On 1 of July 2021, regulations introducing a new normative type of capital company to the Polish legal system – a simple joint-stock company (the abbreviation of legal form in Polish is „PSA”) came into force.
The impulse to create the PSA were indications of communities associated with the startup business. The pointed out problems included, among others, difficulties in starting a business, raising capital or liquidation of companies in case of failure. The PSA is meant to contain intermediate solutions between a joint-stock company and a limited liability company.
How will the PSA differ from the existing types of capital companies in the Polish legal system? Here are the salient features that distinguish the new type of company:
- In order to establish a PSA, it is required (i) to conclude a articles of association, (ii) to establish bodies specified by statute or by the articles of association, and (iii) to be included in the register. However, unlike a joint stock company, it is not necessary for the shareholders to make contributions to cover the entire share capital.
- A new type of share capital has been introduced. It will be a new type of basic capital, which is not the share capital as it has been used so far in limited liability companies and joint-stock companies.
- The amount of the share capital will not be determined in advance in the articles of association, but by the management board on the basis of the sum of the value of the cash contributions and non-cash contributions having a carrying value. The share capital in a PSA shall be at least PLN 1.
- Shares shall have no par value (so-called no-par value shares), shall not form part of the share capital and shall be indivisible.
- An important novelty is the so-called solvency test. A prohibition of performances threatening the solvency of the company has been introduced as an additional prerequisite for the legality of payment of dividends by the company as well as other performances fulfilled under corporate titles (e.g. dividend advances, redemption repayment, or purchase price of own shares by the company). The assessment of the permissibility of distributions to shareholders will be made from the perspective of a 6-month period by the management board, immediately prior to the moment of distribution to shareholders.
- The new law introduces a type of preferred shares in the form of founder’s shares, which are to be used primarily by shareholders who are founders of companies and originators of innovative solutions, who want to ensure a certain share in the total number of votes in the event that an external investor joins the company.
- The act allows for the possibility of making contributions in the form of work and services to cover shares, and all contributions to the company should be made in full within three years from the date of entry of the company into the register.
- It will be possible to establish a monistic or dualistic system in the PSA in terms of its bodies. The monistic system will be characterized by the fact that the overall management and control function will be performed by a single body – the board of directors. On the other hand, PSA which decide to establish a management board, will be able to optionally establish a supervisory board.
- The liquidation of PSA is also supposed to be much faster as compared to a traditional joint-stock company. The law provides, among others, that liquidators will announce dissolution of the company and opening of liquidation only once (instead of twice), calling creditors to report their claims within six months from that date. On the other hand, distribution among shareholders of the assets remaining after satisfying or securing creditors will be possible immediately after these events (not, as in a traditional joint-stock company, only upon the lapse of a year from the date of the last announcement about the opening of liquidation and summoning creditors).
- A very beneficial solution is the far-reaching digitalization of the PSA, which is expected to enable electronic registration within 24 hours via a form, as well as allow the use of electronic means in the functioning of the company.
Ernest Kosa, Associate
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