14 October 2019

Simple joint-stock company – a new form of legal entity

As expected, the regulations on simple joint-stock companies are to come into force from March 1st, 2021. The new proposition is a nod specifically towards young entrepreneurs developing business in the area of technological innovations. The project promises to significantly simplify the procedures for registering and running a new company.

A simple joint-stock company is a new legal form of running a business in Poland. Taking into consideration the requirements and difficulty to maintain, we can place it between a regular joint-stock company (which is expensive to maintain) and a private limited company (a legal entity generally considered outdated).

The statutory minimum amount of share capital was always a major obstacle for young entrepreneurs who wanted to start a listed business. To create a traditional joint-stock company in 2019, the founders had to contribute a minimum of PLN 100,000 PLN in the capital. A simple joint-stock company allows starting a business with a capital of only 1 PLN.

Another advantage worth mentioning is the possibility of issuing the so-called founder’s stock shares. This special type of share allows shareholders to maintain a fixed percentage of voting rights after each subsequent release of new stock shares. The regulations also provide the chance of stock share acquisition in exchange for a service or provision of work – thus simple joint-stock company becomes the only legal form of business giving co-owners and associates the possibility of apportionment.

New possibilities for young entrepreneurs

The project is addressed to entrepreneurs developing new technologies, especially start-up developers. However, this does not mean that the new legal form will be reserved only for selected types of entrepreneurship. Any interested entity will be able to apply for the creation of a new company in the National Register of Court (KRS) from March 1st, 2021.

Partnership agreement

The regulations provide the possibility of concluding a partnership agreement online – using a template provided by the Ministry of Finance. This is a method that is supposed to suit as many new entrepreneurs as possible, which is why establishing a company with an unusual business profile using the e-form may prove difficult/impossible.

Company management bodies

The possibility of creating only one statutory governing body (e.g. management board) in the company, based on the partnership agreement, is a real innovation. Earlier it was the company’s founders’ responsibility to appoint a second governing body, such as a supervisory board controlling the management board. The regulations do not specify the characteristics of the bodies, which is why the management board may consist of one person.

Minimum share capital

The biggest advantage for young entrepreneurs and start-up developers will certainly be the minimum capital contribution threshold of only 1 PLN. This is a significant change for people for whom the high capital at the start is unobtainable. Let’s just remind that the minimum contribution needed to set up an older, traditional joint-stock company is still 100,000 PLN.

Registration

If the company was founded via the Internet, registration in the National Court Register (KRS) takes place automatically. In other cases, the regulations do not provide for new or simplified procedures, which is why registration takes place identically as in the case of a limited liability company.

Selling the simple joint-stock company

Among the benefits of the new company, which were not previously available, is the possibility of selling the SJC without the participation of a notary – although it is required to maintain the traditional way of documenting legal transactions, i.e. documentary form.

According to government forecasts, we can expect about 14,000 new Simple Joint Stock Companies per year.