Administrative Requirements

In order to operate properly, each company must meet a number of legal requirements. This section presents the key issues, which must be taken into consideration while running a business in the territory of Poland as a commercial company.

Each commercial company must be registered in the registry of entrepreneurs of the National Court Register (Polish abbreviation: KRS).

The National Court Register is open to the public, and anyone may apply for a certified copy from the National Court Register concerning any entity registered therein. A certified copy from the National Court Register serves the purpose of identifying the company and official verification of its current data. A certified copy from the National Court Register is valid as long as no changes are made to the register. However, although there are no statutory deadlines for the validity of the copy, it is recommended - from the point of view of economic security - that contractors enter into contracts based on a copy dated up to three months back.

Below is a brief presentation of other legal requirements relating to operation of an enterprise in the form of a commercial company in Poland:

• agreements between the company and a management board member must be signed by the supervisory board or a proxy appointed by a resolution of the general meeting;
• in single-shareholder companies where the sole shareholder is also the sole member of the management board, each legal transaction between such shareholder and the company must be executed in the form of a notarial deed;
• any amendments of the company deed (articles of association), such as change of the registered office of the company (town/city), corporate name of the company, objects of activity, etc. must be executed in the form of a notarial deed;
• transaction of sale of shares in a limited liability company must be executed in writing, with signatures certified by a notary in order to be valid, i.e. it requires the presence of the seller and the buyer (or their respective authorized proxies) at the notary’s office;
• change of corporate address of the company does not need to be executed in the form of a notarial deed – it only requires a new contract of lease, rental, other contract, or deed of property purchase, and adoption of an appropriate resolution (on changing the address of the company's registered office) by the company's board of directors;
• change in composition of the management board does not need to be executed as a notary deed – simple written form is sufficient;
• in the case of a sole-shareholder limited liability company, the sole shareholder who is a private individual must pay his own social security contributions to the Social Security Agency (Polish: Zakład Ubezpieczeń Społecznych, ZUS), as in the case of a person running their own business on a sole proprietorship basis. If at least two entities appear as shareholders, payment of social security contributions is not mandatory;
• all company information must be disclosed in the National Court Register, and therefore all changes in the company should be notified to the Register within 7 days of occurrence; notifications are filed on official forms, and any change of an entry in the National Court Register is subject to a relevant procedure fee;
• where the Act requires a resolution of shareholders or the general meeting, or the supervisory board for the company to perform a legal act, then a legal act performed without the required resolution shall be null and void.

Each entrepreneur is required to maintain the required accounting books and records. Full-scope accounting is mandatory for capital companies (joint-stock and limited liability companies), branches and representative offices of foreign businesses, as well as certain partnerships (limited partnerships and limited joint-stock partnerships), in accordance with the Polish Accounting Act.

Natural persons, civil law partnerships and registered partnerships composed of natural persons, professional partnerships, as well as inherited enterprises operating in accordance with the Act of 5 July 2018 on the succession management of a natural person's business and other facilitations related to business succession, are required to switch to full-scope accounting if their net revenue from the sale of goods, products, and financial operations for the previous financial year amounted to at least the equivalent of EUR 2,500,000 in Polish currency. However, entities with lower income may voluntarily apply full accounting principles, provided they notify the tax office competent for income taxation. The euro-denominated threshold is converted into Polish currency based on the average euro exchange rate announced by the National Bank of Poland (NBP) on the first working day of October of the year preceding the tax year.

Each entrepreneur must retain original accounting documents on the basis of which entries were made in the accounting books for five years from the beginning of the year following the financial year to which the records relate. Approved annual financial statements must be retained for no less than five years from the beginning of the year following the financial year in which they were approved. This rule also applies to reports for financial years starting before 1 January 2019.

Each entity maintaining full accounting records must prepare annual financial statements for each consecutive financial year. If a company starts operations in the second half of the adopted financial year, it may combine its accounting records and financial statements for that period with those for the next financial year (combined financial year).

The financial statements should be composed of the following elements:

1. balance sheet;
2. income statement
3. additional information, including:
   • introduction to the financial statements;
   • additional notes and explanations.

Financial statements of groups and continuing operations of: domestic banks, branches of credit institutions, branches of foreign banks, insurance companies, reinsurance companies, major branches and divisions of insurance companies, major branches and divisions of reinsurance companies, and branches of foreign investment companies must also have:cash flow statement:

• statement of changes in equity;
• statement of changes in net assets and cash flow statement (in case of investment funds).

Annual financial statements of the company for the preceding year should be executed and signed by the entire management board of the company not later than 3 months of the end of the financial year concerned. If the financial year is equivalent to the calendar year, this should take place until March 31 at the latest. Afterwards, the financial statements should be approved by the general meeting of shareholders within 6 months of the balance date (usually no later than June 30). After approval, the financial statements shall be submitted to the registration court (National Court Register) and the tax office.

According to Art. 64.1 of the Accounting Act, financial statements of the following entities are subject to mandatory audit:

• domestic banks, branches of credit institutions, branches of foreign banks, insurance companies, reinsurance companies, main branches and divisions of insurance companies, main branches and divisions of reinsurance companies and branches of foreign investment companies;
• cooperative savings and credit unions;
• units operating under the regulations on trading in securities and the regulations on investment funds;
• entities operating under the regulations on the organization and operation of pension funds;
• national payment institutions and electronic money institutions;
• joint stock companies, except for companies under organization as at the balance sheet date;
• other entities (primarily limited liability companies, general partnerships, limited liability partnerships, limited partnerships, civil law partnerships and enterprises of natural persons) which, in the preceding financial year for which financial statements are prepared, met at least two of the following criteria:
  1. had an average annual full-time employment of at least 50 persons
  2. the total value of balance sheet assets as at the end of the financial year amounted to at least the equivalent of EUR 3,125,000 in Polish currency
  3. the annual net revenue amounted to at least the equivalent of EUR 6,250,000 in Polish currency

The financial statements of the acquiring companies and of the newly incorporated companies for the financial year in which the merger took place, as well as the annual financial statements of the entities prepared in accordance with International Accounting Standards, the annual combined financial statements of the investment funds with separated sub-funds and the annual individual financial statements of the sub-funds are also subject to audit.

Entities keeping full accounting books which have chosen the balance sheet method of calculating exchange rate differences for tax purposes are also required to have their financial statements audited. Additionally, any business entity may engage a certified auditor to perform an audit of its financial statements or a review of its accounting books if the entrepreneur considers it necessary.