Accounting

Share capital increase in Poland

Accounting


Increase of the share capital in Polish Company (limited liability company)

Shareholders often decide to increase the share capital of the Polish company in order to raise Polish company's credibility in the eyes of the clients or in connection with the investment plans or an accession of new shareholders, or in connection with the need to cover losses.  

Decision on share capital increase in Polish company

Decisions regarding an increase of share capital are made by way of a resolution at the General Shareholders' Meeting. If an increase of share capital is already stipulated in the articles of association, a resolution shall determine the increase methods only (hence if it is carried out by creation of new shares or an increase in nominal value of the existing shares, although an increase of share capital by means of combining the two methods is not out of question) as well as funds through which the increase shall be financed (if these are the outside funds or funds from the supplementary capital or reserve capitals). Contributions towards the increased share capital may be cash or in-kind. If all shares in Polish limited liability company are equal, an increase of the nominal value of the share capital shall apply to all shares. It is important to emphasize that if the share capital is increased through subscription of new shares in the company where shareholder has more than one share, the nominal value of the new shares must equal the nominal value of the existing shares.

Unless the articles of association or the resolution on the increase of the share capital provide otherwise, the existing shareholders shall have priority in subscribing for the new shares in the increased share capital in proportion to their existing shares. The pre-emptive rights in Poland shall be exercised within a month of the date of the summons to exercise it. Such summons shall be sent out to the shareholders by the management board at the same time.

A resolution increasing share capital (without amendments to the articles of association) shall be adopted by an absolute majority of votes of Polish Company, although the exceptions from this rule exist.

However, if the articles of associations do not provide for provisions determining the maximum amount or a term of an increase of share capital, share capital may be increased by a resolution of the shareholders on amendments to the articles of association.

An increase of share capital goes into effect at the moment of entry into the Company Registry in Poland. For that purpose, the Management Board shall report the fact of adopting a resolution regarding an increase of share capital to the registry court.

However, the latter two representations are no required in case of an increase of the share capital out of company funds.

Increase of share capital does not generate taxable income CIT. Therefore tax on civil law transactions paid in respect to the increase of the share capital cannot be considered a tax-deductible cost.

Summary on increasing share capital in Poland

  • Share capital in Polish company may be increased by amendments to the articles of association or under existing provisions in the articles of association
  • Declaration on the acquisition of shares in Poland is not required when an increase of the share capital is carried out of funds of Polish company
  • An increase out of own funds may be carried out of from the supplementary capital or reserve capitals created out of company's profits
  • Exclusion from the pre-emptive rights may be exercised only in the articles of association or in the resolution on the increase of share capital 
  • Increase of share capital is subject to tax on civil law transactions
  • Increase of share capital goes into effect at the moment of entry into the Company Registry of Poland.

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