How to close a limited liability company in Poland?

How to close a limited liability company in Poland?
Marek Cieślak

Marek Cieślak

CEO CGO Finance

When starting a business, an entrepreneur has to consider the fact that there may be a moment in which the business will come to and end. In order to make a decision of opening a company consciously, you need to be aware of how the process of closing it down will look like. In this article we will go through the process of closing down a limited liability company in Poland step-by-step. Let’s see how to close a limited liability company in Poland.

Table of Contents

Reasons for dissolution of a limited liability company in Poland

To start the liquidation procedure, you must first dissolve the LLC.  Article 270 of the CCC specifies reasons for dissolution. These are:

  • Reasons stipulated in the company’s agreement;
  • a resolution of the shareholders on the company’s dissolution or transfer of its seat abroad;
  • a declaration of bankruptcy;
  • other situations provided for in specific legal regulations.

How to liquidate a Polish limited liability company step by step?

Liquidation of a limited liability company is a complex process. It consists of many steps that you must carry out in the right order. What are the stages of the liquidation of a Polish LLC?

Step one: Initiation of the liquidation of a Polish limited liability company

The dissolution of a company by the resolution of shareholders is the most common reason. The resolution should have a form of a notarial deed. Moreover, you should meet formal requirements related to convening a shareholders’ meeting or conditions to hold meeting informally.

Do shareholders have to appear in person at a notary public to start a liquidation?

No. Like in many other legal actions, a proxy may help in opening the liquidation procedure.

Although initiating the liquidation requires a notarial deed, the power of attorney to attend shareholders meeting may have a simple written form.

Step two: Appointment of liquidators of a limited liability company in Poland

Upon the initiation of liquidation, shareholders should appoint the company’s liquidators. Appointment of liquidators requires the adoption of a resolution by the shareholders. Usually, it is in a notarial deed on the resolution of company’s dissolution.

Company’s liquidators – who are they?

Liquidators are persons who represent the company in the liquidation procedure. They replace the management board during the process. The liquidators must finish the company’s operations and liquidate its assets.

Who can be the company’s liquidator?

Everyone who has full legal capacity and was not convicted for crimes specified in article 18 of the CCC. Members of the management board or shareholders usually become liquidators. Yet, appointing third parties is also possible.

What if there is no resolution on appointing the liquidators?

If there is no resolution on appointing the liquidators, there is another solution. If the agreement doesn’t state otherwise, members of the management board become liquidators.

Are you planning to liquidate your company? Do you need help with a liquidation procedure?

As you can see, the liquidation procedure of an LLC is long and complex. There are certain steps that one must perform in the right order. Otherwise, the registry court may refuse to delete the company from the register. This will generate more problems and costs. Thus, it is worth using the support of lawyers experienced in liquidation procedures. We encourage you to contact our accounting firm.

Step three: Notification of initiating liquidation procedure to the National Court Register

You should report initiating liquidation procedures to National Court Register [PL: KRS]. You must inform about it within 7 days of adopting the resolution. For this purpose, you must submit an appropriate application to the registry court. The company’s liquidators or the representative holding a relevant power of attorney must sign it. An authorised attorney-at-law or legal adviser can also do that. One can submit the application via the electronic Court Registers Portal [Polish: PRS].

Together with the application, you must submit several other documents. The attachments must include, e.g. declaration of liquidators about their service address.

Is the notification of the opening of liquidation to the KRS subject to a court fee?

Yes. The fee amounts to 350 PLN.

Step four: The announcement of liquidation at MSiG and summoning of creditors

Liquidators should publish an announcement on the initiating of the Polish LLC’s liquidation. In such announcementtheyshould also call company’s creditors to submit their claims. You should publish the announcement in Polish Court and Economic Monitor [PL: Monitor Sądowy i Gospodarczy]. It is the national journal which publishes announcements required by the Code of Commercial Companies.

The announcement should include:

  • information about the LLC’s dissolution and initiation of the liquidation
  • summoning the creditors to claim their receivables with an indication of the deadline. i.e. 3 months from the publication of the announcement in MSiG;
  • the address to which claims should be submitted (e.g. company’s address or the address of the liquidator).

To publish the announcement, liquidators (or proxies) must first submit an application to the reception point of announcements to the Polish Court and Economic Monitor. Such reception points usually operate at registry courts.

The application for publication of the announcement in MSiG is subject to a fee. The payment depends on the number of characters in the announcement. It amounts to  0.70 PLN for each character, including spaces. A standard announcement of initiating liquidation usually costs about 300-400 PLN.

You should publish the announcement within 2 weeks of adopting the resolution on the liquidation of LLC in Poland.

You should submit the application for publishing the announcement to the KRS. It is a separate form. So, after signing the notarial deed, the liquidators must submit two separate applications.

What if the liquidated LLC has no creditors?

It often happens that shareholders want to liquidate an ‘empty’ company. Such a company never conducted any activity or it ceased its activity long ago. Thus such LLC has no assets. It also does not have debts, invoices to pay or other obligations.

Is it possible to avoid the announcement in the MSiG and 3-months of waiting for claims of receivables?

Unfortunately no. Regardless of the company’s financial standing, you cannot avoid the announcement obligation. The same applies to summoning the company’s creditors. Skipping this stage will result in the inability to complete the liquidation procedure. During the attempt to delete a company from the KRS, registry courts often demand proof of the announcement. They also verify if the 3-month waiting period passed.

Step five: Opening balance of liquidation

Initiating LLC’s liquidation obliges you to close and reopen its accounting books. There is also an obligation to prepare financial statements. You should submit the report to the electronic Repository of Financial Documents (RDF).

Moreover, the liquidators must prepare the opening balance sheet. A resolution of the shareholders’ meeting should approve it. Thus, the participation of the LLC’s accounting is indispensable during liquidation process.

Step six: Termination of the company’s operations by liquidators

As mentioned above, the liquidators should finish the company’s operations, i.e.

  • end the company’s ongoing business;
  • fulfil the company’s obligations;
  • collect the company’s receivables from debtors;
  • liquidate the company’s assets.

Moreover, after the financial year, liquidators should prepare a report on their activities. They should also prepare annual financial statements. The shareholders’ meeting must approve these documents and report them to RDF.

Step seven: Liquidation report

After the liquidation of the LLC’s assets and satisfying its creditors, liquidators prepare a final report. It must be created on the day preceding the division of the company’s assets remaining after the satisfaction of creditors.

The liquidation report should be announced in the company’s seat. This does not imply an obligation to announce the report in the MSiG. It’s rather information about the liquidation report in the company’s registered office. The registry courts often require a declaration that the report was announced at the company’s seat. You should also remember to submit the liquidation report to RDF.

After the report’s approval, shareholders should adopt a resolution to appoint a person to keep the books and documents. The resolution also informs about the division of the LLC’s assets (obviously, if there are any assets left after paying creditors).

You can divide a company’s assets only after six months from announcing the liquidation of the Polish LLC in MSiG.

Step eight: Removal of Polish LLC from the National Court Register

After the liquidation procedures are over, liquidators should apply for deleting the LLC from the KRS. You can submit the application with the help of the company’s proxy. The application may be submitted via the electronic court’s registry portal (PRS). You should enclose several other documents, including a copy of the liquidation report.

The application for the LLC’s removal from the National Court Register is subject to a court fee in the amount of 400 PLN.

The liquidation procedure is completed when the registry court issues a decision to remove the company from the register.

How long does it take to close a Polish limited liability company?

Due to its complexity and the imposed deadlines, the liquidation of a Polish limited liability company is a long process. The estimated minimum duration amounts to approximately 7-8 months. This counts from adopting a resolution on the company’s liquidation to the moment of its removal from KRS.

The resolution on the dissolution of LLC requires a majority of two-thirds of the shareholders’ votes. Article 246 § 1 of the CCC specifies that. Yet, the company’s agreement may introduce even stricter conditions. But, the shareholders’ meeting may adopt a resolution to dissolve LLC and liquidate it without the consent of all shareholders. This can only happen if the abovementioned condition of the majority of votes is respected.

A court may also decide about the limited liability company’s dissolution. It may issue such a ruling upon the request of a shareholder or member of the company’s governing body. This may happen if the company’s objects have become impossible to achieve or if other significant reasons exist (art. 271 KSH).

Liquidation of the LLC online – how to do it?

Can you dissolve a limited liability company via the Internet? Yes, but only if the company’s agreement was concluded via the S24 System. Namely, only if you used a contract template available on the website of the Ministry of Justice. This doesn’t influence further stages of the liquidation procedure. It is still necessary to publish an announcement in the MSiG, prepare the liquidation opening balance, etc.

Can you dissolve the Polish LLC without liquidation?

In the case of partnerships (general partnerships, limited liability partnerships and limited partnerships), the provisions of the Commercial Companies Code allow for the termination of the company’s operations without liquidation. Art. 67§ 1 of the Code specifies it.  Yet, a limited liability company is not a partnership.

Is it possible to ‘close’ a limited liability company without liquidation?

The dissolution of a Polish LLC without liquidation is an extraordinary situation. It does not result from the shareholders’ will but from the court’s decision. The registry court may decide on the dissolution of the LLC and its deletion from the KRS. This can happen only in certain cases specified by law. For example, in the event that:

  • the bankruptcy court dismisses the bankruptcy petition or decides on discontinuation of insolvency proceedings. This applies when the company’s assets are not sufficient to cover the costs of the bankruptcy proceedings.
  • the court decides to discontinue or withdraw from the compulsory proceeding. These are registration court proceedings aimed at enforcing the LLC’s legal obligations towards the register of entrepreneurs of the KRS;
  • the LLC didn’t submit annual financial statements for 2 consecutive financial years, despite the registry court’s request;
  • The LLC didn’t perform other obligations towards the KRS despite being called to do it twice. For example, the change of company’s address wasn’t reported.

In proceedings for the dissolution without liquidation, the registry court examines whether the LLC has tradable assets. It also verifies whether it actually conducts business. If such circumstances are confirmed – the court will discontinue the proceedings.

The shareholders cannot independently decide to dissolve LLC without the liquidation procedure

It is not worth taking the risk and failing to fulfil obligations to the registry court. Ignoring the court’s summons and failing to submit financial statements is not a good idea. You cannot count on the fact that the court will remove the entity from the register by itself in such a case. Such actions may have negative effects and result in:

• the imposition of a fine by the registry court – both on the LLC itself and on the members of its management board;

criminal liability of members of the management board. For example, failure to submit financial statements is a crime for which a fine or restriction of liberty may be imposed. This is specified in Article 79 of the Accounting Act. A person convicted of failure to submit financial statements will appear in the National Criminal Register.

If this article was interesting for you and you want to know more on the topic it concerned we encourage you to contact us. Are you looking for an accountant in Poland? Specialists from our accounting firm in Poland, Warsaw will be happy to help. If you are interested in company formation in Poland visit our dedicated landing page.

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Marek Cieślak

CEO CGO Finance