The new regulations meet the needs of so-called single-member companies, which make up the vast majority of Polish companies. Thanks to these solutions, in the event of the death of an entrepreneur, his company will be able to maintain operational continuity of operations.
Work contracts, contracts, permits and concessions related to the company will be maintained. The Act also includes solutions to ensure the continuity of company tax settlements and provides for exemption from inheritance tax for persons who inherit the company and continue to run it.
The bill was created from the inspiration of family companies and is a response to the problem of the complexity of succession after the deceased entrepreneur.
Until now, after the death of an entrepreneur performing activities on the basis of an entry in the Central Register and Information on Economic Activity (CEIDG), his successors could not continue running the company smoothly.
"Thanks to the Act on Successive Management, entrepreneurs will operate in a legal environment that allows for a real relay of generations. This is another improvement from the package 100 changes for companies that are starting to apply this year. It guarantees many companies that through close 25 years of economic freedom built their achievements and brand of safe transition along with a new generation of entrepreneurs to the next stage of development" - said Minister of Entrepreneurship and Technology Jadwiga Emilewicz.
Often the death of the owner meant great difficulties for companies. It was possible to take over the estate of the deceased, but without the possibility to use the necessary elements for the functioning of the business, such as employment contracts, NIPs or administrative decisions, in particular permits and concessions. The death of an entrepreneur entered in CEIDG also resulted in the expiry of many commercial contracts and meant the loss of employment for persons employed in the company.
In the coming years, the issue of generation transfer in Polish business will be addressed by an increasing number of entrepreneurs. People who started their businesses in first years of systemic transformation, now approaching or already reaching mature age. The CEIDG currently has approx. 212,000 entrepreneurs who have completed 65 year of life.
"The solution was the result of signals notified to us by entrepreneurs. Generation currently taking over family business is basically measured for the time being first in the realities of the Polish economy with the challenge of generational succession. The new bill gives them the necessary tools to make this process go smoothly," said Minister Emilewicz.
The new rules allow the entrepreneur listed in CEIDG to be appointed as the successor manager. He will conduct current business cases after the death of the owner, until the succession formalities are completed. The Act also allows the attorney's business to become a succession manager.
The appointment of a succession administrator requires his consent – he has not only powers but also responsibilities. A succession administrator will also be appointed by persons who inherit the company or spouse, who is its co-owner – if the entrepreneur has not appointed the administrator in life.
The succession board may, as a general rule, extend up to 2 years since the death of the entrepreneur. In exceptional cases, the court may extend this time to 5 years. As a rule, the succession board will expire with the moment of division of the inheritance.
"The new regulations will ensure that civil law contracts and employment contracts which are crucial to the business activities. This will make the situation of workers more stable. Similarly, the case is with permits, licenses, concessions or permits that can be executed by the succession manager, and ultimately transferred to the legal successor of the entrepreneur. Finally, the succession manager will be able to use the NIP of the deceased entrepreneur and use the company account" - stressed Deputy Minister of Entrepreneurship and Technology Mariusz Haladyj.
The law will keep the company's tax settlements consistent. They will be made using the NIP number of the deceased entrepreneur during the succession management period.
It will be possible, among other things, to deduct losses incurred by the entrepreneur, to continue the depreciation started and to benefit from tax rulings obtained by the entrepreneur.
In addition, the Act introduces an inheritance tax exemption for the acquisition of an undertaking by persons who will operate it by at least 2 years, regardless of the relationship with the deceased entrepreneur. This is the answer to the lack of a successor in the immediate family circle.
"Thanks to the package of these solutions, generational change in companies will be smooth, and the existence of many of them, often achieving multimillion turnover and giving jobs, will be well secured. At the same time, the Act creates good conditions for the construction and development of Polish multi-generational family companies" - added the head of the Ministry of Entrepreneurship and Technology.
Most of the provisions of the new law will apply after the end of 3 months after the announcement, i.e. since the fourth quarter 2018.