Quasi single member company and ZUS

Quasi single member company and ZUS
Marek Cieślak

Marek Cieślak

CEO CGO Finance

Many people think that the shareholder of a limited liability company is not covered by compulsory social insurance and therefore can avoid paying contributions. To what extent is it in accordance with the law? How do the Commercial Companies Code, ZUS (Social Insurance Institution) and the Supreme Court view the issue quasi single member company? We present below.

Table of Contents

Quasi single member company and ZUS. The concept of an illusory shareholder

In the provisions regulating social insurance, a partner in a single-member LLC is treated as a person conducting business activity outside the agricultural sector. This means that he is subject to mandatory social and health insurance. However, in the case of multi-member companies, there might be a situation where one of the partners has a significant majority of votes. He can use it in such a way that the multi-member company is treated similarly to a single-member company. In such cases, the second partner is considered an illusory partner.

What does the Commercial Companies Code say about a “quasi” single-member company and ZUS? It doesn’t include the concept of an illusory partner. Even a partner holding 1% of shares in the company has certain rights. This excludes the possibility of considering such a company as a single-member one. Unfortunately, this concept arises from the social insurance system. According to the law, only a partner holding 100% of shares in a single-member company can be recognized as an entrepreneur in the Social Insurance Institution context. But, contrary to the regulations, ZUS (Social Insurance Institution) and the Supreme Court also recognises a shareholder who doesn’t hold full 100% of shares as a single-member partner in some cases.

In court practice, it is assumed that an illusory partner occurs when one of the partners in a multi-member company has practically all corporate and property rights. This corresponds to rights resulting both from the articles of association and the practice of company’s operations. In such a situation, the other partner is considered to be the so-called illusory partner.

The case law of the Supreme Court is not consistent in determining the level of shares that result in recognition as a single-member partner. Different views on this matter lead to certain legal ambiguities.

Quasi single member company and ZUS. Employing a shareholder as a board member

One should note that a partner cannot be employed as a board member when another partner’s share is only nominal. For example, if one partner holds 125 shares, while the other holds only 1. This view has been confirmed by the case law of the Supreme Court. One of the judgments states that:

“from the perspective of the social insurance law, i.e., Art. 8 sec. 6 point 4 of the National Social Insurance Act,  this type of company should be treated as a single-member company”  [judgment of the Supreme Court of 3 July 2011, I UK 8/11].

A multi-member LLC can hire a member of the management board based on an employment contract. However, two conditions must be met:

  • The share of another partner must not be nominal or illusory.
  • According to Article 210 § 1 of the Commercial Companies Code:

“in the agreement between the company and the member of the management board, as well as in the event of a dispute with that member, the company is represented by the supervisory board or a proxy appointed by a resolution of the shareholders’ meeting.”

What are the responsibilities of a management board member in an LLC in Poland? Find out from this article.

Quasi single member company and ZUS. Obligations and contributions

When it comes to ZUS and “quasi” single-member companies, the issue of contributions cannot be overlooked. According to the Act on the National Social Insurance, individuals conducting non-agricultural business in Poland are subject to mandatory social insurance. In this context, a shareholder of a single-member LLC, who conducts business activities in accordance with the entrepreneurs’ law or other special regulations, is also subject to these insurances. The obligation results from Art. 8 sec. 6 point 1 of the Act.

The provision clearly states that the obligation applies only to a shareholder who is at the same time the sole shareholder of the LLC. This means that if an LLC has more than one shareholder, such obligation does not apply. This is contradictory to general partnerships, limited partnerships, or LLPs, where all shareholders are subject to mandatory social insurance according to the Act.

According to the Commercial Companies Code, the company’s articles of association determine whether a shareholder may have only one share or more. The number of shares assigned to individual shareholders depends solely on their will. There is a possibility that one of the shareholders holds a majority of shares. Therefore, if the company’s articles of association and information from the National Court Register indicate that the company is multi-member, it should be assumed that we are practically dealing with a single shareholder subject to mandatory pension and disability insurance on that basis.

Opinions of the Supreme Court emphasize that the mere fact of holding shares with a value below 10% of the share capital doesn’t limit the rights of a shareholder. However, there is no basis for assuming that in every case where there is only one (majority) shareholder of an LLC in the business register, he should be treated as a shareholder of a single-member LLC from the perspective of social insurance law.


The issue of the Social Insurance Institution in Poland (ZUS) and “quasi” single-member company raises many doubts. According to the Act on the National Social Insurance, a shareholder of a single-member LLC is considered a person conducting non-agricultural business activities. He or she is subject to mandatory social and health insurance. But, both ZUS and courts have different perspectives on this matter. This introduces some interpretational doubts. Therefore, when interpreting the legal aspects of “quasi” single-member companies in the context of the obligation to pay ZUS contributions, several legal acts should be taken into account. Among them, are the Act on the National Social Insurance, the Commercial Companies Code, as well as the case law of the Supreme Court.

If you have doubts regarding specific legal situations related to obligations and contributions concerning “quasi” single-member companies and ZUS, it is always worth consulting a lawyer. Experts specializing in this matter will help to dispel your doubts on this topic.

If you find the above article interesting and want to know more, we encourage you to cooperate with us. Experts from our law firm in Łodz and Warsaw are at your disposal. Contact us today and let us help you.

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Marek Cieślak

CEO CGO Finance