Simple joint-stock company
From 1 March 2020, there will be a new type of capital company in Poland: a simple joint-stock company ("SJC"). The SJC is said to be a combination of capital companies (i.e. limited liability company and joint-stock company) in the form of an advanced mechanism of capital raising, and partnerships - it will be the only type of capital company to allow the "personal" aspect of partnerships in the form of the possibility to contribute work or services instead of cash/assets. The SJC will also provide more flexibility in the daily operation of the company both from the managers' and owners' perspectives. It is a response to market needs and difficulties that start-ups face with incorporation, capital raising and liquidation.
The main advantages of the SJC are:
- Incorporation via the
internet: The SJC can be incorporated in a traditional way
(before a notary) or via the internet. The latter is quicker and
cheaper, as shareholders simply use the articles of association in
the standard form available on the relevant website. In case of a
more complex structure the traditional way may be preferable.
- No-value shares and separate
share capital: The minimum amount of share capital is
PLN 1 (less than 25 eurocents). Shares in the SJC do not
have nominal value and are detached from the share capital, as they
represent shareholders' rights and not a portion of the share
capital. Shares are dematerialised and may be covered with cash or
in-kind contributions, including work, know-how or services. The
amount of the share capital is not set in the articles of
association and its change does not trigger the necessity of
changing the articles. It is a huge simplification for
shareholders, as they can increase the capital without issuing new
shares and involving a notary (lower cost). Additionally, there are
no statutory restrictions on preference of shares in regard to
voting rights, dividend or liquidation assets (subject to general
rules of social conduct).
- New management
structure: Shareholders are free to
choose how to manage the SJC – either in a classical way,
i.e. management board (supported by the voluntary supervisory
board) or in the form of a board of directors composed of executive
and non-executive directors (more familiar to foreign investors and
based on the Anglo-Saxon legal system).
- Shareholders' meetings
made easier: The necessity of holding the
shareholders' meeting before a notary has been minimised to
changing the articles of association. All other shareholders'
meetings can be held outside of Poland and by means of electronic
communication (e.g. videoconference).
- Simple disposal of
shares: Shares in the SJC can be transferred in document
form, including by the use of electronic communication. Even though
shares of the SJC cannot be admitted to public trading, this does
not exclude the possibility of online subscription without a
prospectus requirement. The transfer is effective upon the entry of
the new shareholder in the share ledger kept by a notary or
investment firm (probably banks will provide this as an additional
service). The SJC may be transformed into a joint-stock or limited
liability company if needed in the future (here the provisions have
not been relaxed).
- ESOP and
anti-dilution: Employee incentive programmes, such as
subscription warrants, convertible bonds, conditional share issue
and ESOP (i.e. employee stock ownership plan) may easily be
introduced, which is not the case in limited liability companies.
Newly introduced founders' shares are a new type of preferred
share, including an anti-dilution mechanism. Thus, if new shares
are issued, those holding founders' shares receive extra voting
rights to keep the original voting rights ratio.
- Simple liquidation: If a project or investment fails, the SJC may be liquidated in a simplified form; namely, all the SJC's assets will be transferred to one of the shareholders (subject to the court's approval), who will later be obliged to satisfy the claims of creditors and other shareholders. Additionally, if shareholders decide to transfer the registered seat to another EU Member State, the SJC will not be subject to obligatory liquidation (this change has not been introduced to other types of companies despite the ECJ's judgment in the Polbud case).
Other important changes in the corporate world
From 3 September it is finally possible for limited liability companies to hold a shareholders' meeting via electronic means of communication. To enable this option, shareholders must introduce it into the company's articles of association. This small change will undoubtedly simplify how business is conducted in the most common type of company in Poland (402,168 companies as of 31 December 2018).
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.