register of organization”. entrepreneurs at the National Court Register. A limited liability company in organization is The timing of registration to a large extent depends on represented either by the management board or a the discretion of the National Court Register. proxy chosen by a unanimous resolution of shareholders. A company in organization may - in its own name - enter into obligations, sue, be sued and acquire rights, including ownership of real estate and other rights in rem (therefore, such a company may conclude a lease agreement for premises constituting the company’s seat). Nevertheless, only upon registration of the company at the National Court Register does this entity acquire full legal personality.
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Share Capital
The timing of registration to large extent depends on the discretion of the National Court Register. Minimum share capital is PLN 5,000 approx. EUR A branch of a foreign entrepreneur does not have any share 1200) capital. Share capital may be contributed either in cash or inkind, or in both forms. An in-kind contribution may consist of property, rights in rem, intellectual property rights, shares/interest in another company, receivables and/or securities (these cannot be non-transferable rights or rendering of services or work). Cash contributions should be paid to the Polish company’s bank account in Poland. Contribution of the entire initial capital (either in cash or in-kind, or both) is a pre-
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No.
Issue
9
Shares
10
Authorities
Limited liability company Branch of foreign entrepreneur requisite for company registration. The minimum value of a share is PLN 50 (approx. EUR A branch of a foreign entrepreneur does not have any shares. 10). A shareholder may have one or more shares. If a shareholder may have more than one share, then all shares in the share capital must be equal and indivisible. - meeting of shareholders - obligatory - management board - obligatory - supervisory board – optional, however, a supervisory board or audit committee must be created in companies with share capital exceeding PLN 500,000 (approx. EUR 120,000) and if there are more than 25 shareholders. A limited liability company is represented by management board members. If the management board comprises several members, rules of representation should be stipulated in the articles of association. 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 the holder of a commercial power of attorney.
- representative of a foreign entrepreneur A foreign entrepreneur establishing a branch in Poland is obliged to appoint its representative. The representative must be a natural person, although he does not have to be a Polish citizen. Upon registration of the branch, it is obligatory to indicate the address of the representative in Poland. A foreign entrepreneur may appoint more than one representative.
The articles of association of a limited liability company may also be drawn up by using a template available at the official website of the Ministry of Justice https://ems.ms.gov.pl/. In such case, the articles of association are concluded once all data is duly uploaded and an electronic signature is attached. Thus, the form of notarial deed is not required, which means a reduction of establishment costs. Some actions are undertaken on-line, however specimen signatures must be submitted to the registry court within 7 days of the registration date. Share capital must be fully paid-up by the same deadline. The Articles of association of a limited liability company based on a template may be changed following company registration (in the form of a notarial deed).
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The most important legal acts regulating Polish-Italian economic cooperation are as follows: - Agreement between the Government of the People’s Republic of Poland and the Government of the Italian Republic on avoidance of double taxation as regards taxes on revenue and tax evasion from 1985; - Agreement between the Government of the People’s Republic of Poland and the Government of the Italian Republic on support and protection of investments from 1989; - Memorandum of cooperation for small and medium-sized enterprises signed in 1999 by the Minister of Industry, Trade and Craft of the Italian Republic and the Minister of Economy of the Republic of Poland.
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