A simple joint-stock company (so-called PSA) is a new form of conducting business in Poland, which was introduced under an amendment to the Commercial Companies Code on July 1, 2021.
Thanks to the revolutionary changes, a simple joint-stock company significantly facilitates the development of Polish startups and companies focused on growth by attracting external investment.
This type of company is a great solution for making investments, especially for a large group of stockholders or a foreign investor.
What does a simple joint-stock company offer?
Setting up a company is cheaper than ever. Capital contributions, payments and withdrawals to investors are fast and easy and resignation from formalities such as registering amendments to the articles of association in the National Court Register or selling stocks via e-mail are supposed to provide a company with liquidity and flexibility in line with the 21st century and the Internet era.
PSA is a company perfectly tailored for startups.
A simple joint-stock company is a combination of advantages of three types of companies already well known in Poland:
The legislator took the best features of these companies, added new solutions and created a completely new legal form. The result is a company that:
The ability to take up stocks in exchange for contribution of work to a company is a revolution that was necessary on the startup market. Situation in which one stockholder contributes cash and the other contributes work is a standard in a startup. Until now, it was not possible to regulate such cases legally.
The biggest novelty in a simple joint-stock company is the requirement of the stock capital of only 1 PLN.
This means that no capital is needed to set up such a company. Moreover, a change in its stock capital does not require an amendment to the articles of association! Therefore, long meetings at a notary's office and dozens of e-mails with lawyers in order to organize a capital increase are no longer necessary.
It is worth mentioning that in a simple joint-stock company the stock capital is detached from the value of stocks. The stocks have no denomination, so they have no fixed nominal value.
Such a procedure, although it sounds complicated, allows to increase and decrease the capital more easily and better reflects the real financial situation of a company - a stock capital consists of contributions actually made to cover the stocks. Therefore, it is easier to assess a condition of a simple joint-stock company. Read more about the capital in post The stock capital in a simple joint-stock company.
Another revolution is the possibility of providing work as a contribution to stock capital. This is not possible in a limited liability company or a joint-stock company.
This is a great idea, especially from the perspective of startups, where the founders usually contribute their own work (know how) and not money. Until now it was always troublesome - it took a lot of effort for founders to receive stocks in exchange for already performed work (e.g. on the occasion of capital increase).
Now, stockholders of a simple joint-stock company can take up stocks in exchange for performed work and this can be included directly in company's articles of association, without using legal loopholes.
This change also means that no start-up capital will be necessary, because from the beginning the stocks can be covered with work.
Cash contributions can be made within 3 years from taking up stocks. This is a considerable simplification, which will make it possible e.g. to arrange with investors that capital contributions to a company will be made in specific tranches.
In a simple joint-stock company, stocks can be sold and taken up via e-email.
This is a great simplification, especially for companies planning to raise capital from an unknown group of investors (e.g. crowdfounding) or from investors scattered around the world.
It is also extremely beneficial for foreign investors.
Until now, investment projects were usually carried out in the form of a limited liability company. This caused many difficulties in the investment process. The stocks in a limited liability company have to be taken up in the form of a notarial deed, and any sale of stocks requires a notarized certification.
In case of the issuance of stocks to, for example, several hundred people, this task was basically impossible.
Similarly in the situation where people from different countries were interested in the investment. Such a transaction required obtaining of notarized powers of attorney from those persons, their certified translation or even obtaining apostille, which was time-consuming and costly.
In a simple joint-stock company, all the problems described above do not exist. Issued stocks can be taken up by e-mail. Stocks can also be sold via e-mail.
Conducting an investment round e.g. for foreign investors or through crowdfunding thus becomes very easy and cost-free.
In a joint-stock company and a limited liability company, it is not possible to get the contributed capital back. Therefore, if a capital has been paid in a limited liability company or a joint-stock company and it is not needed, it cannot be returned. A cumbersome and lengthy capital decrease procedure must be carried out.
In a simple joint-stock company the situation is quite different - money paid into the company's stock capital can be returned to the paying stockholder. It is not necessary to carry out a procedure of capital decrease.
How to pay out money paid for the stock capital? The funds may be paid out to stockholders as dividends, taking into account the balance-sheet test and the restriction on distributions endangering the solvency of the company. This solution also increases the financial flexibility of a company.
Such solution also allows investors to make larger contributions to a company and then withdraw some of it in case it turns out that the company does not need them.
PSA introduces many other new features:
All the described changes are of great practical importance and will significantly simplify the functioning of the company.
A simple joint-stock company seems to be a good solution that will support growth of Polish startups and other companies looking for investors.
Considerable simplifications in comparison to a joint-stock company and preserved advantages of a limited liability company or a partnership should prove to be a functional tool.
If you are thinking about setting up a simple joint-stock company and you need help, contact us. Thanks to many years of experience we know how to take advantage of the benefits of a simple joint-stock company.
You will find more information about setting up a simple joint-stock company in the post How to set up a simple joint-stock company.