Simple joint-stock company - a new form of business
1 July 2021 was the effective date of the amended provisions of the Commercial Companies Code which introduced a new legal form of running business to the Polish legal order – a simple joint-stock company (Prosta Spółka Akcyjna - PSA).
Simple joint-stock company – for which entities is it intended?
A simple joint-stock company is by definition a form of a non-public company intended for innovative ventures. It combines the nature of the company as a legal entity and its basic manifestation being exclusion of personal liability of the partners for the company`s liabilities with the considerable freedom in shaping the company`s relationship, both as regards the mutual relations between the partners and the company`s management system, as well as the supervision over this process.
The procedure for establishment of the simple joint-stock company is based on the provisions concerning the limited liability company.
The simple joint-stock company may be formed by one or more individuals for any purpose permitted by law. Just as in the case of the other companies, the PSA cannot be established by a single-member limited liability company. Shareholders of the PSA, similarly to the LLC and JSC, are not liable for the company’s liabilities.
According to the introduced regulations, the company deed may be executed in the form of a notarial deed or with the use of the draft company deed available in the ICT system – via the Internet (on the S24 website).
After execution of the company deed, a simple joint-stock company in organisation is established whose essence and rules of functioning have been regulated in a way similar to the other types of companies, which also finds its reflection in the process of registration of the company in the National Court Register (KRS).
It is distinguished, first of all, by, on the one hand, admission of new categories of contributions covering shareholders’ rights, and on the other hand, a modern mechanism of protection of company’s creditors departing from the construct of the share capital in favour of flexible reduction in payments to shareholders, taking into account both the amount of aggregate debt of the company and the degree of its solvency.
Shares of the simple joint-stock company
The shares of the PSA are subscribed for in exchange for cash or non-cash contributions (contributions in kind).
The non-cash contribution made to cover the shares may be any contribution having asset value, in particular performance of work or services. Therefore, also contributions in kind without contribution capacity in the meaning of Article 14 § 1 of the Commercial Companies Code may constitute the shareholder’s contribution covering shares in a simple joint-stock company, but their value does not affect the amount of the share capital. These two categories of contributions to the simple joint-stock company are differentiated in the doctrine by way of the use of the notions “capital contributions” (with regard to the contributions credited to the share capital) and “non-capital contributions” (with regard to the contributions not credited to the share capital).
The shares do not have a nominal value, are not a part of the share capital and are indivisible. Thus, the shares cannot be divided into smaller parts which as a result of such a division would become separate share rights.
The shareholders in the PSA deed may decide on some specified shares being preference shares.
Similarly to the other companies, the preferential rights carried by the shares in the simple joint-stock company may concern, in particular, the voting right, the right to the dividend or the distribution of assets in the case of company’s liquidation. However, different from the limited liability company and the joint-stock company, the provisions on the simple joint-stock company do not set limits either as regards voting or dividend preference. The freedom of the shareholders in this respect is, thus, subject solely to the restrictions rising from the general disposition of Article 353¹ of the Civil Code in conjunction with Article 2 of the Commercial Companies Code.
The Code provides for two sample types of preference, i.e. founders’ and non-voting shares. The preference shares may give rise to a special right according to which each subsequent issue of new shares cannot violate the specified minimum proportion of the number of votes carried by those preference shares to the total number of votes carried by all company’s shares (founders’ shares). In the case of an issue of new shares which could violate such a proportion, the number of votes carried by the founders’ shares is increased, respectively. A share with a dividend preference may have the voting right excluded (non-voting share). The company deed may specify the circumstances in which the holder of the non-voting share gains the voting right.
The shares in the simple joint-stock company are dematerialised shares, i.e. they do not have the form of documents. Therefore, it is expected that the share of the PSA will be registered in the register of shareholders. In the case of a subscription for the shares entry in the shareholders’ register is made after the company has been entered in the register or after the new issue of shares has been entered in the register. The shareholders’ register may be kept by properly qualified entities only (e.g. The Central Securities Depository of Poland, brokerage houses and banks conducting brokerage activities, custodian banks, foreign investment companies and foreign legal entities conducting brokerage activities in Poland in the form of a branch) or by notaries.
Due to their non-public character the shares of the PSA should not be introduced or admitted to organised foreign trading, which concerns both trading on the regulated market and alternative trading systems (ATS). This is because the simple joint-stock company is a legal tool intended for entrepreneurs interested in acquiring venture capital rather than entrepreneurs whose aim is to acquire capital on the organised capital market.
In the new regulations the legislator has departed from the rigid share capital in favour of a share capital whose essence consists in that it does not have the feature of permanence characteristic of the share capital of the limited liability company and the joint-stock company. The amount of the share capital is not (and cannot be) specified in the company deed and the change of the amount of the share capital is not made by way of its formal increase or decrease being an amendment to the company deed. Due to company formation the amount of the share capital is specified by the management board based on the sum of the values of contributions in cash and in kind covering the shares, excluding contributions not credited to the share capital (Article 14 § 1 of the Commercial Companies Code – i.e. contributions in the form of non-transferable rights or performance of work or services for the company).
The share capital should amount to at least PLN 1. Therefore, the condition for establishment of a simple joint-stock company is the fact of actually making a cash contribution or a contribution which meets the criteria of contribution capacity whose value is equal to at least PLN 1 (Article 3004 point 3 of the Commercial Companies Code). Thus, the statement of the members of the management board enclosed to the registration application of the simple joint-stock company has to show that the share capital amounts to at least PLN 1. A simple joint-stock company in which the amount of the share capital is equal to 0 or lower than PLN 1 cannot be entered in the register.
Governing bodies of the simple joint-stock company
Following Anglo-Saxon solutions, a new type of governing bodies of the company in the form of a board of directors has been introduced which assumes existence of one body with managerial and supervisory powers. It is supposed to ensure flexibility in allocating managerial and supervisory competencies, which will make it possible to adjust the company’s organisational structure to the individual situation of the company and its shareholders – including the possibility to separate executive and non-executive directors.
Therefore, entrepreneurs will be able to choose between the so-called monist system (there is one body with managerial and supervisory competencies – board of directors) and the dualist system (there are two bodies, so the areas of management and supervision are divided between the management board and the supervisory board).
Liquidation of PSA
At the same time, the rules concerning liquidation of the company have been significantly simplified, among other things by introduction of a requirement of only one announcement about the opening of liquidation, a three-month period for submission of creditors’ claims and lack of the statutory waiting period being the condition permitting for the distribution of the assets among the shareholders.
Also, an interesting institution of a simplified liquidation of the company has been introduced, so as to implement the idea that many of the businesses launched as the PSA may not be successful and end their existence shortly. That is why a mechanism has been introduced according to which the simple joint-stock company may be deleted from the register of businesses without a liquidation procedure, if a resolution of the general meeting of shareholders adopted by a qualified majority of ¾ of votes with a 50% quorum provides for all assets of the company being taken over by a specified shareholder (acquiring shareholder) with the obligation to satisfy the creditors and the other shareholders. This requires an additional consent of the registration court.
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