New type of Polish enterprise: simple joint-stock company — prosta spółka akcyjna (PSA)
What is prosta spółka akcyjna? For which entrepreneurs it may turn out to be a bull’s eye and what distinguishes it from other capital companies that already exist in Poland.
What is prosta spółka akcyjna PSA (in short)
From July 1, 2021, a new type of company will appear in the Polish National Court Register (Krajowy Rejestr Sądowy KRS, which is the most important business register in Poland): a simple joint-stock company, in Polish: prosta spółka akcyjna. It will be abbreviated to the legal form of PSA and is intended to be what the Polish start-up community needs at the moment. To set it up, all you need is a capital of one zloty. Therefore, the barrier faced by most entrepreneurs who want to start a new business will disappear: the need to accumulate a large amount of initial capital.
Thus, in Poland from today we have not two but three types of capital companies:
- limited liability companies (spółki z ograniczoną odpowiedzialnością sp.z o.o.)
- joint stock companies (spółki akcyjne SA)
- simple joint stock companies (proste spółki akcyjne PSA).
If you want to learn more about all kind of business enitities that appear in Poland, read our previous article Polish companies.
As you can guess, PSA is a kind of mix of features possessed by LLC and joint-stock company. It is worth noting, however, that it also introduces something completely new (including fixes “mistakes” that are the bane of other capital companies appearing in Polish business, an example of which may be a much clearer rule for determining the term of office of members of the company’s bodies).
Importantly, simple joint-stock companies are by no means a novelty — there are foreign counterparts in many countries. In Great Britain they are LTD companies, i.e. limited liability companies without share capital, and in the Czech Republic they are SRO companies, i.e. limited liability companies with share capital of CZK 1. (You can read more about them here: British companies; Czech companies).
The most important features of a simple joint-stock company — prosta spółka akcyjna PSA
- PSA is a non-public company, i.e. its shares cannot be introduced to organized trading on the regulated market or on the market of alternative trading systems ASO.
- In return, it may issue non-publicly traded shares (e.g. for venture capital funds), and its shares will take the form of dematerialized securities with no par value (i.e. shares of a simple joint-stock company will be marked only with a series, number and number of shares).
- The contribution of a simple joint-stock company may not only be material but also take a non-monetary form, e.g. in the form of work performance. Thus, the skills and knowledge contributed to the company (which are currently at a premium in technology companies) may become the basis for becoming a shareholder of the company.
- Many activities can be carried out electronically, which is to reduce operating costs and significantly speed up processes. For example: a prosta spółka akcyjna simple joint-stock company can be set up via the S24 internet system, shares can be issued and sold via electronic statements (e.g. e-mails), resolutions of PSA bodies can be adopted remotely.
- The minimum share capital is PLN 1.
- The PSA can choose for itself whether it wants a board of directors and a supervisory board or whether it wants a board of directors.
- Simplified liquidation of PSA in the event of market failure — one announcement about the opening of liquidation is enough, and the time for submitting claims by creditors will be only 3 months. Moreover, one shareholder will be able to take over the entire company.
Sounds like a lot of advantages to founders, right? Well, it cuts both ways. Only time will show whether Polish simple joint-stock companies will be reliable enough for investors. Despite the bright future that this new legal form currently promises, it may turn out that a minimum of formalities and quite “loose” procedures will make investing in PSAs too risky.
Who is Polish PSA for? A bit about technology and startups
In the Guide to Simple Joint Stock Company issued by the Ministry of Development of Poland, we find the following information:
“P.S.A. it is universal, not sectoral. It can be used by investors planning to start operating in any industry, except for the exceptions resulting from the provisions of specific laws.“
So, de facto, almost every business can take advantage of it. Nevertheless, this new legal form was made primarily for the technology sector — high-tech companies and startups. It is in this industry that quick investment capital is needed, minimum formalities and electronic forms of communication are often preferred, and the knowledge and skills of employees are a gigantic “asset” of the company. A simple joint-stock company is intended to significantly facilitate startups entering the market (from just 1 PLN!). The Polish government believes that it will drive the development of the new technology sector in Poland.
Simple joint-stock companies versus joint-stock companies and limited liability companies — differences worth knowing about
What is the difference between a simple joint-stock company and a joint-stock company and a limited liability company? They are mainly:
- easier issuance and trading of shares than in the case of a joint-stock company, although PSA shares will not be found on the capital market,
- cheaper and less formalized business operations (many decisions, including sale of shares, can be made electronically via e-mail),
- more flexible capital structure,
- the register of shareholders is open only to a given simple joint-stock company (there is no obligation to disclose it to the public),
- less complicated, much faster liquidation of the company,
- the minimum share capital of PSA is only PLN 1 (in the case of a joint-stock company it is PLN 100,000 and a limited liability company PLN 5,000).
How to set up a simple joint stock company PSA?
A simple joint stock company can be set up in two ways:
- electronically via the S24 portal — just complete the electronic form. The waiting time is only up to 24 hours. However, it is worth remembering that in this case all shares must be covered only with a cash contribution,
- traditionally by concluding a notarial deed — in this way, non-cash contributions can be made to the company.
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