What are contributions in kind?
Under Polish law, a contribution in kind is a non-cash contribution made to a company. Contributing in kind involves transferring ownership of an asset or right constituting the contribution to the company in exchange for shares in a company with share capital or a partnership interest in a partnership. Contributions in kind may take various forms, including real estate, equipment, machinery, vehicles, copyrights, know-how, patents or shares in other companies.
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An enterprise as a contribution in kind
An enterprise is an organized set of tangible and intangible assets intended for conducting business activity. It includes, in particular, the business name, ownership of real estate or movable property, contractual rights, receivables, rights arising from securities and cash, as well as concessions, licenses and permits, patents and other industrial property rights, economic copyrights and related rights, trade secrets, and books and documents associated with conducting business activity.
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An organized part of an enterprise as a contribution in kind
An organized part of an enterprise is an organizationally and financially separate set of tangible and intangible assets, including liabilities, within an existing enterprise. These assets are intended to perform specific business tasks and at the same time could constitute an independent enterprise capable of performing those tasks on its own.
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Other contributions in kind
A contribution in kind may comprise movable property, real estate or other transferable rights, such as patents or know-how. Shares and the entirety of a partner’s rights and obligations in other companies constitute a special type of contribution in kind. Carrying out this type of transaction effectively and safely in Poland requires both legal and tax analysis. A contribution in kind results in the disposal of a specific asset, and its implications must therefore be properly considered within the broader legal, tax, accounting, corporate and business context.
Contributions in kind: Grant Thornton support
Drawing on many years of experience in carrying out this type of process, the Grant Thornton team provides support in selecting the appropriate reorganization route. Where the selected scenario involves contributing any asset to a company, particularly an enterprise or an organized part of an enterprise, we offer comprehensive legal, tax and accounting advice.
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Comprehensive legal, tax and accounting support in implementing a contribution in kind
Planning and support in carrying out the contribution process, including recommendations and practical guidance developed by our experienced experts.
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• Thorough analysis and preparation of a written report explaining the implications of the process
As part of the contribution process carried out by our experts, we may prepare a written report explaining the procedure to shareholders or members of 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.
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Preparation of documentation for the contribution in kind process
Our support also includes preparing the documentation required to carry out the process, in particular agreements transferring ownership of the assets being contributed, relevant amendments to the company’s articles of association or statutes in connection with the contribution, the required corporate approvals, and a complete set of attachments to the application for registration of the company or amendments to its articles of association or statutes in the register of entrepreneurs of the National Court Register.
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Representation in registration proceedings
We represent clients before registry courts throughout Poland. We are responsible for filing the application for registration of the company or amendments to its articles of association or statutes, together with all required documents, in the register of entrepreneurs of the National Court Register. We monitor the proceedings while remaining in ongoing contact with the registry court.
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Ongoing support with formalities following the contribution in kind
We provide ongoing support both before and after the contribution is made. We inform clients of their obligations following the contribution and assist them in fulfilling those obligations. We also support communications with customers, employees and public institutions.
Contributions in kind: key facts
- A special type of contribution in kind involves contributing an enterprise or an organized part of an enterprise to a company.
- Contributions in kind may be made to any type of company, making them a frequently selected legal tool in reorganization processes and an alternative to transforming a sole proprietorship into a company or to processes involving the separation of part of a business.
- Where an enterprise is contributed in kind, the recipient company takes over the existing operations of the entities contributing the enterprise and continues them as a separate business entity.
- Contributing an organized part of an enterprise is a reorganization option used to separate part of a company’s operations and transfer it to another subsidiary. A demerger by separation may be an alternative to contributing an organized part of an enterprise.
Implementation process
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Review of the assets to be contributed, discussion of the client’s needs and process planning
At this stage, we review the client’s business operations. We examine matters such as the company’s assets, employment matters, agreements with customers and suppliers, administrative decisions and permits. Once the client’s needs have been identified, we prepare an implementation plan.
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Process implementation: making the contribution in kind
At this stage, we guide the client through all formalities associated with the contribution in kind. We manage the entire process, from liaising with the notary and preparing all the necessary documents to filing the application with the National Court Register and continuously monitoring the case in the register of entrepreneurs of the National Court Register.
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Ongoing consultations during and after the process
We understand that contributing an enterprise or an organized part of an enterprise may present an organizational challenge for the entire company or group of companies. Our many years of experience allow us to support clients with all ongoing matters related to the reorganization. We also ensure that clients receive guidance on all formal matters that must be addressed after the contribution has been made, taking into account all circumstances relevant to the client.
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At this stage, we review the client’s business operations. We examine matters such as the company’s assets, employment matters, agreements with customers and suppliers, administrative decisions and permits. Once the client’s needs have been identified, we prepare an implementation plan.
