Polish regulations allow the following legal forms of businesses:

• enterprises run by a natural person; these are subject to registration according to the type and scope of activity,

• civil partnerships established under the regulations of the Polish Civil Code,

• commercial companies, established by natural or legal persons under the regulations of the Polish Commercial Companies' Code,

• co-operatives established by natural or legal persons,

• state-owned enterprises.

The Commercial Companies' Code of 15 September 2000 regulates two groups of companies:

• partnerships (registered partnership, limited partnership, professional partnership and limited joint-stock partnership),

• corporations (joint-stock company and limited liability company).

Societies, foundations and trade unions may also carry out economic activity.

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On the grounds of the Law on Commercial Activity of 19 November 1999 foreign companies and foreign residents may conduct their business operations in Poland in all legal forms, subject to reciprocity. However, the condition of reciprocity does not apply to limited partnership, limited liability company and joint-stock company.

The formation of the latter two types of company by foreign entities has also been allowed under the former regulations. Since these forms are well suited for all, but small-scale businesses, it is expected that a major part of foreign business activities in Poland will still be carried out as such. As a limited partnership is the only other legal form available to foreign investors without the need to obtain a relevant certificate from the Polish Consulate in their home country concerning reciprocity, it may also prove to be popular, especially among small companies and individuals.

Joint-stock company and limited liability company

Before registration procedure for a company may be started, the company charter (joint stock company) or the articles of association (limited liability company) must be prepared and duly signed and notarised. Prior to their finalisation in consultation with the notary, a draft should be prepared by legal advisers to the company's founders.

In the case of a joint stock company, the notarial deed should contain the following:

• business name and company seat,

• type of activity,

• duration of the company, if limited,

• amount of share capital, capital paid-in before registration, the nominal value of the shares and their number, indicating whether they are registered shares or bearer shares,

• number of shares and rights associated with specific share types, if applicable,

• names and addresses of the founders,

• number of members of the governing and supervisory bodies, or at least a minimum or a maximum number and an entity authorised to appoint the members,

• at least an approximation of costs resulting from the company's formation,

• a newspaper / periodical for publishing announcements, if the company intends to publish announcements in other than Court and Economic Monitor (Monitor Sadowy i Gospodarczy).

Apart from the above, the charter should include provisions concerning the number and type of instruments that entitle the holder to participate in the profits or in the division of company assets, along with the rights associated with these instruments, any additional obligations related to the purchase of the shares, a condition and manner in which the shares may be re-deemed, any limitations concerning shares' transfer or sale and any extra rights granted to specific shareholders.

In the case of a limited liability company, the notarial deed should contain the following:

• business name and company seat,

• type of activity,

• duration of the company, if limited,

• amount of share capital,

• whether a shareholder is entitled to one or more shares,

• number and value of shares held by individual shareholders.

Apart from the above, the deed should include provisions concerning in-kind contributions and stipulations concerning additional shareholder benefits and/or obligations, if applicable.

Other documents required at the notary office are:

• a list of names of shareholders and the value and number of shares held by the founders,

• draft of the appointment of the Board of Management,

• draft of the appointment of the Supervisory Board (obligatory for joint-stock companies) and Control Committee, if envisaged by the law, or articles of association.

If the shareholder is a legal person, he is required to submit:

• a copy of the company's entry in the commercial register (valid for three months!),

• a resolution of the appropriate body of the company agreeing to the company's participation in the new company to be formed,

• notarised proxies, if the persons authorised to sign on behalf of the shareholder are not appearing in person and are to be represented by a proxy.

It should be noted that documents in a foreign language should be confirmed by the local Polish embassy or consulate as having been prepared in accordance with local law and must be accompanied by a certified translation.

The next step is to register the company in the National Court Register. This is performed by the Registry Court, which acts after receiving an application for registration submitted by the Board of Management and containing information on:

• the company's name, seat, and scope of business,

• the value of the initial capital (and shares' number and nominal value for joint stock companies),

• the names of Board of Management members and how the company is represented (and members' addresses for limited liability companies),

• the names of Supervisory Board  members (obligatory for joint-stock companies) and Control Committee, if envisaged by the law, or articles of association,

• the duration of the company, if limited,

• a newspaper / periodical for publishing announcements, if indicated in the charter / articles of association,

• a statement on in-kind contributions made by the partners,

• whether a shareholder is entitled to one or more shares (limited liability companies),

• number of privileged shares and type of privileges (joint stock companies),

• final share capital amount, if envisaged by the charter (joint stock companies),

• amount of capital paid-in before registration (joint stock companies),

• any extra rights granted to specific shareholders, if envisaged by the charter.

Other documents required upon the registration include:

• the company charter or articles of association,

• documents appointing the company's governing bodies, with a specification of appointed members. In the case of a limited liability company only when these were not defined in the articles,

• a statement from all members of the Board of Management that the contributions towards initial capital have been made by all shareholders in full (limited liability companies), or that the share payments and contributions in kind envisaged by the charter have been effected lawfully (joint-stock companies),

• a list, signed by all members of the Board of Management, giving the names of the shareholders (individuals and companies) and the number and nominal value of shares held,

• specimens of the signatures of the Board of Management members, certified by a notary or made in person in the presence of the Court.

There are some further requirements concerning documents required upon registration of a joint-stock company, specified in the Commercial Companies' Code, article 320.

The registration has to be officially announced, as required by the law, in the Court and Economic Monitor.

After its registration in the Court, each company must obtain its statistical number from the local statistical office. To receive it the company is required to submit an application containing:

• the name of the company,

• scope of activities,

• time when full capacity will be reached,

• planned number of employees.

The application should be accompanied by a copy of the articles or charter and a certified copy of the entry in the Commercial Register.

Finally, it is time to register the company with the Social Security Institute (ZUS) and the local tax office (after opening a bank account).

Limited partnership

Limited partnership is a partnership wherein at least one partner is fully liable against creditors (general partner) and the liability of at least one partner (limited partner) is limited. The partnership agreement must be notarised and it should contain:

• business name and company seat,

• type of activity,

• duration of the company, if limited,

• contributions made by each partner and their value,

• liability of each limited partner against creditors (value),

• if a limited partner contributes in kind, the contribution must be specified along with its value and the contributing partner.

The next step is to register the company in the National Court Register. A limited partnership's registration application should contain:

• business name and company seat,

• type of activity,

• name(s) of general partners and, separately, names(s) of limited partners, as well as circumstances pertaining to limitations of partners active capacity, if applicable,

• names of persons authorised to represent the company and how the company is represented and, should general partners entrusted running the company to just some of them, mentioning this circumstance,

• amount up to which the limited partners are liable.

Limited partnership is established upon its registration. After this, just as for corporations, the company must obtain its statistical number, register with the Social Security Institute (ZUS) and with the local tax office (after opening a bank account).

Operations in some business areas require a license or a permit, regardless of whether the company is domestic or foreign. The major licensed areas are defined in the Law on Commercial Activity of 19 November 1999, however it should be noted that there are some other areas requiring a permit, as specified by other regulations.

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Pursuant to the provisions contained in the Law on Economic Activity of 19 November 1999, foreign business entities may open branch offices and representative offices in Poland. In contrast to previous regulations, none of these requires a permit. However, to register a certificate of reciprocity issued by a relevant Polish Consulate is required.

Branch Office

Foreign companies may establish branch offices in Poland, on the basis of reciprocity, in order to conduct business activity within the scope of its business objectives, exclusively. A foreign entity creating its branch office is obliged to appoint a person at the branch who is authorised to represent this entity. A branch may commence its operations only after it has been registered with the National Court Register.

Branch offices are to maintain separate accounting books in Polish, pursuant to Polish accounting regulations. Another requirement stipulates that branch offices are required to notify the Polish Minister of Economy of:

• the commencement of liquidation of the foreign entity that has opened the branch in Poland,

• the loss by that foreign entity of the right to conduct business activity,

• the loss by that foreign entity of the right to dispose of its assets.

Moreover, branch offices are obliged to use the name of the mother company in a language of the country where it is registered, along with the name of its legal form translated into Polish and the words "oddzial w Polsce" (branch in Poland) added.

Representative Office

Foreign companies may establish their own representative offices in Poland solely in order to promote and advertise the company establishing the office. Establishment of a representative office requires registration in the Register of Representative Offices of Foreign Business Entities kept by the Minister of Economy. Registration is effected based on an application from the foreign company concerned. The application, in Polish, should contain the following:

• name, place of registration and legal form of the foreign company opening its representative office,

• equity, or other initial capital of the foreign company opening its representative office,

• scope of the business activity of the foreign company opening its representative office,

• name and address in Poland of a person in the representative office authorised to represent the foreign company.

The above-mentioned application should be accompanied by the documents listed below:

• deed of formation (articles of association, charter) of the foreign company,

• copy of its entry in the Commercial Register or its equivalent,

• statement of the foreign company on establishing its representative office in Poland,

• statement of the foreign company on the amount of share capital paid-in, if applicable.

The enclosures in a foreign language contain in this list should be accompanied by a certified translation into Polish.

Representative offices are obliged to use the name of the mother company in a language of the country where it is registered, along with the name of its legal form translated into Polish and the words "przedstawicielstwo w Polsce" (representative office in Poland) added.

Just as branch offices, representative offices are required to maintain separate accounting books in Polish, pursuant to Polish accounting regulations and to notify the Polish Minister of Economy of:

• the commencement, or end of liquidation of the foreign entity that has opened the representative office in Poland,

• the loss by that foreign entity of the right to conduct business activity,

• the loss by that foreign entity of the right to dispose of its assets, as well as

• any change pertaining to the information contained in the application for registering of the representative office and the amount of capital paid-in.

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All businesses operating in Poland must adhere to Polish accounting standards. The required accounting procedures are based on a double-entry system. Each company must establish its book of accounts. Except for state organisations no uniform book of accounts is imposed. Nevertheless a book of accounts must still meet certain requirements, such as the ability to show the company's assets, the cost of production and the profitability of the company. The accounting records, the annual balance sheet and the profit and loss account must be maintained in Polish currency and prepared in the Polish language.

The requirements regarding correctness and clarity of the accounting records and vouchers do not differ from those normally applied in western countries. Accounting records, documentation, reports, etc. have to be kept for 5 years.

Polish accounting standards are governed by the Law on Accounting dated 29 September 1994 that came into force on 1 January 1995 and applies to financial statements for the financial year beginning on or after 1 January 1995. It brings Polish accounting regulations more in line with the European Union directives and makes it more consistent with the International Accounting Standards. The changes in the regulation move the focus of Polish accounting away from the emphasis on tax compliance towards a more business-oriented approach aimed at meeting the demands of a market economy.

Holdings, joint stock companies, banks and insurers, pension funds, entities operating according to the Law on Public Turnover of Securities and Investment Funds are required to have an annual audit. Other companies must be audited if two of the following three conditions are met in the preceding year:

• the number of employees exceeds 50
• balance sheet assets exceed EUR 2.5 million
• net income exceeds EUR 5 million.

The auditor's report must be submitted to the company's local tax office as well as to the registration court. The report is available for public inspection.

All auditors must be members of and are governed by the National Registered Auditors' Chamber and the list of auditors empowered to audit maybe obtained there.

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