The transformation may prove to be very beneficial for the entrepreneur, especially at the time of financial problems or the need to improve the management process. We usually order an outside company to carry out the process, but it is important to know at least its basics. This will allow for appropriate decisions, e.g. on the form of a company, and facilitate the implementation of the necessary changes.
Recast means a change in the legal form of the business. This means that both before and after the transformation procedure is completed we are dealing with the same entity, but operating in a different, modified legal form.
The transformation into a company also applies to entrepreneurs operating enterprises in the form of single-member business activities and in the form of civil companies.
KSH prohibits the conversion of commercial companies only in the case of companies in liquidation which have already started the division of assets and companies in bankruptcy.
The new company continues its previous operations. It enters into the rights and obligations of the previous entity and does not require the consent of the customers or counterparties of the company.
Conversion (whether or not simplified) to first A glance may seem like a complicated process. However, this is not the case. Professional communication between the accounting officer, the statutory auditor and the lawyer ensures that the process is carried out smoothly, without undertaking activities that are not under his authority
Recitals and benefits of the recast
The motives determining the conversion relate mainly to the economic situation of the company or to improving the management of the company (taking into account the tax aspects).
Many entrepreneurs start their business in the form of one-man business, a civil partnership or a public company. Over time, companies are making more and more revenue, which means more and more responsibility for their owners. As first the advantage of the recast, the possibility of changing the rules on liability should be indicated.
For example, the transformation of the public company into a Polish limited liability company. will lead to the entire risk of operating in the Polish limited liability company. from the date of conversion. The Polish limited liability company. undertakes its own commitments and is responsible for them.
The exact list of benefits depends on the type of the converted company. For example, the transformation of the Polish limited liability company. into a limited partnership entails a single taxation of profits from the company achieved by shareholders (as opposed to taxation in companies from o.o.). It also means that a minimum share capital is not required, or that the company's profits are more flexible.
The conversion into a capital company may be necessary for reasons of law. For example, a loan institution may only operate in the form of a limited liability company or a limited liability company.
Conversion procedure
The transformation requires entrepreneurs to do a number of activities. The procedure begins with the preparation of the conversion plan together with the annexes (among other financial statements) and the submission of it to the court together with a request for an auditor to examine the conversion plan.
After the statutory auditor has issued his opinion and twice the notification of the company's shareholders of the transformation, the shareholders shall adopt a resolution on the transformation, adoption of the company's contract and shall make declarations of participation in the converted company.
When registering a converted company, the court shall at the same time remove the converted company. Recast means the end of the financial year and the start of a new financial year of the entity.
Simplified conversion
The rules also allow for a simplified recast procedure, which does not require the preparation of a conversion plan together with the annexes, the examination of the conversion plan by the statutory auditor and the double notification of the conversion partners.
A simplified conversion is possible in the event of a transformation of a public company or a civil partnership in which all partners carried out matters of the company. In such a case, the partners are required to prepare only a draft resolution on the transformation of the company and a draft contract or the statutes of the converted company.
An additional simplification is the possibility of non-closure and non-opening of accounts in the event of the transformation of a company into another company, as well as a capital company into another capital company.
Conversion (whether or not simplified) to first A glance may seem like a complicated process. However, this is not the case. Professional communication between the accounting officer, the statutory auditor and the lawyer ensures that the process is carried out smoothly, without undertaking activities that are not his responsibility.