As a result of changes to the tax rules introduced "Polish Deal” the limited partnership gained considerable popularity as a form of business activity.
In practice, a limited partnership constitutes a kind of hybrid of a partnership and a capital company. In any case, the change in the legal form of conducting business requires familiarising yourself with the mechanisms of its operation.
The following are some practical comments on the limited partnership.
Role sharing between partners
A typical partnership is the division of roles between partners in terms of their responsibility and commitment to the management of the company. Shareholders act as passive investors who do not conduct the company's affairs and are not responsible for its obligations. Complementaries have the right and obligation to conduct the affairs of the company, and are responsible for its obligations with all their (private) assets in the event of insolvency of the company (subsidiary liability).
Resolutions in the form of a notarial act
The resolutions of the General Shareholders Meeting (or extraordinary or ordinary) require the form of a notarial act to be retained. In practice, this requires the holding of a shareholder meeting in order to adopt a resolution and cover additional notarial costs.
In addition to the obligation to hold an annual ordinary assembly, The Code of Commercial Companies requires a resolution of the general meeting, inter alia, in the case of distribution of profits for the financial year in part attributable to shareholders, sale and lease of the company or its organised part and the establishment of rights of use, sale of the company's real estate, increase and decrease of share capital, issue of bonds, merger and transformation of the company, change of the statutes, dissolution of the company.
Website
Each limited joint-stock company is required to maintain its own website to provide information to shareholders. The website should contain data such as the company, the registered office and the address of the company, the KRS number, the designation of the competent registration court, the NIP and the amount of share capital. Any notice of the company required by the laws and statutes of the company should be included on the website.
The website should already exist at the time of the application for registration of the company in the KRS business register, as the website address should be included in the application.
Conclusion of an agreement with the brokerage house
The shares of the limited partnership must be recorded in the electronic shareholder register. The shareholder register shall be kept by an entity which, on the basis of Act dated 29 July 2005 of trading in financial instruments, is entitled to keep securities accounts (i.e. brokerage house or trust bank).
Consequently, the limited joint stock company is obliged to conclude an agreement with the brokerage house or trust bank to keep such a register. The basis for the conclusion of the agreement with the entity concerned is the resolution of the general meeting on the selection of the shareholder register entity.
Taxes and ZUS
In tax terms, the great advantage of the limited partnership is that the profit of the natural person's subcontractor will not be covered by double taxation.
Namely, the subsidiary has the right to deduct from the tax (from the profit paid to him) the amount of tax paid by the company on its own income in proportion to the shareholder concerned.
The right to tax reduction is granted when the profit generated in a given tax year by the company is paid to it during the period 5 subsequent tax years from the end of the year following that in which it reached it.
Complementary and shareholder do not have the status of an entrepreneur and are not obliged to pay contributions to the Social Insurance Institution or to health and social security.
Full accounting obligation
The Accounting Act specifies that the accounts of the limited partnership are kept in the form of accounts.
In practice, this means broader responsibilities and higher costs of accounting services for the shareholders of the limited-activity partnership. This is due to the fact that full accounting includes much more extensive accounting records and requires detailed documentation.
Author: Magdalena Mączka. Legal advisor, Russell Bedford Dmowski & Partners Law Firm Sp. k.