ABC of a limited liability company

The legal status of 01.01.2013.

A limited liability company is a capital company, the legal basis for its functioning are specified in chapter I title III (article 151- 300) of the Act of 15 September 2000 Commercial Companies Act (Journal of Laws No. 94 item 1037 of 2000 year, as amended). There are a lot of entities functioning in form of limited liability companies in the economic turnover. It results from the fact, that partners of such company are not responsible for the company's liabilities (article 151 of the Commercial Companies Code), what provides them the ability to separate the risk related to the business they are into from the private assets of the partners. That's why it is a favourable form of running a business activity for medium and bigger projects. In era of financial crisis and instability of tax regulations, there are a lot of risks for a company in area of accounting and tax settlements- also for smaller entities. However, a person should be aware that that kind of a company is obligated to keep full bookkeeping.


The minimal share capital of a limited liability company is 5 000 PLN and the nominal value of 1 share cannot be lower than 50 PLN. All shares of the share capital should be equal and indivisible. Shares can be obtained above their nominal value, and the surplus, which occurs in this situation shall be transferred to the disclosed capital.

Conclusion of articles of association and registration

Articles of association of a limited liability company may be concluded in two ways:

• in form of a notarial act, or

• via the teleinformatic system.

If the articles of association are concluded in form of a notarial act, a notary collects and pays the tax on civil law transactions on the share capital to the tax authority, the tax is equal to 0,5% of the share capital value. The capital coverage may be in form of cash or contribution in kind. The articles of association concluded in front of a public notary may regulate the matters of bringing in the additional equity contributions, cession and pledge of shares, conditions for replacing the deceased partner by their heirs, exclusion or limitation of division of shares among the heirs, as well as partner’s spouse joining the company in case of shares were subject to joint property of spouses.

Concluding the articles of association via the teleinformatic system is made using the standard version of the articles of association, which is made available by this system and it is required to be signed with the electronic signatures by all of the partners. The next requirement is to bring in the share capital only in form of money deposit. Concluding articles of association of a limited liability company results in an obligation of partners to fill out the tax declaration form (PCC-3) on tax on civil law transactions. Tax on civil law transactions is 0,5% of the share capital value. Submission of this declaration and payment of the tax has to be done in 14 days from the day of the obligation appeared, which means from the date of conclusion the articles of association. The proper tax authority is the head of the tax office proper for the place of company’s seat.

Concluding the articles of association does not mean that the company is already created. Additionally, You have to bring in contributions to cover the whole company’s share capital. Furthermore, it is necessary to appoint the board of directors, to establish the supervisory board or an auditing committee (if it’s required by the articles of association of the company) and to register the company into the Entrepreneurs Registry lead by the Economic Department of the National Court Register of the District Court proper for the company’s seat place.

Registering the limited liability company in the registry court, whose management is limited to e.g. board of directors, requires filling out the forms which have to be signed by all members of board of directors:

• KRS-W3 – application for registering,

• KRS-WE – an attachment to the application, concerning the company’s partners,

• KRS-WM – an attachment to the application, concerning company’s object of economic activity,

• KRS-WK – an attachment to the application, concerning the company’s bodies.

Articles of the association should be attached to the application, along with statements of members of the board of directors about coverage of the share capital of a company, document on appointing members of company’s bodies, list of partners, specimen signatures of members of the board, application RG-1 for registration into REGON registry, application to be a social insurance contribution payer and tax identification application called NIP-2. You should remember to register a company for tax on goods and services (VAT), by submitting an application to a tax authority using the VAT-R form.

If the articles of association were concluded via the teleinformatic system, there is no need to fill out and submit to the court the above mentioned forms. While concluding the articles via this system, documents (signed with an electronic signature) such as: articles of association, list of partners and statement of board members about coverage of the share capital are sent to the court. Additionally, the company’s board should in 7 days from the date of entry in the National Registry Court, submit to the District Court the specimen signature (certified by a notary) of the board members. Establishing a company via the Internet results in lack of ability to use the so called one window rule and results in necessity to report the company to Social Insurance Institution, Central Statistical Office and Tax Office.

A possibility to conclude articles of association using the standard version of the articles, available in the teleinformatic system, is designed in particular for people, who want to conclude a limited liability company fast and in an uncomplicated way. The new regulation does not provide the possibility to change the test of the articles of association, it only allows to choose options out of prepared possible choices for the specific term of the articles. It may not meet needs of those, who want to conclude a more extensive and complicated articles of association. Subsequent amendments to the articles of association already run in a traditional way.

Taxation of a limited liability company

Limited liability company’s income is subject to taxation with a corporate income tax, which is regulated by an Act of 15 February 1992 on corporate income tax (Journal of Laws No 74, item 397, as amended). The income tax is equal to 19% of the tax basis (Article 19 Paragraph 1 of the Corporate Income Tax Act). The tax basis is an income, which is a surplus of revenues value over the tax deductible costs, obtained in a tax year, after the deductions predicted by the Act.

Dividends distributed to the shareholders shall be reduced by the tax on incomes (revenues) from dividends and other revenues from a share in profits of legal persons having seat or board on Polish territory, which is set on 19% of the obtained revenue.

Laws and obligations of partners

If the articles of association do not provide otherwise, the partners have equal rights and responsibilities in the company. The articles may provide shares with special rights (preference shares), which may concern in particular to voting rights, rights to dividend or how to participate in the division of assets in the event of liquidation.

During the company’s activity, it is not allowed to return to partners the contributions they made, they cannot receive payments from the assets needed to fully cover the share capital or receive interests on contributions made.

Partner has the right to participate in the profit resulting from the annual financial statement and designed to be divided by resolution of the shareholders’ general meeting. Unless the articles of association provide otherwise, the profit attributable for shareholders is being divided in proportion to the shares. Entitled to the dividend for the specific year are those partners, which were entitled with shares at the day of adoption of the resolution about division of profit.

Board of Directors

The board leads the company’s matters and respresents it. It’s consisted of one or more members. Partners, as well as other people, may be appointed to be members of the board. If the board is consisted of more than one people, the way of representation is regulated by the articles of association.

Member of the board is being appointed and abrogated by the resolution of partners, unless the articles of association provide otherwise. In general the board member’s mandate expires on the date of the partners’ general meeting approving the financial statements for the first full financial year of being a board member. The board member’s mandate expires also in the event of death, resignation or dismissal from the board.


Every shareholder has the right of control. For this purpose, a shareholder may view the accounting books and documents of the company at any time, as well as to prepare a balance sheet for their own use or to request explanations from the board.

The supervision in a company may be also performed by the supervisory board or an auditing committee. The supervisory board shall supervise continuously the activities of the company in all areas of its operations. In order to carry out its duties, the supervisory board may inspect all documents of the company, request from the management board and staff the statements and explanations, and review the company’s assets. In general, each member of the supervisory board may exercise their supervision right independently.

Assessment of statement of the board about the company’s operations, as well as of the financial statements for the financial year, is a duty of an auditing committee. If the company has no supervisory board, the articles of association may extend the responsibilities of an auditing committee.

Leading matters of a limited liability company

Decisions concerning company’s matters, that do not exceed the normal management, are made by the board of directors. The remaining decisions must be taken by a resolution of the shareholders’ meeting. Mandatory resolution of the shareholders’ meeting require the review and approval of the board’s statement on the company’s operations, the financial statement for the previous financial year and acknowledgement of the fulfilment of duties by members of the company’s bodies.

Concerning the property issues, the resolution of shareholder’s meeting is necessary especially in the event of for example:  

• disposal and demise of the company or its organisedunit;

• purchase and disposal of a real estate, long-term lease or share in a real estate;

• return of the equity contributions;

• conclusion of an agreement between parent company and daughter company, concerning managing the daughter company or transferring profits from it;

• conclusion of an agreement on purchase of a real estate, a share in a real estate, or fixed assets for the company, for the price exceeding one fourth of the share capital, but no lower than 50000 PLN, before 2 years from the day of the company registration;

• managing the right or making a commitment to service, which value is doubly exceeding the share capital value;

Furthermore, if the financial statement presents a loss exceeding the sum of disclosed capital and reserve capital and a half of the share capital, further existence of a company requires a resolution of the shareholders’ meeting (Article 233 §1 of the Commercial Companies Code).

Increase and reduction of the share capital

Increase of the share capital is being performed by increasing the nominal value of the existing shares or by creating new shares. If articles of association provide regulations about the maximum value of increase of the share capital and its time limit, there is no need to change the articles of association. Partners to date have right to be first to obtain the new shares from the increased share capital, in relation to their shares to date. Statements of partners (to date and new) about obtaining shares, shall be took down in the form of a notarial act.

Increase of the share capital may be performed by covering with means from the capital reserves or capital reserves created out of the company’s profit. So arisen shares are entitled to shareholders in proportion to their current shares and do not require to be subscribed.

A resolution about reduction of the share capital shall specify the method and amount by which the share capital is to be reduced. Approval of reduction of the share capital shall be announced by the Board of Directors immediately, by calling the company’s creditors to raise objections, if they do not agree for this reduction. These creditors who raised objections within three months, should be satisfied or secured by the company.

Increase, as well as reduction of the share capital shall be reporter by the Board of Directors to the district court. In the event of increase of the share capital, it becomes effected when registered in the registry.

Dissolution and liquidation of the company

Dissolution of the company is performed after the liquidation, at the moment of exclusion of the company from the registry. Dissolution of a company is mostly caused by:

• resolution of partners to dissolve the company or to transfer its registered office abroad, confirmed by a protocol drawn up by a notary public,

• bankruptcy of a company.



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