Recent novelisation of Code of Commercial Companies derogated certain formalities regarding single-member companies. Currently a parent company may conclude an agreement with its subsidiary without preserving written form with signatures certified by a notary public.
Before the novelisation of Code of Commercial Companies of 23rd October 2008 year came into force on 8th January all declarations addressed to its subsidiary by a sole shareholder, that exceeded the scope of ordinary business of the company, required the form with signatures certified by a notary public, otherwise being null and void. The main difficulty was, that one may not always determine with 100 % accuracy, whether a particular transaction exceeds the scope of ordinary business of a company or not. And since omission to preserve the required form was barred with pain of nullity, the legal risk was considerable. On the other hand conclusion of all agreements and other acts, that were questionable as to whether they remain in scope of ordinary business of a company or not, in form with signatures certified by a notary public was totally unpractical, particularly for foreign investors. Hence proceeding with a subsidiary was highly problematic for its sole shareholder.
Practice developed a simple way to avoid that rigor ? acquisition of minor number of shares by a trustee, so the company would in fact have two shareholders. This resulted in exclusion of requirement to preserve form with signatures certified by a notary public. Still it meant certain disadvantages ? mainly in respect to holding a shareholders? meeting. To convene a meeting all shareholders need to be dully informed by with prior two week notice. Besides not everyone was able to find a reliable partner to entrust him with shares of his subsidiary. Nevertheless for some it did seem awkward to circumvent state legislation in such a way.
The novelisation derogated stipulations providing for restrictive form. Currently declarations of sole shareholder addressed to a company are valid, provided that written form was preserved (this does not prejudice separate provisions which require a special form for legal actions of specific kind as for instance sale of a real estate). Written form in turn is far easier to preserve since a mere exchange of letters between contracting parties is sufficient. On top of that, digital documents marked with a certified digital signature are treated by Polish law as documents in written form. Consequently conduct of affairs between a company and its sole shareholder shall be much easier.
This simplification ? along with recent decrease of minimal share capital required to form a company (http://www.howtoinvestinpoland.com/blog/2009/01/limit-your-liability-ten-times-cheaper) – is yet another encouragement to form subsidiary companies. However one should not forget that there is a considerable amount of regulations that refer to subsidiary companies that still remain in force, i.e. tax regulations on transfer pricing.
