Simple joint-stock company
The dynamic development of startups, innovative ventures in the initial stage of development, made the Ministry of Development prepared a draft amendment to the Code of Commercial Companies adding a new type of company to the Commercial Companies Code, which is a simple joint-stock company (PSA). This will be done by adding to the Code the provisions of Art. 300 (1) –300 (121). According to the assumptions, these regulations are to come into force in 2020.
Running a business will be much easier
Startups are very often established by young people with an excellent idea and very limited financial resources. A simple joint-stock company is to make it easier for young entrepreneurs to start a business and enter the market.
A simple joint-stock company is to be a new type of capital company. The main goal of this regulation is to introduce a legal form to the Polish company law that combines the features of a joint stock company and a limited liability company, with simple formal requirements and a relatively easy way to adapt the provisions of the articles of association to the needs of the company and its founders.
Attention!
PSA is a solution not only for startups - the new regulations do not limit the group of entities that can operate in the form of a simple joint-stock company, nor do they define the subject of the company's activity. In practice, this means that every entrepreneur can take advantage of the new regulation.
One zloty is enough to cover the share capital
So far, the basic feature of capital companies was - as the name suggests - a significant share capital. Entrepreneurs wishing to operate in the form of a joint-stock company must take into account the necessity to cover the share capital in the amount of PLN 100,000.00. According to data published by the Ministry of Development, only 5% of startups decide to take such a step. One of the basic assumptions of PSA is to eliminate this unquestionable financial barrier - the share capital of PSA may be as low as PLN 1. The project does not impose any restrictions on the sources of financing this capital. The share capital can come from a venture capital fund or even a crowdfunding fundraiser.
Attention!
PSA's capital may amount to PLN 1 and be divided into shares worth PLN 0.01.
Such a low contribution is dictated not only by facilitating the availability of the new company, but also by the legislator's perception that an innovative idea or know-how will be a more valuable contribution to the company. PSA will be able to issue special shares without par value in return for work for the company or intellectual contribution.
Undoubtedly, such a low capital poses a serious threat to the company's creditors, whose claims may never be satisfied. For this reason, the Ministry of Development assumes the introduction of protective solutions: the obligation for PSA to have supplementary capital, control procedures regarding transactions between the company's shareholders and members of its bodies and the company itself, and a solvency test. The solvency test is supposed to mean the obligation to check, before making any payment to the shareholder, that such a transaction will not pose a threat to the company's finances and its solvency. These solutions are to prevent the company's shareholders from diverting the company's capital.
Under the draft, PSA will be able to issue several different types of shares taken up by shareholders depending on their type and contribution:
- founding shares offered to the founders of the company in return for their intellectual contributions, while limiting the possibility of their disposal;
- employee shares offered to employees employed by the company as a form of additional motivation free of charge or on preferential terms;
- advisory campaigns offered to the company's advisors and mentors (e.g. accountants or lawyers) in return for advisory services provided to the company;
- investor shares offered in return for contributions of a cash or in kind;
- investor shares offered in exchange for an innovative idea when it is capitalized by the company.
PSA will also be able to issue bonds as well as receive convertible debt - this will be a type of investment in which the investor will be able to convert his debt into company shares.
The Board of Directors in place of the Supervisory Board
The basic governing body of the PSA will be - as in the case of a joint-stock company - the General Meeting of Shareholders. A manifestation of the simplification of procedures is the proposal to hold the General Meeting of Shareholders electronically, by means of teleconferences over the Internet. Such regulation is to facilitate decision-making by shareholders, even if they cannot attend the meeting. The minutes of the meeting will not have to be in the form of a notarial deed.
The governing body of PSA will be the board of directors. Both the company's shareholders, in particular its investors, and third parties will be able to become members of the management board. Importantly, according to the draft, PSA will be able to appoint the management board for an indefinite term, until its dismissal.
Attention!
The governing bodies of PSA will be the General Meeting of Shareholders and the management board, and the Supervisory Board or the Board of Directors may be appointed on an optional basis.
The decision to appoint the Supervisory Board will rest with the company's founders and its shareholders. The draft assumes that this body will not be obligatory, unless the company's capital exceeds half a million zlotys. Importantly, the Supervisory Board may be replaced by the Board of Directors - a hybrid body combining management and control functions.
Complicated shareholder relations
The Ministry of Development plans to introduce model solutions to the act, regulating the relations between the company and its shareholders. Such solutions function in practice, and their statutory regulation is to introduce law and order in company organizations.
Examples of the types of provisions contained in the draft are:
- drag along clause, according to which a shareholder planning to sell his shares to another entity will be able to demand from other shareholders to sell their shares with him;
- tag along clause, under which other shareholders will be able to join the shareholder selling his shares to the new investor;
- a shootout clause, according to which in the event of a dispute between shareholders and a decision clinch, one of the shareholders will have to leave the company and sell his shares to the other shareholder, who can either buy back the shares offered to him or sell his shares at the same price;
- vesting clause, according to which, after the time specified in the articles of association, the founder of the company will acquire the right to acquire new shares at the indicated price;
- a priority clause according to which a shareholder will have the right to acquire shares in the event that another shareholder intends to sell his shares, in the first place before other buyers;
- liquidation preference clause, according to which a shareholder leaving the company will have the right to a specific distribution of funds obtained from the sale of his shares, e.g. the right to obtain a return of the invested funds, and this clause may also be used in the event of liquidation of the company.
English-language documents make it easier for foreign investors
The PSA may be established by drawing up documents in traditional paper form or by using the S24 internet platform operated by the Ministry of Justice. The project also provides for the possibility of submitting the company's documents in English, which is undoubtedly a tribute to foreign investors.
Attention!
Electronic communication will play an extremely important role in the functioning of PSA - the company will be able to be established and dissolved by e-mail. It will also be able to adopt resolutions using the same method.
A simple joint-stock company not on the stock exchange
According to the assumptions, PSA shares will never be listed on the stock exchange, as PSA will not be able to become a public company. This solution is dictated by the need to protect potential investors - stock exchange trading in the company's shares will not be possible also due to the need to meet numerous formal conditions related to issue prospectuses and information obligations towards investors.
On the other hand, PSA will be obliged to maintain a website containing all information necessary for the company's shareholders and investors, e.g. information on the dates of general meetings.
PSA liquidation by e-mail
Due to the fact that less than 20% of all startup ventures are successful, one of the assumptions of the project is also to simplify the liquidation procedure of the company. The model of the liquidation process will be analogous to the liquidation of a limited liability company. The draft also provides for the possibility of conducting liquidation proceedings by electronic means - this would be the form of both submissions to the National Court Register and claims by the company's creditors.
Moreover, according to the plans of the Ministry of Development, if the company is at risk of a significant loss, the shareholders' meeting will be required to adopt a resolution to liquidate the company.
It should be noted here that the assumptions regarding PSA have met with considerable criticism from the academic community. PSA critics indicate that due to the potential lack of capital and assets, the company can easily become insolvent and its debts will never be covered. This poses a threat not only to the company's creditors, but also a significant risk to shareholders - the company's shares may turn out to be completely worthless.
However, startup environments express support for the new idea, although time will show whether the new company will actually meet the assumptions intended by the Ministry of Development.
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