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Simple Joint Stock Company and Limited Liability Company
When starting a business, we face many dilemmas: what correspondence address to choose, a permanent headquarters or a virtual office, to hire or to choose, but then will a virtual assistant meet expectations? In addition, every entrepreneur faces the problem of defining the nature of their own company. One of the most common dilemmas is the choice between a joint-stock company and a limited liability company and the choice of which "nature" is closer to our assumptions. In the following article, we will try to explain what both issues are, what similarities and differences they have.
First, some basic definitions:
Simple joint-stock company
the legal form of an enterprise, which is a simplified version of a joint-stock company, regulated by the provisions of the Act of 15 September 2000 and introduced on 1 July 2021. It is a capital company intended primarily for creators of startups and new enterprises. A simple joint-stock company complements the already implemented R&D relief and innovation box in this respect.Limited liability company
a type of legal form of an enterprise established by one or more persons, called partners, who are liable for the obligations of the enterprise to a limited extent. In our country, it is a commercial company, i.e. one whose functioning is regulated by the Commercial Companies Code. It may be established by one or more entities (partners) who are not liable for the company's obligations to creditors; the company itself is liable for them with its own assets created from the partners' contributions.
We will try to show some similarities and differences based on several issues, for convenience we will use the abbreviations PSA and SP. Z OO
Who can establish a PSA or a LLC?
PSA and SP. Z OO can be established by one or several individuals or persons. The only limitation for them is the lack of possibility of establishing by one single-member limited liability company. The differences between them are the initial capital for PSA is PLN 1 and SP. Z OO is already PLN 5 thousand, then in SP ZOO Its founders can be individuals or legal persons, regardless of citizenship and place of residence, and there are no similar indications for PSA.How to put it on?
The basic document regulating the principles of operation of PSA and SP ZOO is the company agreement specifying, among other things, the company's name and registered office, the subject of activity, company bodies, the number, series and numbers of shares, the privileges associated with them or the duration of the company, if specified. They differ in the portals on which they can be established. PSA can be established at a notary's office and SP ZOO via the Court Registers Portal. After registration, the company reports additional data to the tax office (NIP-8 form).Capital Management
According to researchers, PSA allows for a very flexible approach to capital management. The share capital of PSA is not fixed, but may be subject to informal modifications. It may even be partially allocated for payment to shareholders. On the other hand, the capital of SP ZOO is fixed and cannot be changed. "The effect of different principles of accumulation and functioning of share capital is also the possibility of covering the acquired shares with the shareholder's own work or provision of services."Management
PSA is or may be managed by the so-called Board of Directors: The Board is divided into executive (managing) and non-executive directors. As a result, management and supervisory functions are concentrated in one body. SP ZOO, on the other hand, The executive body authorized to represent and manage the affairs of a limited liability company is the management board. The management board may include partners and third parties.Responsibility
In the event that enforcement against PSA is ineffective, the members of the management board are jointly and severally liable for its obligations in the same way as with SP ZOO. The members of the management board may release themselves from liability by proving, among other things, that a motion to declare bankruptcy was filed in due time or by proving that despite the failure to file a motion to declare bankruptcy, the creditor did not suffer any damage.
When choosing the form in which we want to conduct our activities, we should take into account the possibilities and limitations offered by each form, i.e. the lack of formalized share capital in PSA. The use of Excel with the entered tax burdens that individual forms entail will certainly allow us to make an easier decision.
The icing on the cake is a quote from one of the lawyers:
"A simple joint-stock company is an experimental mix of the regulations of previously known capital companies, i.e. a limited liability company and a joint-stock company. However, many of the adopted solutions are completely new in the Polish legal system, such as non-nominal shares, the possibility of acquiring them in exchange for intangible contributions, simplifications in the scope of trading in shares, or the body in the form of a board of directors. Getting used to them will certainly take time."
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