Are you a foreigner planning to set up your business in Poland?
If so, today's post will be especially helpful to you. In this article, we compare the most popular forms of doing business in Poland, that is, a limited liability company, a simple joint-stock company and a foreign branch of a company, along with a review of the differences associated with the registration and consequent operation of these entities.
In the following table, which you can download from our site, you will find information about:
Depending on the specific nature of the business, entrepreneurs may choose to establish a company or open a foreign branch of the company in Poland.
If the choice is a capital company, the most popular form is a limited liability company or a Simple Joint Stock Company (abbreviated in Polish as P.S.A).
In the table we explain and compare these 3 forms in detail:
Below I present the advantages of each option. If this does not help you decide - write to us. We will arrange a short meeting to determine what will work best for you.
A limited liability company can be formed for any legally permissible purpose by one or more partners, but it cannot be formed solely by another single-member limited liability company.
Its founders can be either natural persons or legal entities, regardless of citizenship and place of residence. This form of business is suitable, for example, for partners who wish to retain direct supervision over the conduct of the company's affairs and limit the risk to their contribution only.
At least 5,000 PLN of capital is required to establish a limited liability company.
The biggest advantage of a limited liability company is limited liability - this is clear from its name itself. Their liability is limited exclusively to the value they put into the company. What a shareholder has contributed to the company becomes its property (e.g. money or other values as an in-kind contribution), so expect the risk that if the company goes bankrupt - the shareholder will not recover his contribution.
A simple joint-stock company (PSA) is a new form of doing business in Poland, which was introduced by an amendment to the Commercial Companies Act on July 1, 2021.
Thanks to the revolutionary changes, the simple joint-stock company greatly facilitates the development of Polish startups and growth-oriented companies by attracting external investment.
Contributing capital, payments and distributions to investors in a PSA is quick and easy, and dropping formalities such as registering changes to the articles of association with the National Court Register or selling shares via email are expected to provide the company with liquidity and flexibility for the 21st century and the Internet era.
A simple joint-stock company is a combination of the qualities of three well-known types of companies in Poland:
The result is a company that is inexpensive to set up and run - mainly due to the simplification of rules compared to those of a joint-stock company.
The fact that there is no obligation to appoint a board of directors or to have reports audited by a certified public accountant provides previously unknown opportunities to make quick investments and withdraw funds from the company.
The possibility of taking shares in exchange for contributing work to the company is a revolution that was necessary for the startup market. A situation in which one partner contributes cash and another contributes labor is an everyday reality in a startup. Until now, there was no way to legally regulate such cases.
Founder shares are also a special type of preference that exists in P.S.A..
The essence of founder shares is that it is impossible to "dilute" them below a certain threshold. In other words, any issue of new shares must not violate a certain minimum ratio of the number of votes attributable to preferred shares to the number of votes attributable to the total number of all shares in the company. In the event of an issue of new shares that could violate this ratio, the number of votes attributable to founder shares is increased accordingly.
Founder's shares are therefore a good solution for entities interested in raising external financing due to the fact that they allow holders of founding shares to retain control of the company. Contrary to the name, founding shares can also be issued during the company's operation.
Another way for foreign entrepreneurs to operate on the Polish market is to open and conduct business in the form of a branch. This solution makes it possible to control the activity in the chosen country without the need to register a separate business entity, which allows the foreign entrepreneur to save time and capital.
A branch of a foreign company is recommended for entrepreneurs who want to do business in Poland, but only within the scope of the foreign company's business purpose. In practice, this means conducting one's business within a strictly defined scope.
Please write to us if you plan to invest in Poland and open a company or a foreign branch of an enterprise here.
We will guide you through the entire process of registering a company, as well as provide you with the service of comprehensive legal advice necessary in any of your business activities. This will allow you to focus on developing your business without worrying about neglecting the legal aspects of your business.
