According to the TMF group ‘Global Business complex Index 2021’, Poland is the second country in Europe and 10th in the world with the most complex business regulations but it remains an attractive market for running a business, especially for foreign investors. These are the facts. According to data from the Polish Register of companies (Register of Entrepreneurs of the National Court Register) only in 2021, 10.494 companies with foreign capital were established in Poland. Entrepreneurs come from 99 countries, including 347 from Germany, 174 from China, 149 from the UK, and 146 from the Netherlands.
Poland has a very good human capital. In the Pomeranian Voivodeship, the sixth-largest in terms of population, there are 24 universities with 81,000 students. Approximately 20 thousand of these young people will become graduates. Every fifth student studies a major related to administration, business, or law, and every sixth studies engineering related to technology, IT, and industry, including shipbuilding and construction. The leaders in education are the University of Gdańsk, Gdańsk University of Technology, and Gdynia Maritime University, which together educate students in 24 fields of study.
Poland is also the main beneficiary of the economic migration of qualified workers from abroad, especially from Ukraine.
Educated employees, with relatively low labor costs as for European conditions, determine that despite the objectively complicated legal system, Poland remains an attractive market for foreign investors.
What business in Poland?
Foreign investors as a venture capital (VC) or private equity (PE), running companies in Poland, operate mainly in such industries as trade (21%), construction (19%) or transport (13%), but they are also companies operating in the field of IT or back-office services. In the Pomeranian Voivodeship, due to its location on the Baltic Sea, in the vicinity of shipyards, the Port of Gdynia and Gdańsk, and specialized universities, investments of international companies attract particular attention. These are global companies, basing their activities on the shipbuilding, transport, and forwarding industries. Nevertheless, there are also IT (programming) companies as well as back office and IT departments of global corporations.
It should be emphasized that, in general, venture capital invests mainly in new companies or stats with high growth potential. However, private equity in already existing companies requires reorganization. It can be considered that venture capital investments are investments in own electricity, while private equity investments are for investment purposes.
What are the forms of investment?
According to data for 2020 from the Central Statistical Office, there are 23,203 companies with foreign capital in Poland. 92.8% of these companies operate as a limited liability companies, and the other forms are joint-stock companies (3.3%), limited partnerships (2.6%), branches of entrepreneurs (0.8%), and limited joint-stock partnerships (0.2%), and others (0.3%). However, in 2021, according to data from the Polish register of companies (Register of Entrepreneurs of the National Court Register), out of 10,494 newly established companies with foreign capital in Poland, 96% of these businesses operate in the form of a limited liability company, 2.23% in the form of a branch of a foreign entrepreneur, others in the form of such companies as partnerships (general partnership, partnership, limited partnership, limited joint-stock partnership) and a capital company – similar to a limited liability company (sp. z o.o.) – joint-stock company (S.A.). The statistics do not include running a business in a new form of a capital company – a simple joint-stock company (PSA), the regulations of which were drafted in 2021.
Why does business choose capital companies?
In the Polish corporate law system (commercial companies law), companies are divided into two main types: partnerships and capital companies. Partnerships are connected personally by natural persons or legal persons (e.g. other companies), while capital companies combine partners by capital. The capital companies are limited liability companies, joint-stock companies, and simple joint-stock companies.
Limited liability company
A company may be formed by one or more persons; only 5,000 PLN of capital is needed. The company is established by drawing up and signing an agreement in the form of a notarial deed and registered in the National Court Register. The partners of this company are not liable for the obligations of the company. The only thing they can lose is the capital they contribute. The drawback of this form of activity is the need for the partners to pay income tax and tax on profits paid out from the company (dividends).
A joint-stock company is dedicated to large companies that wish to enter the stock market. People setting up a company must have a capital of PLN 100,000. To establish a company, it is necessary to draw up and sign a contract in the form of a notarial deed, appoint a management board and supervisory board, make a contribution and register the company in the National Court Register.
Simple joint-stock company
A new company that facilitates the cooperation of people with know-how and investors with capital. The company can be set up online in 24 hours in the S24 system. The founders need a capital of PLN 1. Shares can be acquired for cash, work, and provision of services, which was not possible in the case of a limited liability company and joint-stock company.
It is worth noting that from 2021 in Poland, in addition to the S24 system, there is also the PRS portal – Court Registers Portal. As a result, it is not only possible to set up (register in the company register) an online company using the S24 IT system or submit the annual financial report of a company online, but also to register or change entries of companies established in a traditional way – when legal actions were performed in the presence of a notary. Moreover, in Poland, traditional applications – in hard copies – are no longer accepted into the register. Similarly, computerization in other areas, such as taxes or social and health insurance, is also being developed and most matters are handled electronically.
Contrary to appearances, running a company in Poland does not have to be so complicated! Thanks to computerization, many administrative duties are easier and more transparent, and formalities are easier to overcome. Of course, appropriate legal assistance is needed to determine the appropriate legal form, register a company and organize a company in Poland, but more and more foreign companies decide to invest in our country.
Our law firm – ADVISER Armknecht & Partners attorneys-at-law in Gdynia as well as many others specializing in comprehensive services for companies (business clients) provide services of this type, it is very often that our actions go beyond traditional corporate matters and constitute the beginning of many years of cooperation. Among our clients whom we helped to start their business in Poland, many companies still run it today. Some of these companies have already ceased operations (company liquidation). They did it after a decade and it resulted from a global change in the strategy of these companies.
Bartosz Armknecht – CEO, ADVISER Armknecht & Partners attorneys-at-law – law firm from Gdynia (Poland, Pomerania) since 1989, business law expert in corporate law & company law.
ADVISER Armknecht & Partners attorneys-at-law
15 Generała J. Bema Street, suite 3, Gdynia, 81386 – POLAND
Phone: +48 58 661 82 23