{"id":4308,"date":"2026-10-27T12:47:39","date_gmt":"2026-10-27T12:47:39","guid":{"rendered":"https:\/\/sawaryn.com\/?p=4308"},"modified":"2026-10-27T12:51:36","modified_gmt":"2026-10-27T12:51:36","slug":"merging-two-polish-limited-liability-companies","status":"publish","type":"post","link":"https:\/\/sawaryn.com\/en\/publikacje\/merging-two-polish-limited-liability-companies\/","title":{"rendered":"Merging Two Limited Liability Companies Step by Step. How to Simplify the Structure Without Surprises After KRS Registration."},"content":{"rendered":"

Merging two limited liability companies step by step<\/h1>\n

Do you have two limited liability companies, two sets of accounts, two KRS registrations and twice as many annual financial statements? This is a typical situation for founders who historically set up separate entities for different business lines, markets or products. Over time, maintaining such a structure begins to generate unnecessary costs and administrative burdens \u2014 without any real benefits.<\/p>\n

Merging two limited liability companies<\/strong> into one is easier than you might think. Especially if you use the simplified procedure, which allows you to dispense with an auditor, reduce formalities and shorten the entire process to a few weeks. But there is one condition: you must first put the shareholding structure in order. If you fail to do so, you may fall into one of three traps that you will usually only discover when it is too late \u2014 no share redemption provision in the articles of association, insufficient retained earnings or tax risks when shares are redeemed at nominal value.<\/p>\n

In this article, I will guide you through the entire process: from preparing the shareholding structure, through the simplified merger procedure for limited liability companies<\/strong>, to a checklist of actions required after registration with the KRS. You will learn how much it costs, how long it takes, what risks you need to consider and what to do to ensure that, after the merger, you are not faced with matters that should have been resolved beforehand.<\/p>\n

Key concepts you need to know<\/h2>\n

Before we move on to the procedure, let us clarify the meaning of several terms that will appear throughout this article.<\/p>\n\n\n\n\n\n\n\n\n\n\n
Concept<\/th>\nMeaning<\/th>\n<\/tr>\n<\/thead>\n
Merger by acquisition<\/strong><\/td>\nOne company (the acquiring company) absorbs another (the acquired company). The acquired company ceases to exist \u2014 it is removed from the KRS without liquidation<\/a>.<\/td>\n<\/tr>\n
Simplified merger (Article 516 of the Commercial Companies Code)<\/strong><\/td>\nA merger procedure available when the acquiring company holds at least 90% or 100% of the shares in the acquired company. It allows the parties to dispense with an auditor and reduce formalities.<\/td>\n<\/tr>\n
Universal succession (Article 494 of the Commercial Companies Code)<\/strong><\/td>\nOn the date the merger is entered in the KRS, the acquiring company assumes all<\/strong> rights and obligations of the acquired company \u2014 contracts, employees, registrations and real estate.<\/td>\n<\/tr>\n
Share redemption (Article 199 of the Commercial Companies Code)<\/strong><\/td>\nThe legal cancellation of shares \u2014 once the process is complete, the shares cease to exist and minority shareholders cease to be shareholders.<\/td>\n<\/tr>\n
Redemption from distributable profits<\/strong><\/td>\nRedemption financed from the company\u2019s retained earnings \u2014 it does not require a reduction in the share capital and is faster and simpler.<\/td>\n<\/tr>\n
Change-of-control clause<\/strong><\/td>\nA provision in a commercial agreement that gives the counterparty the right to terminate or renegotiate the agreement if the ownership structure of the other party changes.<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

When a simplified merger is possible \u2014 and why it requires preparation<\/h2>\n

The simplified merger of limited liability companies<\/strong> is governed by Article 516 of the Commercial Companies Code. It applies exclusively to mergers by acquisition \u2014 not mergers through the formation of a new company.<\/p>\n

The simplified procedure is available in several variants. The most commonly used are:<\/p>\n\n\n\n\n\n\n\n\n
Variant<\/th>\nCondition<\/th>\nWhat is not required<\/th>\n<\/tr>\n<\/thead>\n
100% of the shares<\/strong> (Article 516 \u00a76 of the Commercial Companies Code)<\/td>\nThe acquiring company holds all shares in the acquired company<\/td>\nAn auditor, management board reports, a merger resolution in the acquired company and determination of the share exchange ratio<\/td>\n<\/tr>\n
\u2265 90% of the shares<\/strong> (Article 516 \u00a71\u20135 of the Commercial Companies Code)<\/td>\nThe acquiring company holds at least 90% of the share capital of the acquired company<\/td>\nAn auditor, management board reports and a merger resolution in the acquiring company (although a shareholder holding 1\/20 of the share capital may request that a shareholders\u2019 meeting be convened)<\/td>\n<\/tr>\n
One shareholder in both companies<\/strong> (Articles 515\u00b9 and 516 of the Commercial Companies Code)<\/td>\nOne shareholder directly or indirectly holds all shares in both companies<\/td>\nA capital increase, an exchange ratio and management board reports<\/td>\n<\/tr>\n
Natural persons only<\/strong> (Article 516 \u00a77 of the Commercial Companies Code)<\/td>\nAll shareholders of all merging companies are natural persons, with no more than 10 shareholders in total<\/td>\nPublication of the merger plan and an auditor\u2019s review; however, a single objection from a shareholder prevents the simplified procedure from being used<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Why 100% ownership is the best route<\/h3>\n

The variant in which the acquiring company holds 100% of the shares in the acquired company offers the greatest number of simplifications. You do not need to determine a share exchange ratio, increase the share capital of the acquiring company or adopt a merger resolution in the acquired company.<\/p>\n

If the acquired company has minority shareholders \u2014 for example, former co-founders holding a few percent of its shares \u2014 you must first buy out<\/a> or redeem their shares. This is why share redemption<\/strong> is usually the first stage of the entire process.<\/p>\n

Redemption of minority shares \u2014 the preparatory stage<\/h2>\n

Three conditions that must be met before you can proceed<\/h3>\n
    \n
  1. The articles of association must provide for share redemption.<\/strong> Open the current consolidated version of the acquired company\u2019s articles of association and find the paragraph concerning share redemption. If there is no such provision, you must first amend the articles of association<\/a> before a notary. This adds 2\u20134 weeks to the process and generates additional notarial costs. Many founders are unaware of this at the outset.<\/li>\n
  2. The company must have sufficient retained earnings.<\/strong> Redemption from distributable profits \u2014 without reducing the share capital \u2014 is faster and simpler. However, it requires confirmation that the company has sufficient retained earnings to pay the consideration for the redeemed shares. Ask your accounting team for an up-to-date breakdown of the company\u2019s equity.<\/li>\n
  3. Minority shareholders must give their consent<\/strong> (in the case of voluntary redemption). Voluntary redemption means that a shareholder transfers shares to the company for the purpose of their redemption. It requires a resolution of the shareholders\u2019 meeting and the consent of the shareholder whose shares are being redeemed.<\/li>\n<\/ol>\n

    What if the company does not have sufficient profits?<\/h3>\n

    In that case, redemption combined with a reduction in share capital<\/strong> is necessary. The procedure takes longer \u2014 among other things, it requires a creditor notification procedure in which the company\u2019s creditors have 3 months<\/strong> to object to the capital reduction. Once that period has expired, you must file the capital reduction with the KRS within 6 months of the resolution. You should also remember that the share capital of a limited liability company cannot fall below 5 000 z\u0142 and the nominal value of a single share cannot fall below 50 z\u0142.<\/p>\n

    Tax risk when shares are redeemed at nominal value<\/h3>\n

    This is one of the most common traps. Shares redeemed at nominal value (e.g. 50 z\u0142 per share), when the company\u2019s market value is many times higher, may attract the attention of the tax authority.<\/p>\n

    For an individual shareholder:<\/strong>
    \nVoluntary redemption generates income from monetary capital (Article 17(1)(6)(a) of the PIT Act), taxed at a rate of 19%. Income = consideration received minus the historical cost of acquiring the shares. If the consideration = nominal value = acquisition cost \u2192 income = 0 and no tax is payable. However, under Article 19 of the PIT Act, the tax authority may adjust the revenue to market value<\/strong> if the consideration differs significantly from it without a justified reason.<\/p>\n

    For the company:<\/strong>
    \nRedemption financed in cash from distributable profits is tax-neutral for the company. However, if the consideration is paid in a non-cash form (e.g. by transferring an asset), the company recognises revenue equal to the market value of that asset.<\/p>\n

    For a corporate shareholder (CIT):<\/strong>
    \nRevenue from the disposal of shares for the purpose of voluntary redemption constitutes revenue from capital gains (Article 7b(1)(3)(a) of the CIT Act). Similarly, the authority may adjust the revenue under Article 14 of the CIT Act.<\/p>\n

    Additional risk \u2014 transfer pricing:<\/strong> The Ministry of Finance has confirmed that the voluntary redemption of shares without consideration or at a value grossly below market value constitutes a transaction within the meaning of the transfer pricing regulations. Where related parties are involved, documentation and an arm\u2019s-length analysis are required.<\/p>\n

    What to do:<\/strong> Before the redemption, commission an independent valuation of the shares\u2019 market value. Prepare documentation explaining the economic rationale for the agreed consideration. Consult a tax adviser about the PIT\/CIT implications.<\/p>\n