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. Therefore, a certified copy remains valid for 1-3 months (no statutory validity periods are prescribed, and the choice is up to the discretion of the interested party). 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 acting on behalf of the company;
- 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 as a notary 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 effected through a notary 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 (within the same town/city) does not need to be effected as a notary deed – it only requires a new contract of lease, rental or other contract, or deed of property purchase, with a resolution of the management board;
- change in composition of the management board does not need to be executed as a notary deed – 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 keep the prescribed accounting books and records, and full accounting is required of commercial companies, branches and representative offices of foreign entrepreneurs, and certain commercial partnerships (limited partnership, and limited joint-stock partnership), according to the provisions of the Polish Accounting Act. Private individuals, civil law partnerships and registered partnerships of natural persons, as well as professional partnerships must only maintain simplified accounts unless the volume of their business activities reaches a significant level, i.e. their net incomes from sales of merchandise, products and financial operations for the preceding financial year amount to at least the PLN equivalent of EUR 1,200,000 (in which case, they are also required to keep full accounts of their operations). The above requirement shall not apply to foreign citizens, who are always under an obligation to keep full accounting books and records. Each entrepreneur must retain the original accounting documents of the company, on which basis entries were made to the ledgers and the ledgers, for a period of five years from the beginning of the year following the financial year concerned by the given accounts. Approved annual financial statements must be retained permanently.
Each entity keeping its books on a full accounting basis must prepare annual financial statements for each consecutive financial year, and if a company commences operations during the second half of year adopted as the financial year, it may combine its books of accounts and financial statements for that period with the books and financial statements for the subsequent year (combined accounting year). The financial statements should be composed of the following elements:
- balance sheet;
- income statement
- additional information, including:
- introduction to the financial statements, and;
- additional notes and explanations.
Moreover, financial statements of joint-stock companies and other entities subject to mandatory audit by a chartered accountant must incorporate the following additional components:
- cash flow statement;
- statement of changes in shareholders’ equity (fund).
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. After approval, the financial statements shall be submitted to the registration court (National Court Register) and the tax office.
According to the Accounting Act, financial statements of the following entities are subject to mandatory audit:
- consolidated annual financial statements of groups of companies, banks, insurance companies, and reassurance companies;
- annual financial statements of entities operating under securities trade laws and regulations, laws applicable to investment funds, and laws and regulations applicable to pension funds organization and operation;
- annual financial statements of joint-stock companies (with the exception of joint-stock companies in the process of organization);
- annual financial statements of other companies, which fulfilled at least two of the following criteria in the previous financial year for which the financial statements were prepared:
- average annual employment in terms of FTEs was at least 50 employees;
- total assets in the balance sheet as at the end of the financial year constituted the PLN equivalent of at least EUR 2,500,000;
- net incomes from sales of goods and products and from financial operations for the financial year constituted the PLN equivalent of at least EUR 5,000,000.
- annual financial statements of merging companies and newly formed companies, executed for the financial year of merger;
- annual financial statements of companies, prepared according to the International Accounting Standards (IAS);
- annual combined financial statements of investment funds with distinguished sub-funds, as well as annual separate statements of sub-funds.
In addition, every business entity may hire a chartered accountant to carry out an audit of its financial statements or review of its accounting books whenever this is deemed necessary by the entrepreneur.