Michał Surówka
advocatet
SURÓWKA Law Firm
LIMITED LIABILITY COMPANY ESTABLISHED ONLINE – S24
It is worth emphasizing that this article is of a general nature. For an individual consultation, please contact Attorney Michał Surówka directly at +48883921775 or via email at adwokat.m.surowka@kancelariasurowka.pl. The law firm is based in Krakow (Cracow), Poland but provides services throughout the entire country.
A limited liability company (spółka z o.o.) is a popular form of conducting business activities. Many individuals opt to establish it online through the S24 portal, which is managed by the Ministry of Justice. This method is characterized by numerous advantages, including speed, intuitiveness, and lower costs compared to the expenses entrepreneurs would face if they were to establish a limited liability company through a notarial deed.
However, it is important to remember that a limited liability company established through the S24 portal is not without its drawbacks. When forming a company in this way, the company’s articles of association are usually very simplified and based on a standard template. As a result, the content of the agreement does not account for specific provisions tailored to the particular needs of the business. For example, it lacks provisions for increasing the share capital, which may be necessary as the company grows.
As an attorney in Krakow, specializing in business law, I am aware that there are many questions surrounding the topic of limited liability companies established through the S24 portal. In this post, I will address some general issues related to the process of setting up a company via S24 and discuss how to properly conduct an increase in the share capital of an S24 company.
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Registration through the S24 portal – is establishing an LLC online worth it?
Before we move on to the matters of amending the articles of association of an LLC established through S24 and increasing the share capital of such a company, it is worth starting with a reminder of a few key facts. Let us therefore examine the differences between an LLC established electronically and one established through traditional means.
Increasingly, future shareholders of a limited liability company decide to register it via the S24 system (EKRS). Establishing a company through S24 provides significant time savings compared to traditional registration methods. Choosing the S24 system and establishing an LLC through it not only speeds up the entire process but also results in lower fees. For example, the court fee is 250 PLN, while traditional registration costs 500 PLN.
However, a company established through S24 also has its drawbacks. Usually, the articles of association of an LLC set up electronically are highly simplified, containing only the basic formal requirements stipulated for such companies. This is due to the fact that the goal of shareholders using the S24 portal to establish a company is to complete the process as quickly as possible, rather than specifying, personalizing, and tailoring the governance and corporate mechanisms that will govern the company.
LLC established through S24 and increasing the share capital. Cash and non-cash contributions (reports)
The aforementioned conditions mean that establishing a company through S24 results in these types of entities, in addition to dozens of other simplifications, usually having the minimum required share capital stipulated by the Commercial Companies Code. At the same time, as a result, they do not have provisions in the articles of association allowing for an increase in the share capital in a way that would not require changing the articles of association of the company established electronically. Moreover, the share capital of an LLC established online can only be covered by cash contributions, made within seven days from the date of the company’s entry into the register.
As a result, in a situation where the LLC is growing according to the shareholders’ plans or if a new shareholder is to join the company, increasing its share capital often becomes necessary. One solution in this case is to use an appropriate resolution template and amend the articles of association of the company established through S24 in this regard (again – a resolution registered electronically). An alternative option is to amend the articles of association of the company established through S24 via a notarial deed – through a notarial act.
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Effective Increase of the Share Capital of a Company Established via S24 – Is an Amendment of the Articles of Association by Notarial Deed Necessary?
If we are dealing with a limited liability company established through the S24 portal, the provision of Article 158 § 12 of the Commercial Companies Code applies. What does it state? According to this provision, an increase in the share capital of such a company – indeed – can be effectively carried out via the online portal, but only when monetary contributions are made.
However, in many cases, the shareholders plan to increase the capital using assets other than money, such as real estate, receivables, machinery, vehicles, organized parts of the enterprise, or the entire enterprise. In this case, the planned contributions, in addition to the already made (usually minimal) monetary contribution of 5,000 PLN, are referred to as non-monetary contributions.
In such a situation, according to Article 257 § 1 of the Commercial Companies Code, unless the increase is carried out in accordance with provisions already set out in the articles of association regarding the amount and timing of the increase (and such provisions are typically absent in the articles of companies registered online), the increase can only be carried out through a procedure that involves amending the articles of association of the company established via S24.
Returning to what I wrote in the context of Article 158 § 12 of the Commercial Companies Code, in the case of limited liability companies established via S24, only an amendment of the articles of association in the form of a notarial deed opens the possibility for shareholders to make non-monetary contributions. To be more precise, this is necessary because a regular resolution regarding the increase of capital by making non-monetary contributions would be invalid as it would contradict the law, specifically Article 158 § 12 of the Commercial Companies Code.
Importantly, the existence of Article 255 § 4 of the Commercial Companies Code, which concerns the electronic amendment of S24 articles of association, does not affect the correctness of this conclusion. Among the changes permissible via this route, there is no change that shareholders of a company established electronically can introduce, namely, an increase in capital using non-monetary contributions.
Amendment of the Articles of Association of a Company Established via S24 – A Notarial Deed Is an Opportunity to Tailor the Articles to the Specific Company
A planned amendment to the articles of association of a limited liability company registered via the S24 portal is an excellent opportunity to consider the following concept. It involves passing a resolution, which, once included in the protocol prepared by the notary (since we must use their services), simultaneously repeals the existing articles of association and adopts a new, unified version of the articles of association prepared by a specialist.
This time, the document should be comprehensive, taking into account aspects such as:
- relationships between shareholders;
- the company’s assets;
- the appropriate number of shares;
- the nature of the company’s business;
- the preferred decision-making mechanisms within the company;
- provisions for the event of the death of a shareholder.
Clients of the SURÓWKA Law Firm can benefit from the services of an experienced and dedicated lawyer, who has the practical expertise and skills necessary for such matters. As specialists in the field of commercial law Krakow, we are able to prepare a tailored articles of association that reflect the company’s characteristics and incorporate all the key aspects of its current operations, as well as elements that may prove important in the future (such as inheritance of shares).
Amendment of the Articles of Association Formed Electronically – What Should Be Taken Into Account?
Those interested in increasing the capital of a company established via the S24 portal with non-monetary contributions should be aware that in such cases, a civil law transaction tax will need to be paid, which will be calculated at a rate of 0.5% of the value of the non-monetary contributions.
Moreover, after the company’s articles of association are amended through a notarial deed (and in the case of non-monetary contributions, this form is necessary), the company will permanently lose the status of a company formed using the template, and thus, among other things, it will no longer be possible to amend it electronically in any respect.
This means that a notarial amendment to the articles of association of a company formed electronically returns the company to its original state. What does this mean? The company will be in the same position as if its articles of association had been prepared initially in the form of a notarial deed, without the use of the S24 portal (EKRS). Therefore, it is important to carefully consider the justification for establishing a limited liability company electronically from the very beginning.
However, if at a later stage, amending the articles of association of a company established via the S24 portal by notarial deed becomes necessary, for example, in the case of non-monetary contributions, it is worth considering – alongside this – expanding the articles of association and adapting them to the realities of the business and the relationships within the company. Professional support in this regard is provided by SURÓWKA Law Firm.
It is worth adding that we assist clients not only in matters related to business law. Our other specializations include expert services in the following areas:
- criminal law Krakow,
- divorce cases Krakow.
- company services Krakow,
- company formation Krakow,
- bankruptcy of entrepreneurs Krakow,
- company liquidation Krakow,
- company division Krakow,
- company agreements Krakow,
- debt collection Krakow.
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