How to set up a limited liability company? Incorporating a company and launching operations in practice

From this article, you will learn:

• How to set up a limited liability company in Poland?
• How to register the Polish company in the National Court Register?
• What are the obligations of the company following its incorporation and registration in the National Court Register?

As we have already mentioned, thanks to – among others – relatively few formalities, a limited liability company is the most frequently selected form of business in Poland. However, what do these "few formalities" look like in practice? For all those interested in step-by-step incorporation of limited liability companies, we have prepared a summary of the most important matters which must be handled to set up and register the company in the National Court Register. Enjoy your read! 

The most important stages of limited liability company incorporation 

A limited liability company may be set up by any civil law person or entity, be it a natural person, a legal person, or an unincorporated legal entity (e.g. a commercial partnership, i.e. general partnership, professional partnership, limited partnership, or partnership limited by shares). 

An exception to this rule is a single-shareholder limited liability company. In accordance with Article 151(2) of the Code of Commercial Companies, such a company may not set up a limited liability company.

In accordance with Article 163 of the Code of Commercial Companies, the following activities are required for incorporation of a limited liability company:  

• adoption of articles of association;
• raising of contributions by shareholders to cover the entire share capital, and in the event of taking up a share at a premium to the nominal value, also contributing the share premium, having regard to the provisions of Article 158(1)(1) of the Code of Commercial Companies;
• formation of a management board;
• formation of a supervisory board or audit commmitee – if required by statute or the articles of association;
• entry into the National Court Register.

Adoption of articles of association of a limited liability company 

Setting up a company online: How does the S24 System work?

Setting up a company via the S24 System is undoubtedly a faster and more competitive solution as compared to the traditional form, i.e. adoption of articles of association before a notary. However, the system dictates the content of the articles of association. It means that it is impossible to design or modify the content of the articles of association on one's own. 

In the editable section of the form, we decide whether we wish to include the following information in the articles of association: 

• grant the right to vote to a pledgee or usufructuary of shares;
• possibility to pay out an interim dividend;
• formation of a supervisory board;
• designation of the modekapi  of representation of the company (there are only two options: single representation, by each member of the management board independently, or joint representation, by two members of the management board jointly or by a member of the management board together with a company agent);
• possibility of excluding Article 230 of the Code of Commercial Companies, i.e. the requirement of having shareholders' consent to dispose of a right or to take on an obligation to provide consideration of a value exceeding twice the amount of the share capital of the company.

Such data as: 

• particulars of the shareholders,
• name of the company,
• registered office of the company,
• core activity,
• amount of share capital,
• number of shares taken up by shareholders,
• length of management board members' term of office,
• particulars and functions of management board members', and
• end day of the first fiscal year,

must be simply completed in the System. 

Simply put, the first step to set up a limited liability company through the S24 portal is to provide the above data and wait for complete articles of association of a limited liability company to be generated in electronic form. 

Articles of association may be signed with a qualified electronic signature, the ePUAP Trusted Profile (Polish: profil zaufany), or handwritten signature. 

The articles of association are adopted in the S24 System when all shareholders sign them. Where the shareholders sign the articles of association on different dates, they are adopted when the last signature is put. In such a case, a limited liability company in organisation (Article 161(1) of the Code of Commercial Companies) comes into existence.

Conversely to a limited liability company incorporated by way of a notarial deed, in a company set up by means of the model available in the S24 computerised system, there is no obligation for shareholders to raise contributions to the share capital before filing the registration application; they may do so within 7 days from the entry of the company in the register of entrepreneurs of the National Court Register. 

Traditional form of company incorporation

The most common method of incorporating a limited liability company remains adoption of articles of association in the form of a notarial deed before a notary. 

While this option requires that all future shareholders in the company appear before a notary at the same place and time, it makes it possible to freely develop the content of the articles of association or sole-shareholder articles of association. What does it mean in practice? It means that the articles of association may be drafted in a way that more effectively satisfies the basic requirements provided for in the Code of Commercial Companies, and thus better securing the interests of the company and shareholders themselves. 

In drafting the articles of association, Article 157(1) of the Code of Commercial Companies, which sets out obligatory items included in articles of association, must be followed, The said items are the following:

• name and address of the registered office of the company,
• core activity of the company,
• amount of the share capital (the minimum amount of the share capital is PLN 5,000),
• information whether a shareholder can hold more than one share,
• number and nominal value of shares taken up by individual shareholders (note that the nominal value of one share may not be less than PLN 50),
• duration of the company – if for a fixed term.

Non-obligatory, however important, provisions of articles of association include such that regulate: 

• possibility to increase the share capital of the company without amending its articles of association (the key elements are setting the cut-off date and indicating the maximum amount of the increase),
• possibility to redeem shares,
• potential share premiums,
• dividend payout,
• possibility to transfer and pledge shares,
• convening annual and extraordinary general meetings,
• specification of matters considered at particular general meetings,
• mode of representation,
• term of office of the management board members, 
• winding-up of the company, or
• designation of the company's fiscal year. 

Both, in the case of adoption of articles of association of a limited liability company in the S24 System and in the form of a notarial deed, at the time of incorporation of the company, a limited liability company in organisation comes into existence. Such a company becomes a legal entity. However, Polish law states that a limited liability company is fully incorporated only after it is entered into the register of entrepreneurs of the National Court Register. 

The registration has to be made within 6 months from the adoption of the articles of association, otherwise, the company is dissolved by operation of law. 

Advantages and disadvantages of both forms of company incorporation

Registration of the company in the National Court Register

Since 1 July 2021, registration of legal entities (and submitting all applications for changes in their data) has taken place only electronically, by means of a dedicated Court Registers Portal (Polish: Portal Rejestrów Sądowych, hereinafter referred to as the System). 

The content of the applications has not changed; it has been moved online. The System is very intuitive and provides you with step-by-step guidance throughout the whole process by generating proper forms to complete. After providing all necessary data, the System allows you to upload attachments – of course, in electronic form. After completing the registration application (and uploading all attachments), you can request the System to have the application verified. If the application is correct, you may proceed with its signing.

But before moving on to signing, a few words must be said about the fees. 

In accordance with the Court Costs in Civil Matters Act, the fee for entry of a company into the register of entrepreneurs of the National Court Register is PLN 500. To that, one must add the fee for announcement of the registration in the Court and Economic Gazette (Polish: Monitor Sądowy i Gospodarczy) in the amount of PLN 100. Therefore, the total registration fee is PLN 600. In accordance with the rules of functioning of the Court Registers Portal, the fee can be paid outside the System (with a proof of payment attached) or when filing the application. Then, the System will allow you to make an online payment. 

The application for registration of a limited liability company must be signed by – in the case of the first application – all members of its management board, regardless of the mode of representation of the company. The signature must be made with a qualified electronic signature, the ePUAP Trusted Profile, or a handwritten signature. 

The System also makes it available to share the application with another user of the Court Registers Portal. In practice, it means that someone else can prepare the application and share it with authorized signatories from their account level. In that case, the signatory sees the application in "to sign" form. After being signed, the application returns to the account of the person preparing it, and – once it bears all signatures – it can be filed. Within a few minutes from the submission of the registration documents, the System generates the filed application in the form of a PDF file, which can be reviewed at any time. 

It is practically impossible to determine the exact time needed for examination of the application for registration of the company in the National Court Register, as it depends on many factors. The average time needed by the court to consider the application (and issue an order) is about 4 to 5 weeks – running from the moment of submitting the application in the Court Registers Portal. 

There is also an option to submit the application for company registration through the S24 System. The costs of submitting the application in such a manner are PLN 350.60 (PLN 250 for entry into the National Court Register, PLN 100 for announcement in the Court and Economic Gazette, and a handling fee of PLN 0.60 for the payment provider). Here, registration of the company should theoretically take place within 24 hours, however, in practice, this process can extend to several days.

Registration of a company in the National Court Register – what should you remember?

After registering the company in the register of entrepreneurs of the National Court Register, one must remember to fulfill several important legal obligations. The following actions must be performed: 

• Registration of the company in the Tax Office – as a general rule, within 21 days from the time of registration of the company in the National Court Register (in the case of payers of social security contributions, the time limit for registration is 7 days).
• Registration of the ultimate beneficial owners of the company in the Central Register of Ultimate Beneficial Owners (CRBR) – within 14 business days from the time of registration of the company in the National Court Register.

As you can see, the range of actions that can be taken to set up a limited liability company is wide, and the activity leading to the incorporation of a limited liability company can be in a way tailored to individual shareholders' needs. It all depends on how much time, money, and willingness future shareholders would like to devote to the process. Nevertheless, we can safely say that the S24 System was created in a way to satisfy the expectations of entrepreneurs for whom, as is well known, time is precious. 

If you wish to quickly register a company in the National Court Register, we suggest doing it through S24; while if it is important to fully secure shareholders' interests – including their rights and obligations – as well as to regulate the functioning of the company in detail, it is worth considering adoption of articles of association in traditional form. 

Notwithstanding the above, before incorporating a company, we recommend contacting a professional advisor, whose knowledge and experience will help you to properly plan and go through the entire process. Furthermore, they will take into account not only setting up and registration of the company, but also its subsequent effective functioning.

What obligations must be met after incorporation of a limited liability company? Step-by-step instruction

Incorporation of a Polish limited liability company in the National Court Register (Polish: Krajowy Rejestr Sądowy – KRS) is not the end of formalities associated with starting a business. What must be done within the first days and months following the registration of a Polish limited liability company in the National Court Register? What are the consequences of failure to fulfil the statutory obligations? What services are worth using after incorporation of a limited liability company? To make it easier to run a company in Poland, below we present eight steps that you should follow.

Step one after incorporation of a limited liability company: Pay civil law transactions tax (PCC)

In Poland, adoption of articles of association is a civil law transaction subject to civil law transactions tax, as arising from Article 1(1)(k) of the Civil Law Transactions Tax of 9 September 2000 (i.e. Journal of Laws of 2023, item 170, as amended – hereinafter referred to as the "PCC Act"). 

If a model articles of association of a limited liability company available in the computerised system (S24 platform) was used, then the company has to file a tax return and pay civil law transactions tax on its own. 

The obligation to pay tax is imposed on the company (Article 4(9) of the PCC Act). The tax basis is the amount of share capital (Article 6(1)(6)(a) of the PCC Act), and the tax rate is 0.5% (Article 7(1)(9) of the PCC Act). The company has to calculate and pay the tax within 14 days of the adoption of the articles of association (Article 10(1) of the PCC Act), and submit a PCC-3 return to the tax office (competent for the address of the registered office of the limited liability company). 

If the articles of association is adopted in the traditional form, as a notarial deed, then the notary is liable for the calculation, collection, and remittance of civil law transactions tax (Article 10(2) of the PCC Act). 

Step two: Open a corporate bank account

While there is no law which directly obliges Polish limited liability companies to hold a bank account, there are many provisions which order these organizations to make settlements using a corporate bank account. 

For example, in accordance with Article 19 of the Entrepreneurs Law of the 6 March 2018 (i.e. Journal of Laws of 2023, item 221, as amended), bank settlements are obligatory if:

• the other party to the transaction in which the payment is involved is another business, and 
• the single value of the transaction exceeds PLN 15,000 or equivalent. 

Furthermore, a bank account is necessary for a limited liability company if it claims VAT refund (i.e. the excess of input VAT over output VAT). This rule arises from the provisions of the first sentence of Article 87(1) of the Goods and Services Tax Act of 11 March 2004 (i.e. Journal of Laws of 2023, item 1570, as amended; hereinafter referred to as the "VAT Act").

Step three: Identify and report the beneficial owner to the Central Register of Beneficial Owners (CRBR)

The obligation to disclose the beneficial owners of limited liability companies arises from the Anti-Money Laundering and Terrorist Financing Act of 18 March 2018 (i.e. Journal of Laws of 2023, item 1124, as amended; hereinafter referred to as the "AML Act"). 

In accordance with Article 60(1)(1) and Article 60(2) of the AML Act, the information must be disclosed to the Central Register of Beneficial Owners within 14 days of the date of entry (incorporation) of the company to the National Court Register. In order to disclose the beneficial owner information, it is necessary to fill out a form on the website of the Ministry of Finance. In a limited liability company, a member of the management board of the company is entitled to make the disclosure. 

More information about who the beneficial owners are (and how to identify them) can be found here. 

Importantly, failure to disclose the information to the Central Register of Beneficial Owners is subject to a financial penalty, which may amount to as much as PLN 1,000,000 – as arising from the provisions of Article 153(1) of the AML Act.

Step four: Submit supplementary data to tax authorities

The obligation to submit supplementary data arises from the provisions of Article 5(1) of the Taxpayers and Remitters Recording and Identification Rules Act of 13 October 1995 (i.e. Journal of Laws of 2022, item 2500, as amended). 

The supplementary data registration form (NIP-8 declaration) contains, among others, the following data: the list of bank accounts, the data of the entity which keeps the accounts, the address of the place where the accounting records are kept, and the data of individual shareholders. The limited liability company has to submit the NIP-8 declaration to the head of the competent tax office within 21 days of making the entry to the National Court Register. If the data included in the original registration are changed, it is necessary to file an updating registration form (also NIP-8 declaration), however, not later than within 7 days of the date on which the data were changed. 

If the company intends to employ other people – which means that it will pay social security contributions – the obligatory registration of supplementary data with the head of the tax office has to be made earlier, namely within 7 days of the date on which the first person was employed. This rule arises from the provisions of Article 43(1), (3), (5b), and (5c) of the Social Security System Act of 13 October 1998 (i.e. Journal of Laws of 2023, item 1230, as amended).

Failure to comply with the obligation to submit the identification registration form (or its update) is a fiscal petty offence and is subject to a fine, as arising from Article 81(1)(1) of the Fiscal Penal Code Act of 10 September 1999 (i.e. Journal of Laws of 2023, item 654, as amended; hereinafter referred to as the "Fiscal Penal Code").

Step five: Register the company as a VAT payer

As a general rule, registration of a company as a payer of goods and services tax (VAT) is necessary if a company does not enjoy any exemptions, i.e. when the value of its sales exceeded the total amount of PLN 200,000 in the preceding tax year (Article 113(1) of the VAT Act), or if the company offers specific groups of goods and services which are tax exempt (Article 43(1) of the VAT Act).  

Registration of the company as a VAT payer must be made on a VAT-R form, which must be submitted to the head of the tax office before the first taxable operation (Article 96(1) of the VAT Act). In addition, if the company conducts transactions with foreign counterparts within the European Union, it also has to register as a VAT EU payer (Article 97(1) of the VAT Act).

Instructions on how to register a company as a VAT and VAT-EU payer can be found here. 

Failure to comply with the obligation to register for VAT purposes (where such an obligation is necessary with regard to tax) together with failure to submit tax returns and failure to pay tax may be deemed as tax evasion by non-disclosing the subject of taxation or tax base, which constitutes a fiscal offence in the sense of Article 54(1) of the Fiscal Penal Code.

Step six: Take care of bookkeeping

Since the so-called "full accounting" is the most precise and comprehensive bookkeeping model, requiring expertise and keeping up with continuously changing legal regulations, it is worth considering outsourcing of accounting services. 

Step seven: Approve and submit financial documents

The obligation to prepare annual financial statements by a limited liability company is one of the elements of the so-called "full accounting". 

Before financial documents (including annual financial statements) are submitted to the court register, the approving body (in the case of a limited liability company – the shareholders' meeting) has to adopt a resolution on the approval of the annual financial statements and on profit distribution or loss coverage, as arising from the provisions of Article 69(1) of the Accounting Act of 29 September 1994 (i.e. Journal of Laws of 2023, item 120, as amended; hereinafter referred to as the "Accounting Act").

Failure to comply with the obligation to submit the financial statements to the Head of the National Revenue Administration carries penalties. In line with Article 80b of the Fiscal Penal Code, it is a fiscal petty offence and is subject to a fine. However, under Article 79(1 to 3) of the Accounting Act (i.e. Journal of Laws of 2023, item 120, as amended), it is an offence which is subject to a fine and a community sentence. 

In addition, failure to comply with the management board's obligation to convene a shareholders' meeting constitutes grounds for a fine of up to PLN 20,000 imposed on members of the management board by the registration court, as arising from the provisions of Article 594(1)(3) of the Commercial Companies Code (the Commercial Companies Code Act of 15 September 2000 (i.e. Journal of Laws of 2024, item 18, as amended; hereinafter referred to as the "Companies Code"). 

Step eight: Consider ongoing legal and corporate services for the company 

Due to the dynamically changing legal environment, shareholders in a limited liability company must make numerous business decisions related to – for instance – amendment to the articles of association, transfer of company shares, or change of the composition of the management board or supervisory board of the company. All such operations must be reported to the National Court Register. In order to avoid stress and errors in this respect, it is worth considering ongoing (or ad hoc) legal aid within the scope of corporate advisory. 

To sum up, in addition to registration of a limited liability company in the National Court Register, entrepreneurs starting business in Poland have to meet a lot of additional obligations. The list of institutions which must be contacted is relatively long, and the penalties for non-compliance with the obligations can be really severe. 

In order to ensure the effective and smooth completion of the entire process, it is worth using professional support, not only when adopting the articles of association, but also after company incorporation.