Simple Joint Stock Company - will it make its way into factoring for good?

Simple Joint Stock Company from 1.07.2021 is now with us!

You can read about the features of the new entity and the opportunities it offers here:

A simple joint stock company is already in operation

What can we expect as a factoring industry from this entity?

At first glance from an industry point of view (an approach more from the legal / risk department than from sales :)) a lot of risks come to the fore:

1. The minimum amount of share capital is at least 1 zloty and the contribution can be made even in the form of an obligation to provide work - so potentially the company can be a 'govt' equipped only with a know-how.
2. The PSA will not be required to have its financial statements audited annually - with the risk of lower quality financial reporting;
3. The very different potential constructs related to the rights of shareholders and the differentiation of shares makes it difficult for the fact finder to determine the actual entities actually dominating the company;
4. The fact that the shares can be sold even in documentary form (no requirement for a contract with a notarized signature) makes it difficult for the factor to identify the beneficial owner and comply with AML obligations and even simply keep track of whether something bad is going on in the company;
5. Accelerated liquidation procedure - will facilitate the withdrawal of the entity from the business - this can be particularly risky in the situation of contingent liabilities that we may face in factoring;
6. New body (board of directors);
7. There is no equivalent to the provision of Article 299 of the Companies Act regarding the liability for PSA obligations of the company's Board of Directors.

Add to this the lack of ability to deal with a financial industry entity at this stage and the potential difficulty of participating in legal transactions. PSAs in 2021 will be new entities, with no history of cooperation, turnover or scoring, and will undoubtedly be thus difficult to evaluate.

Therefore, it should be expected that sooner or later this type of entity may appear as a factoring applicant, but also as a recipient. These types of companies especially intensively may start operating in the IT sector. Initially, such companies may enjoy limited trust.

Looking from the perspective of "difficult beginnings" in the factoring industry, and with the above comments in mind, I do not expect this year to belong to PSA entities in factoring in any configuration. It seems that it will take quite a while for an entity to appear more and more boldly to us as a participant in a factoring transaction.