The decision to merge two limited liability companies into one is made quickly. Then it turns out that the articles of association of the company being acquired do not provide for the redemption of shares, minority shareholders are still part of the ownership structure, and the accounting department has not confirmed whether the company has sufficient capital to pay remuneration for the shares. The timeline grows by several weeks before anyone drafts the first merger document.
If you operate a business through two limited liability companies and are planning a simplified merger of companies, this article will show you where to start, what determines the pace of the process, and what obligations await you after the merger is entered in the National Court Register (KRS). I focus on three stages: streamlining the ownership structure, the merger itself, and the list of tasks required to close the matter once and for all.
Key terms before we begin
Before we move on to the details, it is worth clarifying a few terms that come up in every discussion about company consolidation.
| Term | Meaning |
|---|---|
| Merger by acquisition | All assets of the company being acquired are transferred to the acquiring company. The company being acquired is dissolved without liquidation (Article 492 § 1 point 1 of the Commercial Companies Code). |
| Simplified procedure | A procedure involving fewer formalities—with no expert review and no resolution of the shareholders’ meeting of the company being acquired—available when the acquiring company holds 100% of the shares in the company being acquired (Article 516 § 6 of the Commercial Companies Code). |
| Redemption of shares | The legal cancellation of shares—once the process is complete, the shares cease to exist and the former shareholders cease to be shareholders. It requires a basis in the company’s articles of association (Article 199 of the Commercial Companies Code). |
| Universal succession | By operation of law, the acquiring company assumes all rights and obligations of the company being acquired—from contracts and administrative decisions to tax liabilities (Article 494 of the Commercial Companies Code). |
| Creditor notification procedure | A three-month period during which creditors are invited to raise objections—required when the share capital is reduced (Article 264 § 1 of the Commercial Companies Code). |
Why a simplified merger begins with the ownership structure
The simplified procedure is available when the acquiring company is the sole shareholder of the company being acquired. If minority shareholders remain in the ownership structure, you must first ensure that the acquiring company holds 100% of the shares.
You have two options:
- Purchase of shares for consideration from minority shareholders—the transfer of shares takes approximately 5 business days, but the shares continue to exist within the structure of the company being acquired.
- Voluntary redemption of shares—the company purchases shares from the shareholders for the purpose of redeeming them. The shares cease to exist, and the shareholders cease to be shareholders. If the redemption is financed from distributable profits, the process takes several weeks from the time all documents have been collected.
In both cases, you need the consent of the minority shareholders. For voluntary redemption, this consent is an absolute requirement—without it, this option is unavailable.
Three questions before you sign anything
Before you begin the process, you need answers to three questions:
- Do the articles of association of the company being acquired provide for the redemption of shares? If not, you must first amend the articles of association in the form of a notarial deed and register the amendment with the National Court Register (KRS). This adds weeks to the timeline. You cannot download the current consolidated text of the articles from the register—the company itself must provide it.
- Does the company have sufficient capital to finance the redemption from distributable profits? Ask the accounting department to provide written confirmation of whether, after covering losses carried forward, sufficient capital remains to pay the remuneration, whether the company’s current financial position permits the payment, and whether there are any liquidity constraints. A company may report a loss for a given year while still having sufficient profits carried forward from previous years to finance the redemption.
- Will the minority shareholders give their consent? Establish this in advance. A refusal blocks the simplest route to the simplified procedure.
Redemption from distributable profits or through a reduction in share capital
The source used to finance the remuneration for the redeemed shares determines how many weeks—or months—the first stage of the process will take.
| Criterion | Redemption from distributable profits | Redemption through a reduction in share capital |
|---|---|---|
| Requirement to reduce share capital | No—the share capital remains unchanged (Article 199 § 6 of the Commercial Companies Code) | Yes—the redemption takes effect when the capital is reduced (Article 199 § 7 of the Commercial Companies Code) |
| Creditor notification procedure | None | 3 months for creditors to raise objections (Article 264 § 1 of the Commercial Companies Code) |
| Additional registration steps | None | Notification of the share capital reduction to the National Court Register (KRS) after the creditor notification period has expired (Article 265 of the Commercial Companies Code) |
| Estimated time | Several weeks from the time all documents have been collected | At least 4–5 months (3-month creditor notification period + registration) |
| Condition | Sufficient capital after covering losses | The share capital after the reduction may not fall below PLN 5,000 |
Conclusion: if the company has sufficient capital, redemption from distributable profits is several months faster. If it does not, a reduction in share capital is required, significantly extending the overall timeline.
Remuneration for shares—nominal value versus market value
The remuneration for the redeemed shares may be set at their nominal value. However, if the market value of the shares is higher, the discrepancy raises tax questions.
For personal income tax purposes, voluntary redemption for consideration is classified as a disposal of shares for consideration (Article 17 section 1 point 6(a) of the Personal Income Tax Act), and the income is calculated as the excess of the remuneration over the cost of acquiring or subscribing for the shares. Remuneration below market value does not automatically generate income calculated at market value—but a separate analysis of the rules on non-arm’s-length pricing and the relationships between the parties is necessary.
Recommendation: consult a tax adviser to confirm the tax implications of redeeming the shares at their nominal value before you sign the agreement for the acquisition of shares for redemption.
How a simplified merger works step by step
Once the acquiring company holds 100% of the shares, the merger itself can proceed. The redemption and the merger are two separate stages—the second can begin only once the first has been completed.
What can be omitted under the simplified procedure
When acquiring a wholly owned company (Article 516 § 6 of the Commercial Companies Code), the following may be omitted:
- A resolution of the shareholders’ meeting of the company being acquired
- As a rule, a resolution of the shareholders’ meeting of the acquiring company (unless shareholders representing at least 1/20 of the share capital request that it be convened—Article 516 § 2 of the Commercial Companies Code)
- Examination of the merger plan by an expert and the expert’s opinion
- The management board’s report to the extent specified in Article 516 § 5 of the Commercial Companies Code
What cannot be omitted
- Merger plan—it must be prepared and made available at least one month before the application for registration is filed (Article 505 § 1 of the Commercial Companies Code)
- Documents required under Article 505 of the Commercial Companies Code—made available to the shareholders for inspection
- Publication of the merger plan
The simplified procedure does not mean that all documentation can be omitted. The merger plan and its disclosure remain mandatory.
Estimated timeline
| Stage | Estimated time | Comments |
|---|---|---|
| Streamlining the ownership structure (redemption from distributable profits) | Several weeks | Longer if the articles of association must be amended before a notary |
| Preparation of merger documentation | Up to 2 weeks | Merger plan, documents under Article 505 of the Commercial Companies Code |
| Disclosure of documents and publication | At least 1 month | Before filing the application for registration |
| Filing the application with the National Court Register (KRS) | Immediately after the documents have been signed | Statutory review period: 7 days from receipt (Biznes.gov.pl) |
| Registration of the merger in the National Court Register (KRS) | Timing depends on the registration court | No nationwide statistics are available on the actual time required to register mergers |
The merger takes effect on the date it is entered in the National Court Register (KRS) (Article 493 of the Commercial Companies Code). Do not make obligations to business partners dependent on a specific registration date—the timing is beyond the parties’ control.
Tax neutrality of the merger—conditions, not a guarantee
A merger of companies may be tax-neutral for corporate income tax purposes, but this neutrality is conditional. Article 12 sections 13 and 14 of the Corporate Income Tax Act exclude tax neutrality when the main purpose or one of the main purposes of the merger is tax avoidance. The absence of valid economic reasons triggers a statutory anti-abuse presumption.
This means that the tax authority may challenge the merger’s tax neutrality if you cannot demonstrate a valid business rationale for the consolidation. Reasons such as:
- Eliminating duplicate reporting and registration obligations
- Reducing accounting and administrative costs
- Simplifying the structure before bringing in an investor or obtaining financing
—should be documented and consistent with how the transaction is actually carried out.
External approvals—do you need clearance from UOKiK?
A merger of independent businesses constitutes a concentration that must be notified to the President of UOKiK if the combined worldwide turnover of the participants exceeded EUR 1 billion or their combined turnover in Poland exceeded EUR 50 million in the financial year preceding the notification (Article 13 section 2 point 1 of the Competition and Consumer Protection Act).
When consolidating two limited liability companies within an SME group, these thresholds will generally not be exceeded. Nevertheless, check:
- Whether loan or lease agreements contain change of control clauses requiring notice to or consent from the bank
- Whether the company being acquired holds permits or licences subject to the supervision of a sector-specific regulator (KNF, URE, UKE)
- Whether contracts with business partners impose a notification obligation in the event of a change of entity—a breach of such a clause may constitute a breach of contract
Post-registration task list—this is where the merger ends
Once the merger is entered in the National Court Register (KRS), the acquiring company assumes all rights and obligations of the company being acquired. However, universal succession does not replace active filings with registers and updates to documents.
Below is a list of tasks you must complete after registration—with an owner assigned to each:
| Task | Owner | Deadline / comments |
|---|---|---|
| Update the Central Register of Beneficial Owners (CRBR) | Management board / compliance | 7 days from the change (entities entered in the National Court Register before 10.11.2022) or 14 days (after that date). Penalty for non-compliance: up to PLN 1,000,000 (National Revenue Administration notice) |
| Update the Waste Database (BDO) | Management board / compliance | Failure to apply for an update may result in detention or a fine (BDO) |
| Notify the tax office and Statistics Poland (GUS) | Accounting | Deadlines must be verified under the Act on the Registration and Identification of Taxpayers |
| Notify banks | CFO / accounting | Update details, accounts, and loan agreements |
| Transfer of employees | HR | By operation of law under Article 23¹ § 1 of the Labour Code—the new employer becomes a party to the existing employment relationships. Prepare employee communications and fulfil information obligations before signing the merger documents |
| Review and notification of business partners | Legal / operations | Contracts containing clauses requiring notice or consent in the event of a change of entity |
| Update the data controller details (GDPR) | DPO / legal | Update the records of processing activities (Article 30 of the GDPR), review data processing agreements (Article 28 section 3 of the GDPR), and assess whether privacy notices need to be updated |
| Land and mortgage register application | Legal | If the company being acquired owns real estate—without an application, the land and mortgage register will show an entity that no longer exists |
The merger does not end on the date it is entered in the National Court Register—it ends when this list has been completed.
Employees—what you need to know
Employment relationships are transferred by operation of law if the merger results in the transfer of a workplace within the meaning of Article 23¹ § 1 of the Labour Code. The new employer becomes a party to the existing employment contracts on their current terms.
From an operational perspective:
- Prepare employee communications in advance—before the merger documents are signed
- Explain that the employment terms will not change
- Plan updates to HR documentation (contracts, employment certificates, HR systems)
Poorly prepared communication creates tension and the risk of disputes—particularly in technology companies, where competition for specialists is intense.
Three levels of legal support
Our experience shows that owners of corporate groups have different support needs. This is why we offer three levels of service:
| Option | What it includes |
|---|---|
| Operational minimum | Merger documents + filing with the National Court Register (KRS) |
| Solid foundation | Streamlining the ownership structure (redemption or acquisition of shares), review of key contracts, registrations with the National Court Register (KRS), Statistics Poland (GUS), and the tax office |
| Comprehensive coverage | Additionally: transfer of employees, analysis of contracts with business partners, updates to data controller details and the Waste Database (BDO), and an application to the land and mortgage register |
We begin with a diagnostic consultation: we review the articles of association, the ownership structure, and the ability to finance the exit of minority shareholders. On this basis, we present a timeline and scope of services tailored to your situation.
The result: one company and a completed post-registration task list.
One company instead of two—what to do now
A simplified merger reduces the formalities, but it does not eliminate the need for preparation. Three factors determine the pace of the entire process: the wording of the articles of association of the company being acquired, the actual financial capacity to pay remuneration for the shares, and the consent of the minority shareholders.
If you are planning to consolidate two limited liability companies, start by checking these three points. If you need support with an audit of the ownership structure, preparation of documentation, or completion of the post-registration task list—contact us.
Frequently asked questions
How long does a simplified merger take—from the decision to having a single company?
As a guideline: several weeks to streamline the ownership structure through redemption from distributable profits, up to 2 weeks to prepare the merger documentation, at least one month to make the documents available before filing the application, plus the time required by the registration court to make the entry. The statutory period for reviewing the application is 7 days, but the actual registration time depends on the court’s workload. If the articles of association do not provide for redemption or the share capital must be reduced, the timeline will increase by additional weeks or months.
Which is faster—buying the shares from minority shareholders or redeeming them?
The transfer of shares itself through a sale takes approximately 5 business days. Redemption from distributable profits takes several weeks. However, a sale does not eliminate the shares from the structure of the company being acquired, whereas redemption does. The choice depends on your objective: if you want the shares to cease to exist and the shareholders to exit the structure permanently, redemption is the appropriate route. If it is sufficient to transfer 100% of the shares to the acquiring company, a sale will be faster.
What happens if a minority shareholder does not consent to the redemption?
Voluntary redemption requires the shareholder’s consent—without it, this option is unavailable. The alternative is to purchase the shares for consideration through a sale. If the shareholder refuses both redemption and sale, the simplified procedure cannot be used until the acquiring company obtains 100% of the shares.
Are the employees of the company being acquired automatically transferred to the acquiring company?
If the merger results in the transfer of a workplace within the meaning of Article 23¹ § 1 of the Labour Code, the new employer becomes a party to the existing employment relationships by operation of law. The employment terms do not change. Prepare employee communications and fulfil the relevant information obligations in advance—before the merger documents are signed.
Do contracts with customers and suppliers remain valid after the merger?
Yes—by virtue of universal succession (Article 494 of the Commercial Companies Code), the acquiring company assumes all rights and obligations of the company being acquired. The contracts do not need to be signed again. However, check whether they contain clauses requiring notice or consent in the event of a change of entity—a breach of such a clause may constitute a breach of contract.
Which registers and institutions must be notified after the merger is entered in the National Court Register (KRS)?
After registration, you must update the details in the Central Register of Beneficial Owners (CRBR) (deadline of 7 or 14 days, with a penalty of up to PLN 1,000,000 for non-compliance), the Waste Database (BDO), the tax office, Statistics Poland (GUS), and banks. If the company being acquired owned real estate, file an application with the land and mortgage register. You should also update your GDPR documentation: the records of processing activities, data processing agreements, and privacy notices.
