The purpose of the Act on the Management Board of a Successive Business of a Natural Person is to provide natural persons conducting a single-person economic activity with conditions to maintain the continuity of the business after their death. The bill is part of a business facilitation package "100 Changes for Companies”, prepared by the Ministry of Entrepreneurship and Technology, with inspiration from family companies. The new law has already reached the president's desk and is waiting for his signature.
"This solution will allow a real relay of generations in Polish business. Many companies that by close 25 years of economic freedom built their achievements and the brand will be able to move safely to the next period and further develop along with the new generation of entrepreneurs," said Minister of Entrepreneurship and Technology Jadwiga Emilewicz. Let us look at the most important records.
Further ‘life’ of the company
In the current state of the law, the death of a single-person business entrepreneur basically ends the life of the company he manages. This is because the heirs of the deceased entrepreneur inherit only the assets of his company and possibly the debts he holds.
Such a situation causes that, with the death of the entrepreneur from an operational point of view, the company managed by him also ceases to exist.
Even if the heir who inherits the estate from the deceased entrepreneur intends to continue the economic activity of the same profile, he is forced to register a new company and to fulfil any additional obligations relating, for example, to the need to obtain administrative decisions in the form of concessions, licences or permits.
The new regulations are intended to ensure that heirs can inherit the company as a whole, i.e. both material and intangible components intended to carry out business activities and are intended to give the opportunity to conduct business unchanged, while maintaining full organisational and legal continuity.
The new rules will ensure that a brand that is often successful for entrepreneurs will be able to continue to operate and generate more profits for many years, employees will be able to retain existing jobs, and that the process of regulating obligations towards contractors will not be interrupted. The importance of future changes is demonstrated by the fact that the Act will amend the content of many provisions in different fields of law, including civil law, administrative law, labour law and tax law.
Successive board as a noveum under Polish legislation
According to the content of the project, the possibility of continuing the business after the death of its owner will be based on the institution of the succession board.
The task of a person acting as a succession manager will be to conduct business affairs from the moment of the opening of the succession until its division between heirs, but in principle no longer than by two years. The succession manager will act on his own behalf, on behalf of the owners of the company.
No status of relative to the entrepreneur or professional property manager will be required from the applicant. At the expiry of the succession board, the person acting in that capacity will be obliged to give up the successor company immediately.
In the performance of its activities, the succession manager as the person responsible for the management of the company will use the current company of the entrepreneur with the additional designation “in decline”. In particular, the succession manager of the company's board of directors will be able to:
• carry out its own activities in the field of ordinary management,
- to the extent exceeding normal management: to carry out operations after obtaining the consent of the owners of the company in succession who, at the time of the activity, are entitled to participate in the company in succession and, in its absence, by the court,
- undertake obligations that are related to the company's inheritance,
- carry out legal and factual activities related to employment in the undertaking, including the regulation of obligations to employed persons,
- conclude, execute and terminate contracts, including contracts concluded before the death of the trader, unless they have expired,
- regulate private and public-law obligations relating to the functioning of the company,
- act in civil, administrative, tax proceedings, administrative courts and out-of-court proceedings in cases involving an undertaking, and
- hold the bank account of the entrepreneur used to run the business.
The entrepreneur will be able to use the above-mentioned institution by identifying a specific person to serve as a succession manager or by stipulating that the appointed proxy will become a succession manager.
If the succession board has not been established at the time of the death of the entrepreneur, then after his death, the succession manager will be able to appoint an entrepreneur's spouse who is entitled to a share in the company in succession, or the person who has accepted the recovery note, whose business is the subject of the undertaking or participation in the undertaking, and if no will has been announced in which the recovery note has been made, the administrator may appoint the person who accepted the inheritance.
Function of Successor In one time will only be able to perform one person.
The owners of the company in decline will have the right to participate in profits and will participate in losses resulting from the operation of the company, in the ratio in which they have a share in the company in decline.
The succession manager will be subject to disclosure at CEIDG. Therefore, once the new regulations enter into force, it will not be possible to remove the deceased entrepreneurs from CEIDG from office immediately after receiving information about the death or finding of the corpse.
The entry of the deceased entrepreneur should therefore continue to be published for a period during which a succession administrator may be appointed, i.e. maximum 2 months from the date of the opening of the inheritance, with a view to the possible entry of the succession manager appointed after the death of the entrepreneur.
Ensuring continuity of contractual relations
In addition to the heirs of deceased entrepreneurs, new regulations will also benefit people third, In particular, employees, contractors and other entities that have cooperated with the owners of single-member companies.
In the current state of the law with the death of the entrepreneur, employment contracts concluded by him and, in principle, contracts of a civil nature expire.
Under the new rules, the situation is to be radically changed, as the death of a single-member company will enable the new law to maintain the full continuity of legal relations resulting from the contracts concluded.
Work relations will be maintained when the succession manager is established on the day of the opening of the inheritance. On the other hand, in enterprises in which the succession manager will be established after the opening of the inheritance, the employment relationship will expire after the end of the 30 the days from the date of death of the employer, unless, before the expiry of that period, the person entitled to appoint a succession manager or he himself agrees with the employee that the employment relationship will continue on the basis of the previous rules.
With regard to other contracts, the Act, as with employment contracts, provides two possible scenarios. According to first the scenario of the succession manager will be established on the date of the opening of the inheritance and in such a situation the contracts may continue to be carried out without hindrance.
second the scenario provides for a situation in which the succession manager is not established at the time of the death of the entrepreneur, which will result in the parties being able to refrain from fulfilling the benefit until the date of the establishment of the succession board, unless the heir or spouse participating in the succession offer a mutual benefit.
In the absence of such an offer, the duration of the time limits for the performance of the benefit and the time limits for the performance of other obligations or powers under the contract shall not begin and the succession board shall be suspended from the date of the death of the entrepreneur until the date of the establishment of the succession board and, if the succession board has not been established, the power to appoint the successor manager shall be terminated.
The new rules will also improve the situation of creditors of the deceased entrepreneur, as they will no longer have to establish a circle of persons responsible for the performance of their claims, which will undoubtedly improve their interests.
Tax issues
According to the concept adopted in the Act on the Management of a Successive Business of a Natural Person, the company in decline as an organizational entity without legal personality will be, among others, a taxpayer of income tax on individuals, tax on goods and services, excise duties or tax on gambling.
It is also worth noting that this law provides for the introduction of regulations enabling heirs who acquire one-person economic activity to benefit from the inheritance and donation tax exemption.
The conditions to be fulfilled will be: the declaration of acquisition of ownership by the economic operator to the head of the tax office and the operation of the company by the purchaser for at least a period of time 2 years from the date of its acquisition.
The entry into force of the provisions of the Act on the Management of a Successive Business of a Natural Person will enable effective protection of the interests of single-member business owners and ensure the possibility of maintaining continuity in the functioning of companies after their death.
The new rules will ensure that a brand that is often successful for entrepreneurs will be able to continue to operate and generate more profits for many years, employees will be able to retain existing jobs, and that the process of regulating obligations towards contractors will not be interrupted.
The importance of future changes is demonstrated by the fact that the Act will amend the content of many provisions in different fields of law, including civil law, administrative law, labour law and tax law.