If you’re interested in a free estimate or scheduling a meeting with a lawyer, please fill out the form. Which type of company to choose?
Entrepreneurs often find themselves needing to operate their business in the form of a company, whether it’s transforming an existing business or creating a new one from scratch. There can be various reasons for this, such as growth aspirations, collaborating with others under specific conditions, tax optimization, and many more. In such cases, entrepreneurs wonder which type of company to choose.
Under Polish law, there is one quasi-partnership defined in the Civil Code, as well as six types of companies regulated by the Commercial Companies Code. Four of these are partnerships—where the partners constitute the company and are personally liable for it, as these partnerships lack legal personality. The other two are capital companies, which create a separate entity with legal personality responsible for its own obligations.
Different from the others, as it’s not fully a company. When established, no new legal entity is created. A civil partnership is merely a civil law agreement between entrepreneurs, and they are the ones running the business and owning the companies.
General Partnership (sp.j.)
The basic legal structure. When established, it creates a separate entity, an organizational unit, with legal capacity. It can sue and be sued, incur obligations, but it doesn’t possess legal personality. The partners bear joint and several liability for the company’s obligations, meaning they are liable personally and subsidiarily, if execution against the company’s assets proves unsuccessful.
Professional Partnership (sp.p.)
This partnership can be formed by at least two representatives of a free profession, such as lawyers, pharmacists, architects, engineers, and more. Like a general partnership, it lacks legal personality but has legal capacity. Other partners don’t bear responsibility for the company’s obligations arising from the practice of one of the partners’ free profession.
Limited Partnership (sp.k.)
A partnership characterized by unequal liability of partners for the company’s obligations. At least one partner must be a general partner, who is fully liable with their entire assets, similar to a general partnership. Another partner is a limited partner and is liable only up to the amount of their contribution.
Limited Joint-Stock Partnership (S.K.A.)
A hybrid partnership combining characteristics of a limited partnership and a joint-stock company. At least one partner is a general partner fully liable for the company’s obligations, while another partner is a shareholder not liable for its obligations. It lacks legal personality but has legal capacity. Establishing an S.K.A. requires a minimum share capital of 50,000 PLN.
Limited Liability Company (sp. z o.o.)
Less complex among capital companies. Requires a minimum share capital of 5,000 PLN. It has legal personality and is liable with its assets for its obligations. The liability of shareholders is limited to their contributions, except for members of the management board, who might be liable if they fail to file for the company’s bankruptcy in time.
Joint-Stock Company (S.A.)
More complex and demanding among capital companies. Requires a minimum share capital of 100,000 PLN, divided into equal shares. Each shareholder becomes a shareholder by acquiring shares, which can be bought and sold on the stock exchange. Larger enterprises often adopt this form.
Simple Joint-Stock Company (P.S.A.)
A newer form of commercial company, designed for startups and businesses seeking financing or investors. It’s a simplified version of a joint-stock company and includes legal conveniences like not needing an audit by a certified auditor or notarial minutes of shareholders’ meetings.
These general descriptions aim to provide an overview of each company type present in Polish law and highlight the main differences between them. The Commercial Companies Code contains detailed regulations for each type. The choice is diverse, and each type has its pros and cons. The right choice depends on the entrepreneur’s specific needs and the nature of their business. Legal counsel specialized in this area can provide guidance.
Which type of company to choose?
To answer this question, it’s necessary to determine the goals to achieve and the entrepreneur’s situation. Without a thorough analysis of legal and tax issues, as well as the specific industry, providing a concrete answer is not possible.
If you’re interested in a free estimate or scheduling an online meeting, please fill out the form. Which type of company to choose?