Limited liability company (LLC) has its roots in German law. It is a relatively new institution as it was first introduced into the Polish legal system during the time of Józef Pilsudski. It was regulated in1919 by the Decree on Limited Liability Companies. Then, in 1934 the Commercial Code came into force, which remained in effect until 2001. After that, the currently applicable Commercial Companies Code came into force. It comprehensively regulates not only the functioning of companies but also how an LLC agreement should be drafted.
LLC Agreement – How to Establish a Company Online? ( S24 ). Starting with the basics, it should be noted that an LLC is a capital company. As a rule shareholders are not liable for its obligations beyond their established contributions. The company is formed based on an agreement between the shareholders which must be in the form of a notarial deed. In case of an LLC being established by a single entity ( yes, this is possible for this type of company , the equivalent of the agreement is the founding act of the LLC.
Polish law allows for the establishment of an LLC online. In such cases, the presence of a notary is not required. It is worth noting that in such a situation the agreement must still be prepared according to the model provided by the Ministry of Justice’s tele-informatics system. This model contains only the basic elements that should be included in the company agreement, without which the company cannot be established at all. These elements include the company’s registered office, shareholders, the type of activity conducted and the method of representation.
However, this model does not include many other essential elements that will be necessary for future business operations. Therefore, we recommend reaching an agreement on this matter with an experienced lawyer who will:
- analyze the entrepreneur’s needs at the very beginning of establishing the business entity,
- implement other important contractual clauses that will safeguard not only the company’s interest’s but also the shareholder’s.
This disadvantage of not using professional legal assistance when establishing a company is that for each subsequent change an additional fee will be required for each separate application. Changing the company agreement not only entails a notarial fee but also a court fee associated with registering the changes in the National Court Register (KRS).
Furthermore, there is the issue of time . It should be remembered that the changes in the company agreement are only effective from the moment they are entered into the court register.
Is S24 always the best solution? S24 is a good solution for people who intend to engage in less demanding activities where standard and straightforward provisions in the agreement will be sufficient. If there are significantly more shareholders and the scope of the company’s activities will be more extensive, it is definitely a better idea to establish the company in a traditional form with the assistance of a legal advisor/lawyer and in the form of a notarial deed.
A properly drafted agreement at the stage of its creation can help avoid problems on many levels related to running the company and internal relationships between the company’s organs and even among the shareholders themselves.
LLC Agreement and its elements what elements can an LLC agreement contain to best protect the interests of its shareholders and the company? This is a question that each of us asks ourselves when establishing a company. At first glance all these issues related to company formation mat seem straightforward. However, the number of clauses that should be taken into account regarding future business activities can be overwhelming.
In a drafted LLC agreement it is worth considering several important elements that, in addition to the standard ones, will significantly improve our position. We list them below:
- Preferred Shares – as a rule shares in the company are equal. Shareholders of the company should be treated equally. However, it is possible to introduce preferred shares, which means that specific shares will have “greater” significance. For example during voting a share held by one of the shareholders may give them three votes, while a non-preferred share will have the regular value of one vote.
- Transfer and Pledge of Shares – it is possible to restrict the right of shareholders to transfer or pledge their shares. Generally, each shareholder can freely deal with their shares. In particular, without consulting the company, they can sell them to someone else. However, there is a possibility to limit this freedom.
- Inheritance of Shares – one of the applicable principles in legislation is that shares in a company are inheritable, meaning that theirs succeed to the position of the shareholder in the company . If the company wants only specific individuals to be its shareholders , it is possible to restrict or exclude the entry of heirs into the company.
- Redemption of Shares – it is also possible to include provisions regarding the redemption of shares in the company agreement. There are also three types of redemptions:
- Voluntary ( with the consent of the shareholder )
- Compulsory ( without the consent of the shareholder )
- Automatic ( when a specific event specified in the company agreement occurs )
Right to Convene a shareholders meeting as a rule, the management convenes the shareholder’s meeting. However, there is possibility to grant this right to other individuals as well.
Facilitating the Increase of Share Capital Share -capital is regulated in the company agreement. To increase it, a change to the agreement is required. However, at the stage of drafting the agreement, provisions can be introduced regarding the maximum amount of share capital increase and deadline for the increase.
Company Agreement and the Assistance of Legal Advisors / Lawyers in drafting contracts during the process of drafting the company agreement, professional assistance from a lawyer or legal advisor can facilitate the establishment of the company and expedite its registration. Such a can also help to better understand the specifics of conducting business in this form and resolve doubts in many other areas that may arise while building the company’s strategy.
It is worthwhile to implement legal knowledge and experience from the very beginning to avoid future problems and the need to seek solutions an ambiguous situations. The time gained, cost optimization and avoidance of unnecessary troubles and worries in the later stages of business operations are aspects worth taking care of.
If you have any doubts or are unsure how to register a company, or if you would like to discuss the fulfillment of all requirements related to its establishment, we are at your disposal from Monday do Friday, from 9:00 am to 5:00 pm. Tel. +48 606 608 089