Simplified joint-stock company
On March 1st, 2021, the regulations establishing a new type of capital company, namely a simplified joint-stock company, will enter into force. The main purpose of this solution is to facilitate startup operations. The topics related to this regulation are quite extensive, so in this post we would like to indicate some news.
1. Capital stock
Shareholders are required to make contributions to cover subscribed shares with no nominal value. The minimum amount of capital stock corresponds to PLN 1.
Capital stock is not the same as initial share capital. Its amount is not indicated in the articles of association, and determined by the management board based on the sum of cash and in-kind contributions, it includes only contributions actually made, not declared. It should be remembered that not all contributions are included in the capital stock. Its value is disclosed in the register.
Funds from capital stock may be paid to shareholders as dividends, provided that the payment does not cause the company to lose its ability to perform due financial obligations within six months from the date of payment. An obligation to provide capital stock with profit for future losses of the company was also provided for. If the payment from this capital exceeds a certain percentage of the company's obligations, it will be necessary to conduct convocation proceedings similar to reducing the capital of a joint-stock company.
A joint-stock company discloses the amount of share capital as at the last day of the previous financial year in all letters and commercial orders submitted in paper form. In the case of electronic form current capital stock must be provided.
2. Contributions to shares
Shares, in addition to in-kind and cash contributions, may be covered by contributions in the form of non-transferable rights, rendering work or services, which is a breakthrough in relation to companies. Such contributions do not count towards capital stock.
Responsibility for significant revaluation of in-kind contributions is also provided for, but only for those allocated to capital stock.
3. Freedom to shape preference shares
In the provisions of the Code of Commercial Companies, examples of privileged shares have been introduced, but no statutory restrictions have been introduced as regards voting rights or dividend rights. It is also possible to grant special individual rights to named shareholders. These rights do not have to expire when the entitled person ceases to be a shareholder of the company.
A special kind of privilege is the so-called founding shares, the establishment of which guarantees their holders that in the event of issuing new shares, the minimum ratio of the number of votes vested in the founding shares to the total number of votes remains unchanged. Founding shares may be established not only at the stage of establishing the company, but also later.
Shareholders from dividend preference shares may be deprived of voting rights (so-called silent shares). The regulations allow for the provision of a condition, which this law restores.
4. Establishment and registration of the company
It is not required to prepare the company's statute, acts establishing the company, consent to the content of the statute and taking up shares.
Partners are not obliged to make contributions before the date of submitting the application for company registration. The time limit for making contributions may be specified in the articles of association, resolution of the general meeting or management board. The regulations require that all contributions are made within three years of entering the company into the register. A contribution of PLN 1 is required to create a simplified joint-stock company.
So -called simplified joint- stock company will be able to be concluded using the S24 online system, but then the contributions must be purely cash, otherwise a notarial deed will be required.
5. Withdrawing money from the company and making a profit
The provisions on the P.S.A stipulate that it is forbidden for the company to return funds invested to the shareholders or to make a profit by inflating the value of services provided by the company to the shareholder. Payment of profit or return of contributions can only take place on the basis of dividends, dividend advances, payment for redemption of shares or payment of the purchase price by the company of its own shares.
As mentioned earlier, disbursement of funds from share capital is allowed after fulfilling the conditions provided for in the Code of Commercial Companies.
6. Dematerialization of shares
The shares of a simplified joint-stock company are not in the form of documents. An obligation to keep a register of shareholders was foreseen. In relations with the company, only a person entered in the register of shareholders will be considered a shareholder.
It was provided that the register of shareholders would be allowed to be maintained by entities authorized to operate securities accounts. In addition, such competence will be vested in notary offices in Poland. The company was charged with the obligation to immediately conclude a contract for keeping a register with an entity of its choice.
Any entity with a legal interest, e.g. a company, seller or buyer of shares, may submit a request to make an entry. The register will be open to the company and its shareholders, as well as to authorized state bodies.
7. Disposal of shares
To transfer rights from shares, an entry in the shareholders' register is required. In the case of shares for which no contributions have been made in full, the company's approval for their sale is required. The company may refuse it without indicating another buyer. It is possible to repeal these restrictions in the articles of association. In addition, it is possible to enshrine a priority right to purchase shares in the company's articles of association.
8. Loss of shareholder status
The P.S.A regulations provide for special cases in which a shareholder may lose their status in the company.
Shareholders holding over 50% of shares may apply to the court to exclude a minority shareholder if there are important reasons on their side.
The institution of the resignation of a shareholder from the company will be a significant novelty. The court will be able to issue such a decision at the request of a shareholder if there is an important reason between the shareholders or between the company and this shareholder, which results in gross harm to the outgoing shareholder. If the court issues a decision on resignation, the shares owned by the shareholder must be bought back at the fair price. The company and other shareholders are jointly and severally liable for the payment of this price. Therefore, this is the case when a shareholder may be required to perform a performance which was not provided for in the articles of association and poses a kind of threat.
The shares may be annulled by the court if it is found that the shareholder has not contributed or covered them in a defective manner.
9. Organisational structure
In the case of the P.S.A, two company management models are foreseen. In the first one, the management functions are exercised by the management board and the supervisory functions by the supervisory board, which does not always have to be established. In the second one management and control is carried out by one body - the board of directors. In the case of establishing a supervisory board, it has the power to independently determine, by resolution, a catalog of activities that the management board will be able to take only with its consent. The articles of association may provide otherwise.
10. Taxation of contributions
Income will be taxed in connection with the acquisition of shares in exchange for an in-kind contribution in kind, and therefore there will be no need to pay tax for contributions consisting in the provision of work or services.
11. Audit of a financial statement
Unlike in a standard joint-stock company, the P.S.A's financial statements will be audited only by the auditor if the company meets the conditions specified in the Accounting Act.
12. Shareholders' social security contribution
A shareholder who has made contributions to the company in the form of work or services will be subject to compulsory social insurance from the date of commencement of work or services until their completion. This is a very unusual solution in the case of a capital company.
13. Dissolution of the company
A resolution on transferring a company abroad is not a reason for dissolving the company if the transfer is to take place in another EEA country and the law of that country allows it.
A completely new solution is the possibility to remove a company from the register without liquidation, when a resolution of the general meeting of shareholders provides for the takeover of all the company's assets by a shareholder with an obligation to satisfy creditors and other shareholders. The registry court has yet to agree to such a takeover. In the event of consent, the court calls the company's creditors by submitting an objection within 30 days. After the objection, the court decides about the consent to takeover at the hearing.