A simple joint stock company is already in operation
About the simple joint stock company (hereinafter: "PSA") we wrote in the pages of our blog at the stage of work on the draft law. After a long period of waiting, entrepreneurs - who want to start a business within the framework of a new type of capital company - can already use this form of doing business from 1.07.2021.
# brief reminder of PSA assumptions
By design, the PSA is intended to serve entrepreneurs in industries with the greatest potential for innovation, i.e. startup and fintech. The previous types of companies - z .o.o. and joint-stock company - were not fully attractive to startups in these sectors. It has been noted that high start-up costs and high formalism (as in a joint-stock company) and difficult rules for attracting investors (as in a limited liability company) are a barrier to those wishing to run high-tech ventures. A PSA is about to become the way around this obstacle.
# PSA Features
Key features of the new capital company:
- Combination of features of a partnership with a capital company:
- On the one hand, there is the possibility of contributing labor or services (a feature of a partnership), and as a result, the contribution is formalized and much more flexible than in the case of other capital companies;
- on the other hand, an elaborate mechanism for raising capital by issuing shares (a feature of a capital company) is envisaged;
- Share capital in place of share capital:
- The minimum amount of share capital is at least 1 zloty;
- The value of the share capital will be variable, depending on the decision of shareholders;
- the value of the share capital will not be entered in the company's articles of association, so a change in the value of the capital will not require the form of a notarial deed (an entry in the KRS will still be mandatory);
- no par value of shares (a share reflects a shareholder's entitlement to a PSA, i.e., the number of votes or participation in dividends), which means that the share capital in a PSA is not divided into shares;
- The PSA will not be required to have its financial statements audited annually;
- simplified incorporation of the company:
- Introducing the possibility of electronic registration using a form available online (similar to the S24 system);
- action diversification:
- The shares are dematerialized and subject to registration in the shareholder register, which replaces the stock ledger;
- PSA shares will not be allowed to be traded on the stock market;
- The board of directors may have the authority to decide on a new share issue (authorized share issue);
- there are founders' shares as a special form of preferred shares, which guarantee the founders a certain level of influence over the company regardless of further share issues;
- shares will have no par value and will be independent of the share capital;
- Rapid liquidation:
- The possibility of a simplified liquidation of the PSA through the acquisition of all its assets by a selected shareholder with the obligation to satisfy the company's creditors and other shareholders;
- organs of the company:
- The board of directors as a body combining the powers of the management board and the supervisory board (functioning alongside them at the same time) with the division of directors into executive (managing) and non-executive (only supervising the conduct of the company's affairs);
- Supervisory Board as a mandatory body (unlike it was in the draft);
- General meetings are held in person, in writing or by means of remote communication and are convened by e-mail, letter or courier; as a rule, resolutions of the general meeting are placed in the minutes (without the form of a notarial deed) and only those concerning amendments to the articles of association are placed in the minutes prepared by a notary public.
# Will PSA really become attractive to Polish entrepreneurs?
A brief review of the features of the PSA shows that it eliminates the problems that were generated by operating as a joint-stock or limited liability company.: the introduction of no-par value shares facilitates capital raising and restructuring due to the possibility of taking shares below their par value; the existing freedom to create preferred shares (including founders' shares) will safeguard the interests of the founders despite the entry of an investor with a financial advantage into the company; the lack of high capital requirements; removal of a shareholder without his or her will is limited and, in principle, possible only through judicial means (this is another nod to the founders, who therefore remain protected in the event of the issuance of shares to attract new investors - such issues could lead to a decline in the founders' shares, which from a level below 5% would qualify for compulsory redemption). At the same time, attention is drawn to the dangers flowing from the operation of PSAs in business transactions, i.e. the difficulties in the event of the company's bankruptcy related to the fact that the object of the contribution to the PSA may be the provision of labor or services, and these - although difficult to value - can be translated into an asset value, which, however, does not represent a liquidation value. Potential creditors may find it difficult to satisfy their claims.
PSA is the total novum for the Polish legal system. Practice will certainly show what positive or negative consequences the functioning of a new type of capital company will bring. The lack of popularity of PSAs among entrepreneurs may be influenced by the lack of certainty related to the approach of state authorities to this type of company (e.g., the signaled problems with accounting regarding share capital, share subscription and dividend payments). On the other hand, the proposed facilitation of the amount of contributions, their form as the provision of labor or services or other in-kind contributions, the preference of founding shares and the formalization of PSAs may encourage entrepreneurs to use this form of business.
