Simple joint-stock company – what are its biggest advantages? 

So far, Poland has had two types of private limited companies – a limited liability company and a joint-stock company. However, on July 1, 2021, legislation came into effect introducing a new type of commercial company to be counted as a private limited company - the simple joint-stock company. As envisioned by the legislator, it is a form of business equipped with flexible instruments for managing its structure and assets, and characterized by significant de-formalization of operation. Therefore, we have decided to take a closer look at the solutions adopted in the simple joint-stock company, which constitute its greatest advantages over other types of companies. 

Non-denominated shares and share capital

The simple joint-stock company was equipped with two instruments hitherto unknown to Polish private limited – share capital and so-called non-denominated shares. Share capital represents a completely new concept in the approach to the assets of a simple joint-stock company. The minimum amount of share capital needed to establish a company is PLN 1  and is not indicated in the articles of association. Thus, the law does not require an amendment to the company's articles of association in the event of an increase or decrease in share capital. This is different from the solution in force for example for a limited liability company, where the minimum amount of share capital is PLN 5,000, and its indication in the articles of association is mandatory. In addition, a change in the amount of a limited liability company's share capital, as a general rule, requires a resolution to amend the articles of association.  

In addition to the share capital in a simple joint-stock company, there are also so-called non-denominated shares, whose characteristic is precisely the lack of a nominal value reflecting the share in the share capital. So, on the one hand, they do not form part of the share capital (their issue price is stated in the articles of association), but on the other hand, it is primarily the shares that determine the shareholder's rights in the company. For comparison, it is worth pointing out that shares of a limited liability company, as well as shares of a joint-stock company, have a nominal value – in the first case, the minimum nominal value of a share is PLN 50, while with regard to a joint-stock company, the minimum value of a share is 1 grosz. 

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A different approach to contributions 

In the asset structure of a simple joint-stock company, there are two categories of contributions with which shares can be covered. The first category includes contributions that feed into the share capital, and therefore affect its amount. These include both monetary and non-monetary contributions. The second category of contributions includes contributions to cover shares – monetary contributions and any non-monetary contributions that have an asset value may be made to simple joint-stock company. 

A solution hitherto unheard of in Polish private limited companies is to grant shareholders of a simple joint-stock company the possibility of covering shares with non-cash contributions in the form of the provision of labor and services and non-transferable rights. Moreover, there is no obligation to make contributions in full at the time of incorporation. Only a contribution to the share capital of PLN 1 is required to establish the company, and other contributions should be made to the company in full within three years from the date of its registration. The articles of incorporation can, of course, oblige shareholders to pay the remainder of their contributions within a shorter period of time. It is also worth mentioning that non-cash contributions made to a simple joint-stock company are not subject to valuation by an auditor.  

A lot of freedom for shareholders 

Shareholders of a simple joint-stock company have considerable freedom to make preferred shares, such as the creation of founders' shares, which allow them to safeguard the interests of the founders. They also have the right to make payouts out of their share capital – an arrangement not seen before in other capital companies. If the S.J.S.C.'s business develops successfully and generates income, shareholders may come to the conclusion that their contributions are no longer needed. Then they can make a payout from the share capital and thus recover their contributions. Since the minimum share capital is only 1 zloty, in practice it is possible to withdraw almost all of the share capital. 

Simplified share trading 

In a simple joint-stock company, compared to the regulations for a joint-stock company, the procedures for trading in shares have been simplified and, importantly, only a documentary form has been reserved for making a transfer or encumbrance of shares. This means that the transfer or encumbrance of the shares can be carried out through any medium that will allow its contents to be known. So theoretically it could be an SMS or e-mail in addition to the traditional letter. In practice, however, particularly because of the need to document any changes in share ownership in the shareholder register, it is better to opt for the sale of shares of a simple joint-stock company at least in writing.  

The provisions for a simple joint-stock company also allow flexible financing of the company's operations through the issuance of subscription warrants, senior bonds or convertible bonds. At the same time, a simple joint-stock company is non-public, i.e. the company's shares cannot be listed on the stock exchange. Also new is the introduction of an electronically maintained shareholder register. The entity keeping the register may be a notary public, a brokerage house, a bank conducting brokerage activities, a custodian bank, a foreign investment company, a foreign legal entity conducting brokerage activities on Polish territory, as well as the National Securities Depository. 

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Flexibility of operation 

The parties to the articles of incorporation have considerable latitude in determining the structure and rules of the bodies. The parties to the company's articles of association may even grant the management body the authority to decide on a new share issue. The establishment of a general meeting in a simple joint-stock company is mandatory, but it is left to the shareholders to choose whether to establish a management board or a board of directors, which concentrates both management and supervisory powers. If a management board is established, a supervisory board can also be established in a simple joint-stock company – but there are no mandatory conditions for the establishment of a supervisory body. In a simple joint-stock company, the procedures for adopting resolutions have been simplified, including the possibility of adopting them by means of direct remote communication, such as email. 

Simpler termination rules 

In a simple joint-stock company, the rules for liquidation of the company have been greatly simplified, and a procedure for deletion of the company from the Register of Entrepreneurs of the National Court Register as a result of the acquisition of all the company's assets by a designated shareholder has been introduced.    

The above-mentioned advantages of a simple joint-stock company clearly illustrate that the legislator, on the one hand, has combined in it the solutions inherent in different types of commercial companies, and, on the other hand, has equipped it with hitherto unknown legal institutions – which together create completely new opportunities for conducting business in this particular legal form. 

If you are planning to transform your company into a simple joint-stock company or want to start your own business by setting it up from scratch – feel free to contact us, we will definitely help! In the meantime, we recommend reading our article Transformation of a company or a partnership – issues to which special attention should be paid, from which you will learn what to pay special attention to when transforming a company. 



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