Limited Liability Company Law
- Share capital
- Initial contributions/concept of shares
- Legal explanations (company name)
- Bodies of the company/Management Board
- Bodies of the company/Supervisory Board
- Bodies of the company/general meeting of shareholders
- Rights and obligations of the shareholder
The share capital of a limited liability company is composed of initial contributions of shareholders and amounts to at least 5,000.- PLN pursuant to legal regulations being applicable in Poland. For reasons of protecting creditors, this share capital must be maintained at least in this amount during the period of the existence of the company.
The shareholders are not allowed to receive any payments from the assets of the company, insofar as it is necessary for full coverage of the share capital.
Initial contributions / concept of shares
The shareholders’ main commitment, which they undertake to fulfill in the LLC deed, is the payment of initial contributions. The initial contributions may be in cash or in-kind contributions. In return for the initial contributions, the shareholders assume one or more shares of the share capital.
In a case where a share shall be covered totally or partially in the form of an in-kind contribution, the LLC deed must specify the subject matter of this in-kind contribution, the shareholder providing this contribution, as well as the number and the nominal value of shares acquired in return. The subject of the in-kind contribution shall be submitted to the Management Board at exclusive disposal.
On the one hand, a share is the percentage of share capital expressed in Polish currency that is defined in the LLC deed. On the other hand, it represents the participation of the respective shareholder in the company (all rights and obligations of each individual shareholder).
The nominal value of one share must amount to at least 50.-PLN. The Polish Commercial Companies Code provides two systems in view of shares of a limited liability company under the Polish law. On the one hand, there is the possibility that pursuant to the LLC deed, a shareholder might take over more than one share. In such case, the nominal values of relevant shares are equal and additionally indivisible. However the LLC deed might also define that every shareholder may hold only one share. In such case, the nominal values of shares must not be equal. They are also divisible.
A company name is the name used by a contractor in business transactions and legal affairs. The company name of a limited liability company can be freely selected. Please note, however that in company name must be followed by „z ograniczoną odpowiedzialnością“ (limited liability). In legal affairs it is allowed to use the abbreviation „sp. z o.o.“ (LLC) or „spółka z o.o.“ (LL company).
The company name must differ from names of other companies, which carry out their economic activities in the same market (principle of company exclusiveness). It may not contribute to misinformation about the person or business activities of the company, but must comply with the actual state (principle of corporate truth). In addition, a company may use only one company name (principle of the unity of the company).
The company name may not be sold without the company. When acquiring a company, the activity of the company may be continued under previous name. Unless contributing to misinformation, an entrepreneur may also entitle another entrepreneur to use his company name.
Bodies of the company / Management Board
Obligatory bodies of a limited liability company are the Management Board and the general meeting of shareholders. There is furthermore the possibility to appoint a Supervisory Board or an Auditing Commission.
The Management Board is the body responsible for business management, as well as the judicial and extra-judicial representation of the company. The Board member or members are appointed and recalled by the shareholders. The Management Board can be composed of both shareholders and non-shareholders (foreign organization). Board members can be recalled at any time by a decision of the shareholders. This decision must however not necessarily result in simultaneous termination of the contract, basing on which the respective Member of the Board provides his services (labour or manager contract).
Initially, in case of a multi-member Board, the LLC deed defines the type of representation. Only if it is not the case, legal provisions apply pursuant to which the deposition of statements in the name of the company requires the cooperation of two Management Board members or a Board member and a proxy (collective representation). Statements, which are to be provided to the company, might be however submitted to a single member of the Board or proxy.
In case of agreements concluded between a member of the Board and the company, as well as in case of disputes between a member of the Board and the company, the company must be represented either by a member of the Supervisory Board or in the event that such body has not been appointed, by an authorized representative designated by the general meeting of shareholders.
Bodies of the company / Supervisory Board
With one exception, the appointment of a Supervisory Board has merely optional nature. Only in case of companies with a share capital exceeding the amount of 500,000.- PLN and more than 25 shareholders, the Supervisory Board is to be established in the LLC deed.
Due to other functions, certain persons may not be simultaneously members of the supervisory board. This applies on the one hand to members of the Management Board (or persons directly or indirectly subordinate hereto), proxies, liquidators, department and plant managers and on the other company employed chief accountants or lawyers. The Supervisory Board consists of at least three members, appointed and recalled by a proper resolution of the shareholders.
The Supervisory Board has the ability to supervise company’s activities in all areas. The members of this body are however not entitled to give binding instructions relating to the management of the company to the Management Board.
Bodies of the company / general meeting of shareholders
The decisions of the shareholders are taken on ordinary or extraordinary general meetings of shareholders. Under Polish law, the ordinary shareholder meeting is held only once a year within six months after the end of the respective financial year. While an extraordinary general meeting of shareholders may be convened at any time, several times during the year.
The highest body of a limited liability company is the general meeting of shareholders. Pursuant to legal regulations, the general meeting of shareholders decides therefore on essential matters of the company. This should include the approval of the management report on company’s activities, approval of the annual report for the past financial year, sale and lease of an enterprise or an organized part hereof, acquiring and sale of real estates, usufruct rights or shares in real estates, as well as the refund of subsequent payments in favour of the shareholders.
The decisions of shareholders are generally to be taken by an absolute majority of the votes. A majority of votes is absolute, if more than half of the submitted votes have been submitted for one decision (50% + 1 vote).
For certain decisions, the law prescribes a higher voting than the absolute majority of votes. This includes decisions concerning the amendment of LLC deed, on sale of the company or an organized part thereof, or on dissolution of the company that require at least a 2/3 majority of the votes.
Decisions on substantial changes in business activities of the company require, however, a ¾ majority of the votes. The LLC deed might set stricter conditions in terms of the text of these decisions.
Rights and obligations of the shareholder
The shareholders are obliged to provide only such services that had been specified in the LLC deed. Due to the fact that the limited liability company is a capital company, it is the primary obligation of shareholders to submit the contributions.
Other essential obligations of the shareholders include especially the compensation of the difference between the actual sales value and over valuated contributions in kind to the company, as well as disbursing of payments received by the shareholder against statutory or contractual provisions.
The rights of the shareholders can be divided in property and corporate rights. Property rights cover among others the right to certain profits (dividends) resulting from the annual report and planned for distribution by the general meeting of shareholders. In addition, the shareholders have the privilege in acquisition of new shares formed at the increase of share capital in proportion to their previous shares, unless the LLC deed states otherwise. The LLC deed might also specify special benefits, related either to the shareholder itself or to certain share.
The corporate rights of the shareholders cover i.e. the right to attend the general meetings of shareholders, the right to exercise the voting rights and the right of inspection. A limitation of the right of inspection is allowed only in case a Supervisory Board had been appointed in the company.
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