What does the company transformation process involve?
Under Polish company law, a company transformation is a formal process involving a change in legal form, for example, from a limited partnership to a limited liability company or from a general partnership to a limited partnership. The company transformation process usually takes approximately 2–3 months. A company transformation is a safe and commonly used process that allows the business to continue operating smoothly in a new legal form. Following the transformation, the transformed company will generally retain all the rights and obligations of the company being transformed, particularly those arising from contracts, administrative decisions, permits and licenses. Drawing on many years of experience in carrying out hundreds of such projects in Poland, the Grant Thornton team provides comprehensive support in changing a company’s legal form, including legal, tax and accounting advice.
-
When is it worth considering a company transformation?
A company transformation should be considered if the shareholders or partners identify at least one of the following disadvantages associated with their current legal form: significant exposure of their personal assets to business risks, difficulties in planning succession, difficulties in finding an investor or meeting an investor’s requirements regarding the company’s legal form, high tax and other public law burdens or the need to increase the funds available for investment in the company.
-
How does the company transformation process work?
The first step is a thorough analysis of the company and an assessment of the legal, tax and accounting implications of the transformation under Polish law. The next step is to prepare the relevant documentation, including the transformation plan, the draft articles of association or statutes of the transformed company and the draft transformation resolution. This is followed by the adoption of the transformation resolution, registration of the transformation with the registry court and a set of post-transformation formalities, such as updating the company’s details with the relevant authorities and registers. Depending on the type of transformation, the scope of the required activities may be narrower or broader. For example, when a company is transformed into a joint-stock company, the transformation plan must be reviewed by a court-appointed auditor.
-
What type of company should you transform your business into?
Currently, the most common transformation route is the transformation of a general partnership or limited partnership into a limited liability company. Transformation into a limited liability company facilitates succession planning and limits the liability of shareholders, while also creating a legal form that is attractive to external investors. Transformation into a limited liability company often precedes the implementation of the Estonian CIT taxation model, which can minimize the company’s current tax and other public-law burdens. In some cases, the nature of the business and the shareholders’ objectives may make it advisable to transform the company into another legal form, such as a limited partnership, simple joint-stock company or even a joint-stock company.
Scope of Support
-
Comprehensive legal, tax and accounting support in implementing the company transformation process
Planning and support in carrying out the company transformation process, including recommendations and practical guidance developed by our experienced experts.
-
Thorough analysis and preparation of a written report explaining the implications of the process
As part of the company transformation process, our experts prepare a written report explaining the transformation procedure to shareholders or members of the company’s governing bodies, as well as all legal, tax and accounting implications and details of the process. The report serves as a practical guide to the process, while also providing additional reassurance to shareholders and internal teams involved in its implementation.
-
Preparation of company transformation documentation
Our support also includes preparing the documentation required to carry out the process, in particular the articles of association or statutes of the transformed company, such as a limited liability company or a simple joint-stock company. Based on the objectives and assumptions previously discussed with the shareholders, we prepare a draft and agree on the final wording of the company’s articles of association, tailored to the shareholders’ needs and expectations.
-
Representation in registration proceedings concerning the company transformation
We represent clients before registry courts throughout Poland. We are responsible for filing the application for registration of the transformation together with all required documentation. We monitor the proceedings and remain in ongoing contact with the registry court to ensure that the transformation is registered on the specific date requested by us. Thanks to this carefully planned approach, the change is implemented as smoothly as possible, with minimal disruption to day-to-day business operations.
-
Ongoing support with post-transformation formalities, including Estonian CIT and succession
We provide ongoing support both before and after the formal completion of the transformation. We inform clients of the obligations imposed on the company following the transformation and assist them in fulfilling these obligations. We also support the potential implementation of the lump-sum corporate income tax regime commonly known as Estonian CIT, as well as succession planning, both of which very often accompany the process of changing the legal form of a business.
Implementation process
-
Company analysis, assessment of the client’s needs and process planning
At this stage, we review the operations of the company to be transformed. We examine matters such as the company’s assets, employment issues, agreements with customers and suppliers, administrative decisions, permits and licenses. Once we have identified the client’s needs, we prepare an implementation plan.
-
Process implementation: carrying out the transformation
At this stage, we guide the client through all the formalities associated with the transformation. We manage the entire process, from liaising with the notary and preparing all the necessary documentation to filing the application with the National Court Register and continuously monitoring the registration of the transformation.
-
Ongoing consultations during the process and after registration of the transformation
We understand that a company transformation is an organizational challenge, primarily for the shareholders or partners, but also for the company’s employees responsible for implementing changes in the relevant areas, such as accounting and administrative staff. Our many years of experience allow us to support clients with all ongoing matters related to the transformation at every stage of the project, including after its completion.
At this stage, we review the operations of the company to be transformed. We examine matters such as the company’s assets, employment issues, agreements with customers and suppliers, administrative decisions, permits and licenses. Once we have identified the client’s needs, we prepare an implementation plan.
