[Business law] The strategic advantages of business in Poland in 2022

We invite you to read the analysis of our lawyer Bartosz Armknecht in the field of business law (commercial company law) in Poland, entitled The strategic advantages of business in Poland in 2022, which appeared on May 09, 2022, on the pages of the European Business Magazine.

Zapraszamy do zapoznania się z analizą naszego prawnika Bartosza Armknechta z zakresu prawa handlowego (prawa spółek handlowych) w Polsce, pt. The strategic advantages of business in Poland in 2022, która w dniu 09 maja 2022 r. ukazała się na łamach European Business Magazine.

According to the TMF group ‘Global Business complex Index 2021’, Poland is the second country in Europe and 10th in the world with the most complex business regulations but it remains an attractive market for running a business, especially for foreign investors. These are the facts. According to data from the Polish Register of companies (Register of Entrepreneurs of the National Court Register) only in 2021, 10.494 companies with foreign capital were established in Poland. Entrepreneurs come from 99 countries, including 347 from Germany, 174 from China, 149 from the UK, and 146 from the Netherlands.

Foreign investors as a venture capital (VC) or private equity (PE), running companies in Poland, operate mainly in such industries as trade (21%), construction (19%) or transport (13%), but they are also companies operating in the field of IT or back-office services. In the Pomeranian Voivodeship, due to its location on the Baltic Sea, in the vicinity of shipyards, the Port of Gdynia and Gdańsk, and specialized universities, investments of international companies attract particular attention. These are global companies, basing their activities on the shipbuilding, transport, and forwarding industries. Nevertheless, there are also IT (programming) companies as well as back office and IT departments of global corporations.

It should be emphasized that, in general, venture capital invests mainly in new companies or stats with high growth potential. However, private equity in already existing companies requires reorganization. It can be considered that venture capital investments are investments in own electricity, while private equity investments are for investment purposes.

According to data for 2020 from the Central Statistical Office, there are 23,203 companies with foreign capital in Poland. 92.8% of these companies operate as a limited liability companies, and the other forms are joint-stock companies (3.3%), limited partnerships (2.6%), branches of entrepreneurs (0.8%), and limited joint-stock partnerships (0.2%), and others (0.3%). However, in 2021, according to data from the Polish register of companies (Register of Entrepreneurs of the National Court Register), out of 10,494 newly established companies with foreign capital in Poland, 96% of these businesses operate in the form of a limited liability company, 2.23% in the form of a branch of a foreign entrepreneur, others in the form of such companies as partnerships (general partnership, partnership, limited partnership, limited joint-stock partnership) and a capital company – similar to a limited liability company (sp. z o.o.) – joint-stock company (S.A.). The statistics do not include running a business in a new form of a capital company – a simple joint-stock company (PSA), the regulations of which were drafted in 2021.

In the Polish corporate law system (commercial companies law), companies are divided into two main types: partnerships and capital companies. Partnerships are connected personally by natural persons or legal persons (e.g. other companies), while capital companies combine partners by capital. The capital companies are limited liability companies, joint-stock companies, and simple joint-stock companies.

A company may be formed by one or more persons; only 5,000 PLN of capital is needed. The company is established by drawing up and signing an agreement in the form of a notarial deed and registered in the National Court Register. The partners of this company are not liable for the obligations of the company. The only thing they can lose is the capital they contribute. The drawback of this form of activity is the need for the partners to pay income tax and tax on profits paid out from the company (dividends).

A joint-stock company is dedicated to large companies that wish to enter the stock market. People setting up a company must have a capital of PLN 100,000. To establish a company, it is necessary to draw up and sign a contract in the form of a notarial deed, appoint a management board and supervisory board, make a contribution and register the company in the National Court Register.

A new company that facilitates the cooperation of people with know-how and investors with capital. The company can be set up online in 24 hours in the S24 system. The founders need a capital of PLN 1. Shares can be acquired for cash, work, and provision of services, which was not possible in the case of a limited liability company and joint-stock company.

It is worth noting that from 2021 in Poland, in addition to the S24 system, there is also the PRS portal – Court Registers Portal. As a result, it is not only possible to set up (register in the company register) an online company using the S24 IT system or submit the annual financial report of a company online, but also to register or change entries of companies established in a traditional way – when legal actions were performed in the presence of a notary. Moreover, in Poland, traditional applications – in hard copies – are no longer accepted into the register. Similarly, computerization in other areas, such as taxes or social and health insurance, is also being developed and most matters are handled electronically.