Running two Polish limited liability companies (spółki z ograniczoną odpowiedzialnością, or sp. z o.o.) can mean two sets of accounts, two entries in the National Court Register (Krajowy Rejestr Sądowy, or KRS), two annual financial statements and duplicated administration. Founders often establish separate companies for different products, business lines or markets. Over time, the cost of maintaining that structure may outweigh its benefits.
A simplified merger can reduce the paperwork and remove the need for an auditor’s review. But the shareholding structure matters. If the company to be acquired still has minority shareholders, their shares may need to be bought out or redeemed before the most streamlined route is available. That preparatory work can expose three issues: the company’s articles do not permit redemption, it lacks sufficient retained earnings, or the proposed redemption price creates tax risk.
This guide covers those preparations, the merger procedure, employment and contract issues, indicative costs, and the work that remains after the merger is registered.
Key Polish terms
| Term | What it means in this process |
|---|---|
| Merger by acquisition | One company absorbs another. The acquired company ceases to exist and is removed from the KRS without liquidation. |
| Simplified merger — Article 516 of the Commercial Companies Code | A merger route available under specified ownership structures, including where the acquiring company holds at least 90% or all of the acquired company’s shares. It removes the auditor’s review and reduces other formalities. |
| Universal succession — Article 494 of the Commercial Companies Code | When the merger is entered in the KRS, the acquiring company takes over all rights and obligations of the acquired company, including those relating to contracts, employees, registrations and real estate. |
| Share redemption — Article 199 of the Commercial Companies Code | The legal cancellation of shares. Once their shares have been redeemed, minority shareholders no longer hold them or remain shareholders on that basis. |
| Redemption from distributable profits | Redemption funded from retained earnings, without reducing share capital. This is generally the faster, simpler route described here. |
| Change-of-control clause | A contractual provision that may allow a counterparty to terminate or renegotiate an agreement following a change in the other party’s ownership structure. |
When can you use a simplified merger?
Article 516 of the Polish Commercial Companies Code governs simplified mergers. The procedure discussed here applies to a merger by acquisition, not a merger that creates a new company.
The main variants are:
| Variant | Ownership condition | Formalities that fall away |
|---|---|---|
| 100% ownership — Article 516 §6 | The acquiring company holds all shares in the acquired company. | Auditor’s review, management board reports, a merger resolution in the acquired company and a share exchange ratio. |
| At least 90% ownership — Article 516 §§1–5 | The acquiring company holds at least 90% of the acquired company’s share capital. | Auditor’s review, management board reports and a merger resolution in the acquiring company. A shareholder holding 1/20 of its share capital may, however, request a shareholders’ meeting. |
| One shareholder in both companies — Articles 515¹ and 516 | One shareholder directly or indirectly holds all shares in both companies. | A share capital increase, a share exchange ratio and management board reports. |
| Natural-person shareholders only — Article 516 §7 | All shareholders of all merging companies are individuals, no more than 10 in total. | Publication of the merger plan and an auditor’s review. A single shareholder objection prevents use of this simplified route. |
The 100% ownership variant offers the most simplifications. The acquiring company does not need to issue new shares, establish an exchange ratio or increase its share capital; the acquired company does not need to pass a merger resolution.
If former co-founders or other minority investors still hold shares in the company to be acquired, those shares must first be bought out or redeemed to reach 100% ownership. Share redemption is therefore often the first stage of the project.
Preparing the shareholding structure: redeeming minority shares
Check three conditions before you start
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The articles of association must permit redemption. Review the current consolidated articles of the company to be acquired. If they contain no redemption provision, the company must first amend its articles before a notary. The source estimates that this adds 2–4 weeks and further notarial costs.
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There must be enough retained earnings to fund redemption from distributable profits. This route avoids a reduction in share capital. Ask the accounting team for an up-to-date breakdown of equity and confirmation that retained earnings are sufficient to pay the agreed consideration.
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The affected shareholders must consent if redemption is voluntary. Voluntary redemption involves a shareholder transferring shares to the company so that the company can cancel them. It requires both a shareholders’ meeting resolution and the consent of the shareholder whose shares are being redeemed.
If retained earnings are insufficient
The alternative described in the source is redemption combined with a reduction in share capital. It takes longer. Among other steps, creditors have three months to object to the reduction under the creditor notification procedure. The reduction must then be filed with the KRS within six months of the resolution.
The company’s share capital cannot fall below PLN 5,000, and the nominal value of an individual share cannot fall below PLN 50.
Assess the tax risk before agreeing on a price
Redeeming shares at nominal value—for example, PLN 50 per share—may attract tax authority scrutiny if the company’s market value is much higher.
- Individual shareholder — Polish personal income tax (PIT): The source treats voluntary redemption as income from monetary capital under Article 17(1)(6)(a) of the PIT Act, taxed at 19%. Taxable income is the consideration received less the historical cost of acquiring the shares. If all three amounts—consideration, nominal value and acquisition cost—are equal, the resulting income is zero. The source also warns that, under Article 19 of the PIT Act, the authority may adjust revenue to market value where the consideration differs substantially without a justified reason.
- Company redeeming the shares: Cash redemption funded from distributable profits is described as tax-neutral for the company. If it pays non-cash consideration, such as an asset, the company recognizes revenue equal to that asset’s market value.
- Corporate shareholder — Polish corporate income tax (CIT): The source classifies revenue from selling shares for voluntary redemption as capital-gains revenue under Article 7b(1)(3)(a) of the CIT Act. It also identifies a potential market-value adjustment under Article 14 of that Act.
- Related parties and transfer pricing: The source states that the Polish Ministry of Finance has confirmed that voluntary redemption for no consideration, or for consideration grossly below market value, is a transaction for transfer-pricing purposes. For related parties, it identifies a need for documentation and an arm’s-length analysis.
Before redemption, obtain an independent market valuation of the shares, document the commercial reasons for the agreed consideration and consult a Polish tax adviser on the PIT and CIT consequences. You can also contact us to assess the redemption risks and the available routes.
The 100% ownership merger procedure, step by step
The following steps address the source’s principal scenario: the acquiring company already owns all shares in the company to be acquired and uses Article 516 §6 of the Commercial Companies Code.
1. Prepare the merger plan
A merger plan is still required under the simplified variants. Its minimum content includes:
- Each company’s legal form, business name and registered office.
- The method of merger—acquisition.
- The legal basis: Article 492 §1(1) together with Article 516 §6 of the Commercial Companies Code.
For the 100% ownership variant, the plan does not need a share exchange ratio, rules for allotting shares or a date from which new shares participate in profits. The acquiring company issues no new shares.
The plan is accompanied by documents including draft resolutions, draft amendments to the articles of association, KRS extracts, financial statements and statements concerning the companies’ accounting position.
2. Publish or make the plan available
The merger plan is published in the Monitor Sądowy i Gospodarczy—the Polish Court and Commercial Gazette—or made available on the companies’ websites.
For this 100% ownership variant, the source specifies publication at least one month before filing the application to register the merger. It emphasizes that the reference point is the filing date, not the shareholders’ meeting.
3. Pass the merger resolution
In this variant, a merger resolution is required only in the acquiring company. The shareholders’ meeting resolution approving the merger and any amendment to the articles must be recorded by a notary in the form of a notarial deed.
At least half of the share capital must be represented to meet the stated quorum requirement.
4. Apply to the KRS
After the documents are signed, file the merger registration application with the KRS court responsible for the acquiring company’s registered office. The stated court fee for registering the changes is PLN 500.
5. Identify the effective merger date
The merger takes effect when it is entered in the KRS under Article 493 §2 of the Commercial Companies Code. On that date:
- the acquired company is removed from the KRS without liquidation;
- the acquiring company takes over the acquired company’s rights and obligations through universal succession; and
- the acquired company’s employees become employees of the acquiring company by operation of law.
Indicative costs and timing
Costs depend on the work required before the merger, the scope of legal support and, where relevant, the value of a share capital increase. The estimates in the source are:
| Cost | Indicative amount |
|---|---|
| Notarial fee for the merger deed and amendment to the articles | Up to PLN 10,000 net plus 23% VAT, depending on the value of a capital increase and the notarial fee schedule |
| KRS court fee to register the merger | PLN 500 |
| KRS court fee for other applications, such as company-data changes | PLN 300 per application |
| Monitor Sądowy i Gospodarczy fee for a KRS entry | PLN 100 |
| Monitor Sądowy i Gospodarczy court notices | PLN 500 per notice or PLN 0.70 per character |
| Legal support: merger only | Several thousand PLN net |
| Legal support: merger, redemption and registrations | More than ten thousand PLN net |
| Comprehensive support, including contracts, employees, GDPR and real estate | More than twenty thousand PLN net |
Any consideration paid for redeemed shares is additional. Its amount depends on the valuation and arrangements with the minority shareholders.
For the simplified 100% ownership route, the source estimates one to two months from minority-share redemption through KRS registration, provided the shareholding and documentation can be put in order. Redemption from distributable profits may itself take several weeks after the documents are assembled. An amendment to add a missing redemption provision can add 2–4 weeks; a capital reduction takes longer because of the creditor objection period. These are planning estimates, not a guaranteed registration timetable.
Employees: plan the transfer before registration
The source treats a merger as a transfer of an undertaking under Article 23¹ of the Polish Labour Code. Employees of the acquired company move to the acquiring company by operation of law on the merger date; new employment contracts are not required.
Give employees the required information
At least 30 days before the expected merger date, employees must be informed of the transfer. The source calls for an individual letter to each employee, rather than a bulletin-board notice or an email with no confirmation of receipt.
The notice should state the expected transfer date, reasons for the transfer, legal, economic and social consequences for employees, and intended measures concerning employment conditions. Employees absent because of illness or leave must also receive it.
Account for employee rights and liabilities
Within two months after the merger, an employee may end the employment relationship without notice by giving seven days’ advance warning. The source describes the consequences as equivalent to termination by the employer, including entitlement to severance pay and unemployment benefits.
The transfer itself cannot justify termination by the employer under the Labour Code provision cited in the source. The source also states that the former and new employers are jointly and severally liable for employment obligations arising before the merger, including unpaid wages, payments for unused leave and severance.
Because employee notification is due before the merger, it belongs in the project timetable—not merely on a post-registration checklist.
Review contracts for change-of-control provisions
Under universal succession, the acquiring company steps into the acquired company’s contractual relationships. As a rule, counterparties do not need to consent to the merger for that succession to occur. The source states that contractual terms attempting to prevent the transfer of rights are invalid under Article 58 §1 of the Civil Code together with Article 494 of the Commercial Companies Code.
That does not remove contract risk. A change-of-control clause may remain effective within the transferred contract and give the counterparty a right to terminate or renegotiate. Depending on its wording, a merger may qualify as a “change of control,” including where the clause refers to definitions in Article 4 of the Commercial Companies Code or Article 4 of the Act on Competition and Consumer Protection.
Before filing, review material customer, supplier, financing and other commercial agreements for notification, consent and change-of-control terms. Identify the communications required and contact counterparties in advance rather than allowing them to learn of the change from the KRS.
After KRS registration: notifications and updates
Registration completes the merger, but not the administrative work. The source identifies the following actions and deadlines; assign an owner to each before the merger date.
| Action | Timing stated in the source | Suggested owner |
|---|---|---|
| Update information with the Central Statistical Office (GUS) for the REGON statistical register | Within 7 days of the merger | Management board / accounting |
| File NIP-8 with the tax office | Within 7 days | Management board / accounting |
| Update information with the Social Insurance Institution (ZUS) | Within 7 days | HR / accounting |
| File the property tax notification | Within 14 days | Accounting |
| Update the Central Register of Beneficial Owners (CRBR) | Within 14 days | Management board |
| Update the Waste Database (BDO) entry | Within 30 days | Management board / operations |
| Update land and mortgage registers | Without delay | Management board / lawyer |
| Update GDPR information concerning the data controller | Without delay | Data protection officer / management board |
| Update banking arrangements and account information | Without delay | Management board / finance |
The employee notice is a separate pre-merger action due at least 30 days before the expected merger; the employee termination period described above runs for two months afterward.
Also review the combined revenues of the two companies. The source warns that exceeding a EUR 2 million threshold after the merger would mean losing the preferential 9% CIT rate and moving to 19%. Check the tax position as part of the merger plan rather than assuming the previous rate will continue.
Common situations and the first decision in each
A founder operates a SaaS company and a consulting company. Separate accounting, reporting and administration no longer serve a useful purpose, but former co-founders retain small stakes in one entity. The route described in the source is voluntary redemption of those minority shares from distributable profits, followed by a simplified merger under Article 516 §6—subject to the articles, funding and tax checks above.
A scale-up needs one operating company before an investment round. The ownership structure and registration timetable become transaction-critical. The source suggests considering a merger around the financial year-end to make closing the books easier, while allowing for the preparatory and publication periods.
The acquired company’s articles do not permit redemption. The immediate task is not the merger filing: it is amending the articles before a notary. Discovering that omission late can add the estimated 2–4 weeks and additional cost. Review the articles at the outset.
How we can help
A merger draws together corporate, tax, employment, data-protection and registration work. Our support can include:
- Reviewing ownership and the articles to establish which simplified route is available and what must change first.
- Handling minority-share redemption, including documents, notarial coordination and identification of tax risks.
- Preparing the merger plan and supporting documents, including draft resolutions, amendments and accounting-position statements.
- Filing with the KRS and handling questions from the registry court.
- Reviewing counterparty agreements and preparing change-of-control communications.
- Coordinating the remaining actions, including employee notices, registry and tax updates, GDPR information, banks and land and mortgage registers.
We can tailor the work from the merger filing itself to support across the full process. If you are considering combining two Polish companies, contact us to assess the available route and the issues to resolve before filing.
Frequently asked questions
Can the companies merge without an auditor’s review?
Yes, under the simplified procedure described in Article 516 of the Commercial Companies Code, including where the acquiring company holds at least 90% of the acquired company’s share capital. At 100% ownership, further requirements fall away, including management board reports and the share exchange ratio. The source states that this simplified procedure is not available for cross-border mergers or where the acquiring company is a public company.
Do minority shares always need to be redeemed?
Not for every simplified variant. But to use the 100% ownership route when minority shareholders remain in the acquired company, their shares must first be bought out or redeemed. Voluntary redemption requires the shareholder’s consent and a provision permitting it in the company’s articles.
Is redemption at nominal value tax-safe?
Not necessarily. The source identifies potential market-value adjustments under Article 19 of the PIT Act or Article 14 of the CIT Act where consideration is substantially below market value, plus transfer-pricing risk involving related parties. Obtain a valuation, document the commercial rationale and seek Polish tax advice before setting the price.
What happens to the acquired company’s employees?
They become employees of the acquiring company by operation of law on the merger date, without signing new employment contracts. The source requires written information at least 30 days before the expected transfer and describes an employee right to leave within two months after the merger on seven days’ advance warning.
Must counterparties approve the merger?
As a rule, their approval is not needed for universal succession. Individual contracts may nevertheless require notice or consent, or contain effective change-of-control rights. Review them before the merger.
What must be done after registration?
The principal items in the source are GUS/REGON, NIP-8 and ZUS updates within 7 days; property tax and CRBR updates within 14 days; a BDO update within 30 days; and prompt updates to land and mortgage registers, GDPR information and banking arrangements. Employee notification must be completed before registration.