Share capital increase in Polish limited liability company (sp. z o.o.)

Share capital increase in Polish limited liability company (sp. z o.o.)

2020-03-17

Ways of increasing the share capital in a limited liability company

 

The share capital of Polish LLC may be increased through:

 

  • creation of new shares and their acquisition by existing or new shareholders
  • increase in the nominal value of existing shares

 

How to increase the share capital of Polish company (sp. z o.o.)?

 

In order to increase share capital of Polish company by way of standard proceedings it is required to:

 

  • adopt resolution on share capital increase
  • adopt resolution on amending articles of association
  • take up new shares or increased value of existing shares

 

The abovementioned actions require notarial form. Shareholders may pass the resolutions and take up new shares personally (by way of signing documents in the presence of public notary in Poland) or by representatives.

 

  • Contribution (payment of increased share capital).

 

The next step is to make contributions to the increased share capital. In case of monetary contributions, the payment obligation can be fulfilled by making a cash contribution to the company's bank account or by handling cash to the company. It is worth to point out that in Poland, in contrast to many other jurisdictions, making payment of share capital into bank account is not required. Cash payments are also accepted.

 

Non-monetary contributions (in-kind contribution) require the transfer to the company of ownership of the object of in-kind contribution in an appropriate form or taking another legal action, adequately to what is the object of the in-kind contribution.

 

  • Registration in the National Court Register

 

As a next step, the share capital increase should be reported to the National Court Register. Submitting the application with the registry court is the duty of the management board. The increase of the share capital of a limited liability company is effective only from the moment the increase is entered into the register by the registration court. Therefore, it is important to attach all required documents to the National Court Register. Lack of even one document or incorrectly filled forms may result in a significant extension of the waiting time for registration  or even refusal to enter the increase in the National Court Register.

 

Share capital increase in online form (S24)

 

Recently, for some companies, it has also been possible to increase share capital online, using online system (S24). In such case, both resolutions and application to the court are signed in electronic form using an electronic signature. It means that shareholders signing resolution and company management board (directors) must have active Polish electronic signatures.

 

Tax consequences of a share capital increase

 

  • Share capital increase and PCC

 

A civil law transaction tax (PCC) must be paid on the increase of the share capital. The PCC rate in this case is 0.5%. If the resolution on the increase is passed by a notary public, he collects the tax and pays it to the tax office (the notary public acts as a tax payer). On the other hand, if the increase takes place without any change in the articles of association or in the electronic form, the tax rate should be declared and paid for independently within 14 days.

 

  • Increase of share capital and income tax

 

A cash contribution to a limited liability company does not cause any tax consequences for both the company and the shareholder. The situation is different in case of in-kind contributions. From 1 January 2017, a revenue of shareholder making in kind contribution other than an enterprise or its organised part is the market value of the contribution.

 

LF LEGAL provides both legal and tax services in the area of share capital increase with participation of foreign persons and companies. We advise how to organize share capital increase in most efficient ad tax effective way.

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