Basic features of a simple public limited company
As of 1st of July 2021, instead of 1st of March 2021 as initially planned, amendments to the Code of Commercial Companies came into force, which resulted in the expansion of the existing catalog of capital companies and the appearance in legal circulation of another type of non-public capital company, i.e., a simple joint stock company (PSA).
For whom is a simple joint-stock company
On the website of the Ministry of Development we can find information that the simple joint-stock company was created in order to “strengthen the development of startups in Poland, increase their competitiveness and stop exporting Polish ideas abroad”. The main goal of a simple joint-stock company is thus to support modern initiatives through a flexible form of activity, while protecting the private assets of its founders. A simple joint stock company is a specific combination of features of a joint stock company and a limited liability company. The date of introduction of the new type of capital company was postponed from March due to protracted works on launching a new eKRS platform, through which the registration process of the new type of company is possible.
A characteristic feature of this type of capital company is, among others, the minimum amount of capital required to start a business (in the amount of PLN 1). The European market already knows companies without minimum capital or with symbolic capital. They operate e.g., in such countries as Germany, the Czech Republic or France.
The advantages of a simple joint-stock company
1. Incorporation of the company
This type of company can be incorporated by one or more persons for any legally permissible interest. A significant advantage is that incorporation is easy and inexpensive and can be done through online registration. A simple joint stock company can also be registered in the traditional way, but then the articles of association will have to be drawn up in the form of a notarial deed. According to Section 3006 of the Companies Act, if a simple joint stock company is incorporated “traditionally” i.e., without the use of an online template, then the articles of association of a simple joint stock company should be in the form of a notarial deed, regardless of whether the contributions made are in cash or not.
2. Share capital
The biggest convenience – and perhaps the biggest benefit of a simple joint stock company – is that there are no barriers to the company’s emergence on the market while at the same time the rules on the liability of shareholders, who are not liable for the company’s debts, are maintained. The share capital for a simple joint stock company will be at least PLN 1. It should be mentioned that in case of a regular joint-stock company this capital is as much as PLN 100,000 (one hundred thousand zlotys), which unfortunately is an insurmountable obstacle for many entrepreneurs.
3. Contributions Simple joint-stock company
- In case of a Simple Stock Company, a non-monetary contribution to cover shares may be any contribution having material value, in particular, rendering of work or services;
- only contributions meeting the conditions set forth in article 14 § 1 of the Commercial Companies Code, i.e., other than non-transferable rights or provision of work or services, shall be counted towards the share capital;
4. Trading in shares
Another change is allowing for the possibility of encumbering and disposing of shares of the Simple Stock Company in the previously unacceptable documentary form, referred to in Art. 772 of the Civil Code, this form has been reserved under pain of nullity. In order to maintain this form, it is necessary to make a declaration of will in the form of a document, in a way that allows identification of the person making the declaration (e.g., via e-mail or instant messenger). This form is much less formal than the written form, because its observance does not require the handwritten signature of the document.
What is more, the condition for trading in and acquiring shares is entry in the register of shareholders, which the company is obliged to entrust to an entity authorized to keep records of securities or to a notary.
5. Company bodies
An additional simplification for persons establishing a simple joint-stock company is the possibility of choosing between a dual system of bodies in the company (management board and supervisory board) or a monistic system (management board or board of directors).
The appointment of a supervisory board in the case of a simple joint-stock company, unlike in the case of a regular joint-stock company, is optional. In a simple joint stock company, the supervisory board consists of a minimum of three persons, appointed and dismissed by a resolution of the shareholders. The board exercises permanent supervision over the company’s operations but has no right to issue binding instructions to the management board.
If a monistic system is chosen, the company body may be either the management board or the board of directors.
The board of directors conducts the affairs of the company and represents the company. Members of the board of directors are appointed and dismissed or suspended by the shareholders for important reasons by way of a resolution, unless the articles of association provide otherwise. If a supervisory board has been established in a company, members of the management board shall be appointed and dismissed by the supervisory board and suspended by it for important reasons, unless the articles of association provide otherwise. If the board of directors consists of more than one person and the articles of association do not provide otherwise, two members of the board of directors or one member of the board of directors together with a proxy shall act jointly in order to make statements on behalf of the company.
The board of directors manages the affairs of the company, represents it externally and supervises the conduct of the company’s affairs. The board consists of executive directors, who are responsible for managing the company’s business, and non-executive directors, who are responsible for exercising continuous supervision over the conduct of the company’s affairs. If the board of directors is composed of more than one person and the articles of association do not contain any provisions to this effect, two directors or one director together with a proxy are required to make declarations on behalf of the company.
The general meeting of the company consists of the shareholders of a simple joint-stock company. They pass resolutions at or outside the general meeting. If the company’s articles of association provide for electronic means of communication, the shareholders may vote at general meetings through such means. If the articles of association do not provide for this, this is possible if all shareholders agree to this method of voting in documentary form.
The regulations provide for a liquidation procedure for a simple joint-stock company, which is essentially similar to the liquidation of a joint-stock company. However, they allow for the possibility, not existing before, of the complete takeover of the company’s assets by a designated shareholder, provided that two conditions are met, i.e., the general meeting gives its consent by way of a resolution adopted by a ¾ majority of votes in the presence of shareholders representing at least half of the total number of shares, and the registry court grants its consent to such takeover. The Management Board shall file an application for deletion of the simple joint-stock company from the National Court Register immediately after the decision permitting the takeover of the company’s assets becomes final. Upon deletion of the company from the register, the acquiring shareholder takes over all the rights and obligations arising from the simple joint-stock company.
Disadvantages of a simple joint-stock company
Each new solution is associated with certain doubts, and it is no different in case of a simple joint-stock company. Legal circles claim that the advantages of a simple joint-stock company may in fact turn out to be its disadvantages.
Less restrictive requirements as to the company’s governing bodies, minimum share capital or introduction of the possibility to adopt resolutions by electronic means may in practice raise concerns among potential investors. Such solutions may be perceived as less secure, which in consequence may make investors afraid to invest their capital in such an entity.