VIII. PARTNERSHIP AND COMMERCIAL COMPANIES
Partnerships under civil law differentiated from partnerships under commercial law
Under the Polish law there are three kinds of partnerships: civil partnership, regulated in Civil code, general partnership and limited partnership, both regulated in the Commercial code.
Civil partnership - is an agreement of contract law. By the deed of partnership the partners shall undertake to promote the attainment of a common economic objective by acting in a specified manner and in particular, by making contributions. There is no special form for concluding a partnership. However, for evidential purposes it shall be concluded in a written form. The civil partnership is not a legal person, therefore it cannot acquire the rights and undertake the obligations, it cannot also sue and be sued. The partners concluding the contract of partnership make contributions which constitute the assets of the partnership. The contributed assets constitute the joint co-ownership of the partners. Every partner is entitled and obliged to manage the partnership`s affairs and represent the partnership unless the civil partnership contract provides otherwise. The partners are liable for the partnership`s obligations with the whole assets of the partnership as well as jointly and severally with their personal property. The partner who joins the partnership is not liable for the obligations which arose before his joining, and the former partner is liable for the obligations which arose during the term he was the partner.
Registered partnership - is a partnership which runs, in the partner`s joint name a profit making enterprise of a larger size and which does not constitute any other type of the commercial company. This partnership agreement is concluded in written form for the evidential purposes and it can be entered into the commercial register. This entrance has, however, a declarative character. The registered partnership is not a legal person, it can however , acquire rights and undertake obligations, may sue and be sued. Each partner has the right to represent this partnership, also the proxy can be instituted to represent it. Each partner is liable to the creditors for the partnerships` obligations, without limitation, with his whole property, jointly and severally with other partners and the partnership. A person who joins this partnership is also liable for the obligations undertaken before his joining it. A partner may give a notice of termination six month prior to the end of the financial year if this partnership has been formed for an indefinite period. Contrary to the civil partnership, in registered partnership a partner may be ordered by the court for important reason concerning one of the partners, to withdraw from the partnership, upon the remaining partners` request.
Limited partnership - its purpose is to run, on larger scale, a profit making enterprise under a joint business name, if at least one partner holds unlimited liability for the obligations of the partnership towards the creditors and the liability of at least on partner (a limited partner) is limited. This partnership need a notarial deed form to be established. It is not a legal person but it can acquire rights and undertake obligations, may sue and be sued. The partner who is liable with no limits for the obligations of the partnership is entitled to represent and manage the partnership`s business. The limited partner may represent the partnership only in case he has the power of attorney to do so (a proxy). In case a limited partner performs an act on behalf of the partnership not having the plenipotentiary, he is liable towards the third persons as he would be a partner liable with no limits. In this case, he would be liable without limitation, with his whole property, while normally, he is liable for the obligations of the partnership only to the amount of the commandite sum. A person who joins an existing partnership as a limited partner is liable for the obligations existing at the date of registration thereof in the commercial register. Similar to the registered partnership a partner may give a notice of termination six month prior to the end of the financial year if this partnership has been formed for an indefinite period. The death of a limited partner does not constitute the reason of dissolution of this partnership. In such a case the heirs of a limited partner should appoint one person to exercise their rights.
Commercial companies
There are two types of commercial companies under the Polish Commercial code. These are: limited liability company and joint stock company.
Limited liability company - may be formed only for economic purposes by one or more persons. The shareholders are liable for the company`s obligations to the amount of contributions. The company is liable with no limits for its obligations, however only with the company`s assets. While establishing the company there is created a share capital which is divided into shares (equal or not equal). The company`s articles of association state whether the shareholder may have one or more shares. In case the shareholder may have more than one share the shares should be equal and indivisible. To form a limited liability company the following is required: concluding of the company`s articles of association, contribution of the entire initial capital, appointment of the company bodies, registration in the commercial register. Entering the company into the commercial register is obligatory for the company`s forming. The limited liability company is a legal person, thus it can acquire rights and undertake obligations, may sue and be sued under its business name.
Rights and obligations of the shareholders - the rights of the shareholders may be divided into substantial and corporational. The corporational are for example; the right to attend and vote at the shareholders meeting , the right to sue the resolutions and the right of control. The substantial rights are for example the participation in the company`s profits, the right to participate in a liquidated assets of the company, the right to remuneration for consideration delivered to the company . The basic obligations of the shareholders are: the covering of the share in cash or in non-cash contribution, making an additional contributions, completing a decrease in the share capital, managing and supervising.
Corporate bodies - the most important body of the limited liability company is a shareholders` meeting. Its main function is to adopt the resolutions in cases provided in the Commercial code and in the company`s articles of association. There are ordinary and extraordinary meetings in the limited liability company. The ordinary meeting should be held every year within 6 months after the end of the accounting year. This meeting shall (i) consider and approve the report, the balance sheet and the profits and losses account for the preceding year, (ii) adopt a resolution on distribution of profit or coverage of losses, it the deed of company formation delegates such matters to the meeting of shareholders, acknowledge the fulfilment of duties by the company`s bodies. The extraordinary meeting is held in cases provided in the Commercial code as well as in cases the corporate bodies or entitled persons deem it necessary.
The Board of Directors is the executive body of the limited liability company. It is representing and managing the company. It is also possible to institute the proxy or the plenipotentiary for representation and managing of the company.
Every shareholder is entitled to supervise the company`s activity, however the company`s articles of association or the act of law may provide the obligation of instituting the Supervisory Board or the Board of auditors.
Dissolution and liquidation - The dissolution of the company is caused by the following: (i) reasons provided for by the company`s articles of association, (ii) resolution of shareholders on dissolution of the company or transfer of the company`s seat abroad (iii) declaration of the company`s bankruptcy, (iv) other reasons provided in the Commercial code. Also the court may order the dissolution of the company upon request of a shareholder or member of company`s bodies, if the attainment of the company`s objects becomes impossible or if there are other serious reasons caused by the company`s relations. The dissolution of the company follows its liquidation. Up to that moment the dissolution may be prevented if all the shareholders consent to maintain the company unless the dissolution has taken place upon request of a member of the company`s bodies not being a shareholder. During the course of liquidation the company still has the legal personality. The liquidators are instituted to represent and manage the company. The liquidators may be also the members of the Board of Directors. The liquidators are to finish the company`s business, complete the claims, fulfill the obligations and sell the assets of the company. After the creditors are satisfied and secured the company`s assets are to be divided.
Tax liability - According to art. 116 of the Tax Ordinance Act the members of the Board of Directors of the limited liability company are jointly and severally liable with all their assets in tax areas if the execution against the company proves ineffective, unless a member of the board of directors shows that bankruptcy was declared or arrangement proceedings were initiated in due time, or that the lack of such declaration or arrangement proceedings was not his fault, or if he indicates property on which execution can be effected. The responsibility of members of the board of directors shall comprise tax obligations arising while they were carrying out the duties of member of the board of directors.
The rules concerning the legal persons tax are provided in the Legal Persons Income Tax Act of 15 February 1992 .
Joint stock company - is a typical commercial company. Under the Polish law this company may be established in any legally permitted purpose which may be economic as well as non-economic. The joint stock companies are basis to create great enterprises. Since in joint stock companies the links between the shareholders and the company are not tight the shareholders and the creditors of it must be specially protected.
There are two ways of creating the joint stock company: one provided in Commercial code and the other one provided in different acts when its establishment requires the permit (banks, insurance companies). The joint stock company receives the legal personality after its entering into the commercial register. At the stage of establishing of joint stock company the full contributions are not required, it is enough if 1/4 of the assets is covered with a money contributions. The share capital may be covered by the founders or, contrary to the limited liability company, in the way of subscription. A joint stock company`s capital is divided into shares of equal nominal value. This value is the basis to count the dividend and the liquidation sum.
Rights and obligations of the shareholders - the basic obligation of every shareholder is to make contributions in exchange for held by him shares. The rights of shareholders in joint stock company are similar to those in limited liability company, however with some differences. The main rights of a shareholder in the joint stock company are his participance in the company, its participance in the shareholders meeting, his right to be a member of the board of directors, or a member of the supervisory board or auditors board or any other corporate body of the company, his right to participate in the yearly profit of the company and the right to participate in a new emission of shares collection.
Corporate bodies - Similar to the limited liability company, the joint stock company being a legal person may act through its bodies which are: shareholders` meeting, board of directors, and the supervisory board or the auditors board. The competence of these bodies are also similar. It is worth, however, to point out some differences.
The shareholders` meeting is the superior and supreme body of the company. It has the right to decide about the most important matters connected with its activity. The ordinary shareholders meeting should be held within 6 months after the end of the accounting year. The extraordinary shareholders meeting may be held at any time. The right to attend the shareholders meeting have the owners of the registered shares and of the provisional certificate entered into the shareholders register at least one week before the meeting, and the owners of the bearer`s shares if they placed their shares one week before the meeting.
The board of directors manages the enterprise and represents it. It may consist of one- or more persons. The scope of the representation includes all acts connected with running of any enterprise in spite of the cases reserved for the shareholders meeting.
Contrary to the limited liability company, the joint stock company must have the supervisory board or the auditors board, unless the articles of association do not provide the obligation of creating both. The supervisory board executes the instant control over the company`s activity within every field of the enterprise activity, and particularly examines the balance, profits and losses account, the board of directors report and its motions as to the profits dividing and losses covering. The competence of the auditors board are similar.
Dissolution and liquidation - According to art. 444 of Commercial code the dissolution of the joint stock company may be caused by reasons provided for under the articles of the company and by a resolution of the general meeting on dissolution of the company or on transfer abroad of the seat or the principal establishment of the company, declaration of the company`s bankruptcy or other reasons provided for by law like the merger of the companies, permit withdrawal, dissolution by court. The dissolution of the joint stock company follows its liquidation.
Tax liability - is regulated by art. 116 of the Tax Ordinance Act similar to limited liability company. The rules of taxation with legal persons income tax are provided in the Legal Person Income Tax of 15 February 1992.