Limited liability company in Poland – what you should know when you sell the shares
A limited liability company is one of the most popular form of doing business in Poland. The shareholders establishing the company hold shares constituting components of the company’s share capital. How to sell shares in a limited liability company?
Limited liability company – what forms the share capital
In a limited liability company shareholders hold shares that form part of the company’s share capital. The minimum amount of capital of a limited liability company is PLN 5,000, while the amount of the share capital and individual shareholdings are agreed by the shareholders when executing the articles of association.
Shares are usually contributed in cash, but the contribution may also be in kind. An in-kind contribution can be, for example, a real estate. Shareholders may hold more than one share of the same value.
Shares give shareholders the right to vote, the ability to decide on the affairs of the company and constitute a confirmation of having the rights resulting from being a shareholder. The number and value of shares affect the strength of these rights. These rights also include the possibility to transfer the shares.
Limited liability company – how to sell shares
The sale of shares in a limited liability company takes place in several stages, and the first step is a thorough analysis of the articles of association. It is in the articles of association where all the important information on how, when and to whom the shares can be sold are included.
The articles of association may contain clauses on the sale of shares and specify whether:
- the consent of the company or its governing body must be obtained in order to transfer the shares
- who has the right of priority
- right of pre-emption
- and what are the rights of shareholders selling the shares.
The articles also contain information on possible restrictions on transferability.
To avoid problems when selling shares, it is worth taking advantage of services of a law firm, whose experts will analyse the provisions of the articles of association and investigate the requirements and restrictions regarding the sale of shares.
Restrictions on the sale of shares may vary. For example, the right of priority set out in the articles of association obliges the seller to offer the purchase of shares first to the shareholders and only when everyone waives this right can a sale be made outside the company.
Sale of shares in a limited liability company – what steps need to be taken
As mentioned above, the first step towards the sale of shares in a limited liability company is the analysis of the articles of association. It is worth commissioning this analysis to a law firm to be sure of the rules applicable to the sale.
If there are no restrictions or contraindications in the articles for the sale of shares to persons outside the company, the seller can proceed with the sale. At this stage, a support of a notary and or a lawyer will be necessary, because in accordance with Article 180 of the Commercial Companies Code, the sale of shares takes place by signing an agreement by the parties whose signatures are authenticated by a notary.
The next step is the legally required notification to the company about the sale of shares.
Notification of the sale of shares should be in writing. On the basis of the submitted notification, the company will make changes to the share book and submit an appropriate application to register the changes in the Registry Court.
To sum up, the sale of shares in a limited liability company consists of at least three actions:
- analysis of the articles of association,
- drawing up a share sale contract with notarized signatures,
- notification to the company about the sale.
Other actions, such as filing for registration of appropriate changes in the business register, remain with the company. To avoid unpleasant surprises and complications, the sale process should always be supervised by experts from a trusted law firm.