How to Convert a Limited Liability Company into a Joint-Stock Company?

A limited liability company (sp. z o.o.) can be converted into a joint-stock company. The process has three stages: management, ownership, and registration. It usually takes several months, requires a certified auditor and a notary, and minimum costs start at approximately PLN 10,000. Below is a step-by-step explanation of the conditions, procedure, and costs.

Why convert a limited liability company into a joint-stock company?

A joint-stock company is the most advanced form of doing business in Poland. Conversion into an S.A. (also possible from a sole proprietorship or another company) makes sense in three situations:

1. You need additional capital – a joint-stock company can raise it through a private share issue.
2. You want to limit the management board’s liability – a joint-stock company has no equivalent of Article 299 of the Commercial Companies Code (KSH). This means that members of an S.A. management board are not liable for the company’s obligations when enforcement proves ineffective, except for tax obligations.
3. You plan to list on the stock exchange – only a joint-stock company can be a listed company (this is the position of the Warsaw Stock Exchange, GPW).

Limited liability of an S.A. management board: what does it change?

In a limited liability company, Article 299 of the Commercial Companies Code applies: if enforcement against the company proves ineffective, members of the management board are liable for the company’s obligations with their personal assets. This mechanism does not exist in a joint-stock company, except for tax obligations. If your company has growing liabilities, this means a real reduction in the management board’s personal risk.

What conditions must you meet before conversion?

Before starting the procedure, check whether your company meets the following requirements:

• No bankruptcy or liquidation – a limited liability company cannot be in bankruptcy or liquidation if the division of its assets has already begun.
• Share capital of at least PLN 100,000 – if your company has lower share capital (for example, PLN 35,000), you must increase it to at least PLN 100,000 before conversion.
• Approved financial statements – for at least the last two financial years. If the company has operated for a shorter time, an approved statement is required for the entire period of operation not covered by an annual statement.

There is no minimum operating period for the company. You can convert even a company that has been operating for just a dozen or so days.

What does the conversion procedure look like? Three stages

The procedure for converting a limited liability company into an S.A. is governed by the Commercial Companies Code (Title IV, Division III, Chapters 1 and 4). It consists of three stages.

Stage 1: Management – conversion plan and auditor’s opinion

At this stage, the company’s management board prepares a conversion plan. Attach the following documents to the plan:

• a draft statute for the converted joint-stock company,
• a draft conversion resolution,
• a valuation of all company assets and liabilities,
• financial statements prepared as of a date in the month preceding the presentation of the conversion plan to the shareholders.

Prepare the conversion plan and its attachments with help from a lawyer and other advisors.

Review of the plan by a certified auditor

Once the plan has been prepared, file it with the registration court together with an application to appoint a certified auditor. You may name a specific auditor.

What you need to know about this step:

• Court fee for the application – PLN 300.
• Certified auditor’s fee – from a few thousand to under PLN 20,000, depending on the size of the business and its assets.
• Deadline for preparing the opinion – no more than 2 months from the date the court appoints the auditor.
• Auditor’s powers – the auditor may ask the management board for additional explanations and documents.

The auditor prepares a written opinion and delivers it to the registration court and the company.

Stage 2: Ownership – conversion resolution

At this stage, the shareholders decide whether to convert the company. Before that happens, take the following steps:

Notifying the shareholders

• Notify all shareholders twice.
• Time between notices: at least 14 days.
• First notice: no later than one month before the planned date for adopting the conversion resolution.
• Attach the draft conversion resolution and the draft statute of the joint-stock company to the notice.

Adopting the conversion resolution

The shareholders adopt the conversion resolution after one month has passed from the first notice. The requirements are:

• Quorum – the resolution must be supported by shareholders representing at least half of the share capital.
• Majority – 3/4 of the votes, unless the company’s articles of association provide otherwise.
• Form – a notarial deed.

Steps after adopting the resolution

After the resolution is adopted, the shareholders must:

1. Appoint a supervisory board and a management board for the joint-stock company.
2. Sign the statute of the joint-stock company.
3. Submit declarations of participation in the converted company.

If the shareholders are unanimous, you can complete all these steps at one meeting.

What if a shareholder does not submit a declaration of participation?

• The management board calls on the shareholder to submit a declaration.
• The shareholder has one month from the date the resolution is adopted. The declaration must be in writing.
• A shareholder who does not join the converted company is entitled to claim payment of an amount equal to the value of their shares, based on the financial statement prepared for the conversion.
• Payment deadline – within 6 months from the conversion date, or from the date the claim is submitted if it is submitted after the conversion.
• Limitation period for the claim – 2 years from the conversion date.

Stage 3: Registration – entry in the KRS

After the resolution is adopted, the management board files an application to register the joint-stock company in the National Court Register (KRS). The registration court:

1. Enters the joint-stock company in the National Court Register.
2. At the same time, removes the limited liability company from the KRS.

On the date of entry, the limited liability company officially becomes a joint-stock company.

Additional obligations after registration

• Register the company in the Central Register of Beneficial Owners.
• Notify the tax office and other competent authorities.

How much does it cost to convert a limited liability company into an S.A.?

Mandatory costs

Additional costs

Add the lawyer’s fee and, if applicable, a business advisor’s fee to the mandatory costs.

Minimum total cost of conversion into an S.A.: from PLN 10,000 upward.

Conversion of a limited liability company into an S.A.: steps summary

1. Prepare the company conversion plan and its attachments.
2. Have a certified auditor prepare an opinion on the conversion plan.
3. Notify the shareholders of the intention to convert the company.
4. Adopt the company conversion resolution.
5. Appoint the governing bodies of the joint-stock company.
6. Have the shareholders submit declarations of participation in the converted S.A.
7. Enter the joint-stock company in the KRS and remove the limited liability company.

Alternative: conversion into a simple joint-stock company (PSA)

If you are not planning to list on the stock exchange, consider converting into a simple joint-stock company. The procedure is simplified compared with conversion into an S.A.

How does the procedure for converting into a PSA differ from an S.A. conversion?

• You do not need a certified auditor’s opinion – instead, you announce the conversion plan in MSiG.
• The conversion plan does not require a valuation of the company’s assets.
• You do not have to increase the share capital before starting the conversion.

Limitations of a PSA compared with an S.A.

• A simple joint-stock company cannot be listed on the stock exchange.
• The PSA management board is liable for the company’s obligations under the rules in Article 299 of the Commercial Companies Code (KSH), just like the management board of a limited liability company.

Steps for converting into a PSA

1. Prepare the company conversion plan and its attachments.
2. Announce the conversion plan in MSiG (information for creditors).
3. Notify the shareholders of the intention to convert the company.
4. Adopt the company conversion resolution.
5. Appoint the governing bodies of the simple joint-stock company.
6. Have the shareholders submit declarations of participation in the converted PSA.
7. Enter the simple joint-stock company in the KRS and remove the limited liability company.

You can find more on this topic in our article about converting a limited liability company into a simple joint-stock company.

Need support with the conversion?

Converting a company requires coordination among a lawyer, a certified auditor, and the accounting team. The lawyer is responsible for carrying out the tasks imposed on the management board by the Commercial Companies Code, from preparing the conversion plan to registration in the KRS.

If you are considering converting into a joint-stock company, write to us. We will advise you and guide you through the entire process.

Frequently asked questions

When does converting a limited liability company into a joint-stock company make real business sense? Conversion into an S.A. makes sense in three situations: you need to raise capital through a share issue, you want to limit management board members’ personal liability for the company’s obligations (there is no equivalent of Article 299 of the Commercial Companies Code in an S.A.), or you plan to list on the stock exchange, because only a joint-stock company can be a listed company. If none of these scenarios applies to you, consider converting into a simple joint-stock company instead.

What conditions must be met to convert a limited liability company into an S.A.? The company cannot be in bankruptcy or liquidation if the division of its assets has already begun, its share capital must be at least PLN 100,000, and its financial statements for at least the last two financial years must be approved. If the company has operated for less than two years, an approved statement for the entire period of operation to date is sufficient. There is no minimum operating period for the company: even a company that has been operating for just a dozen or so days can be converted.

What are the steps for converting a limited liability company into a joint-stock company? The procedure has three stages. In the management stage, the board prepares a conversion plan with attachments (a draft statute, a draft resolution, an asset valuation, and financial statements), after which a certified auditor reviews the plan and issues an opinion within no more than two months. In the shareholder stage, shareholders receive two notices (at least 14 days apart), then adopt the conversion resolution by a 3/4 majority in the form of a notarial deed, appoint the S.A.’s governing bodies, sign the statute, and submit declarations of participation. In the registration stage, the board files an application with the KRS, and the court enters the joint-stock company and removes the limited liability company at the same time.

How long does it take and how much does it cost to convert a limited liability company into an S.A.? The whole process usually takes several months: the certified auditor has up to two months to issue an opinion, and shareholders must be notified at least one month before the resolution. Minimum costs start at approximately PLN 10,000 and include the certified auditor’s fee (from a few thousand to under PLN 20,000), notary fees (approx. PLN 2,500 total), court fees (approx. PLN 1,000), and the MSiG notice (approx. PLN 400). Add the lawyer’s fee and, if applicable, a business advisor’s fee.

How does converting a limited liability company into an S.A. differ from converting into a simple joint-stock company? For conversion into a PSA, you do not need a certified auditor’s opinion (instead, you announce the conversion plan in MSiG), prepare a valuation of the company’s assets, or increase the share capital to PLN 100,000. This means a simpler and less expensive procedure. In return, a PSA has two limitations: it cannot be listed on the stock exchange, and its management board is liable for the company’s obligations under Article 299 of the Commercial Companies Code, just like in a limited liability company. So if you are planning an IPO or want to limit the management board’s personal liability, the full joint-stock company is the only option.