Poland

The most common for-profit organizational forms utilized in Poland are corporations or partnerships.

In Poland, there are two types of “capital companies” (corporations): the limited liability company and the joint-stock company. A regulation introducing a third type of corporation will enter into force as of 1 March 2021 – a simple joint-stock company.

• The limited-liability company is the typical form for a closely held (private) company, with shareholders who are limited in number and closely involved in oversight of the company’s affairs. A limited-liability company is a convenient legal form for wholly-owned subsidiaries of foreign companies (except in certain areas, such as banking or insurance, where a joint-stock company is required). It may be established by one or more persons for any lawful purpose, unless otherwise provided by law. A limited-liability company may not be established solely by another single-shareholder limited-liability company, however.
• A joint-stock company is the typical form for a company that may have numerous or diverse shareholders, and is the required form for public companies and for certain types of business (such as banks and insurance companies). It may be established by one or more persons, but not solely by a single-shareholder limited-liability company.

In both forms currently possible, and also in the newly introduced type of capital company, the shareholders are not personally liable for the company’s debts, but are at risk only for the value paid for the shares.

Under Polish law, there are also several types of partnerships that are regarded as “commercial companies” and governed by the Commercial Companies Code: the registered partnership, the professional partnership, the limited partnership and the joint-stock limited partnership. Those forms, however, do not have legal personality, but are regarded as “organizational units without legal personality.” Personal companies involve unlimited liability to some degree, for at least some of the partners. Nonetheless, both capital companies and personal companies themselves bear unlimited liability for the company’s own obligations.

a. Enterprises that seek financing from investors and will have multiple owners tend to form joint-stock companies. It is possible for such a business to be organized in the form of a limited liability company that has many shareholders, but it is less standard. Partnerships are in general not used in such configuration.

b. In addition to the organizational forms specifically designed for Social Enterprises, the limited liability company is most likely to be used as a for-profit organizational form by Social Enterprises.

Also, foundations and associations, nonetheless not considered as typical for-profit organizational forms, may also conduct business activity under Polish law and therefore be used by Social Enterprises as a vehicle for conducting such activity. However, in this case, the profits gained by either the foundation or association shall be used for the realization of the statutory purposes of such entity and cannot be distributed between the founders/members.

No such requirements or permits.

In accordance with the relevant law provisions, commercial companies may, in general, be incorporated for any purpose permitted by law, meaning that the purpose of the given company does not have to be purely connected with profit making activities and may include other interests, such as environmental protection or others. The purpose of the given commercial company is usually set out in its founding deed. If a purpose other than profit making is specified therein, the management board should, in general, comply with such regulation.

Social Enterprise is a term that is usually used in the broader context of “social economy” and refers to different organizational forms that have specific social or environmental objectives.

Ministry of Family and Social Policy maintains a register of Social Enterprise[1]. It is, however, worth noting that the register only applies to the Social Enterprises that fulfill the specific criteria provided in guidelines created for purposes of distribution of European Union social policy funds. Even though the register gives an overview of Social Enterprises it does not apply to the entire social economy sector in a broad sense. Apart from the definition of a Social Enterprise in the guidelines that have been mentioned, no other definition of Social Enterprise exists under Polish law.

In practice, the two most popular organizational forms that are specifically designed for Social Enterprises are an association (stowarzyszenie) and foundation (fundacja). Their registration is not significantly costly or time-consuming.

• An association is the most accessible form for a Social Enterprise. It is a voluntary, self-governing, and permanent entity for non-profit purposes that can, but does not have to have legal capacity. It can only be formed by a group of natural persons who, usually, have common goals or interests; that is the only limitation in law. A legal person can only be a supporting member of an association. An association can represent the collective interests of members in matters to do with public authorities, when pursuing statutory objectives, and has the right to be heard on public issues. An association can independently determine objectives, programs, structures and adopt internal rules that apply to its activity.
• A foundation is a form of a non-governmental organization that has legal capacity. It can be established by a natural person or a legal person that allocates assets for a purpose of public use. The goal and the assets that are allocated are the most important factors in establishing a foundation. The goal of a foundation is a socially or economically useful purpose that is consistent with fundamental interests of the Republic of Poland, specifically, health care, development of the economy and science, education, culture and arts, social care and assistance, environmental protection, and protection of historic monuments. Therefore a foundation can implement any charitable, social, or economically useful goal if it is of a public nature.

Both an association and a foundation can conduct business activities under certain conditions. In particular, an association may conduct business activities as long as the serves its statutory objectives and may not be distributed among its members. A foundation can undertake business to the extent necessary to achieve its objectives. If a foundation is to do business, the value of the assets allocated to the business is not to be less than one thousand zlotys. Such business is to be within statutory activity and cannot be the exclusive goal of the foundation.

Additionally, both an association and a foundation can request a court to be granted the status of a Public Benefit Organization (PBO). Another condition to become a PBO is registration in the National Court Register that it meets the conditions in the Act on Public Benefit Activity and Volunteerism which are mainly on the scope of activities. Becoming a PBO entitles a Social Enterprise to receive a donation from taxpayers of 1% of income, if the taxpayer chooses the PBO. 

[1] http://www.bazaps.ekonomiaspoleczna.gov.pl/

As provided in point I.2.b. above, Social Enterprises may in general be formed as non-profit organizations, the most common type thereof being foundations and associations.

• Foundations can in general be formed for any socially or economically useful purpose compliant with the basic interests of the Republic of Poland, in particular such as healthcare, development of the economy and science, culture, environmental protection or others. The purposes of the foundation should be specified in its statutes.
• Associations can be formed as a durable consortium of persons for non-profit purposes. The purpose for creation of the association should be specified in its statutes.

Both foundations and associations can conduct business activity for the purpose of realization of their statutory purposes.

There is no “hybrid” Nonprofit form that would require less reporting, nor differentiation between Nonprofits being Social Enterprises and Nonprofits not being Social Enterprises under Polish law.

As to the prevalence in the use of Nonprofits for Social Enterprises, in accordance with the report published by the Polish Agency for Enterprise Development in 2020, out of 29,535 Social Enterprises existing in Poland, approx. 27,600 of them were Nonprofits[1].

A Social Enterprise is not singled out as a legal form for tax purposes. Nonprofits are not given any special tax treatment or fall under additional tax restrictions by virtue of whether or not they conduct social activities that are customary for a Social Enterprise.

[1] https://www.parp.gov.pl/storage/publications/pdf/spoeczna-przedsibiorczo_12-11-2020_popr_z-okadk.pdf

Yes. There are various types of cooperatives allowed in Poland (in particular, work cooperatives, social cooperatives, cooperatives of blind and disabled persons, work cooperatives and European cooperatives).

As Social Enterprises, in addition to the regular funding that may be applied for by Enterprises, additional funding is available for such cooperatives (by 31 October 2018, 700 social and solidarity economy entities received funds for a total amount of PLN 90 million (approximately EUR 21.5 million), social cooperatives constituting 33% of beneficiaries[1])

In addition, social cooperatives are exempted from the obligation of paying social welfare contributions within the first 12 months of their incorporation. If a social enterprise acts as a social integration center, it is allowed to benefit from a partial reimbursement of its’ employees’ salaries[2].

As for restrictions, certain types of cooperatives (e.g. social cooperatives) can be incorporated only by persons a given percentage of whom (e.g. 50% of persons incorporating a social cooperative) possess certain features (e.g. unemployed persons, disabled persons) and must conduct their activity for a specific purpose (reintegration of such persons).

[1] A. Ciepielewska-Kowalik (2020), Social enterprises and their ecosystems in Europe, Country Report Poland, Luxembourg: Publications Office of the European Union, 2020.

[2] Ibidem.

Yes. If a Social Enterprise operating as Nonproft (either an association or foundation) is a PBO, it has to prepare annual substantive reports on its activity. A PBO having revenue not exceeding PLN 100,000 in a financial year can prepare simplified reports. A foundation not being a PBOs must submit to the relevant minister annual reports on activity. Although an association not being a PBO is not subject to reporting requirements, reports on its activity may be prepared for internal purposes. Whereas a Social Enterprise operating as a for-profit Enterprise is not subject to any unique reporting requirements.

Most of the case law in this area concerns quite straightforward and dated legal issues. Therefore many more complex questions addressing the current trends relevant to the subject matter remain open.

Enterprises must comply with various legal requirements some of which are interrelated with ESG considerations e.g. environmental law, consumer law.

The only requirements for an association are that it must remain voluntary, self-governing and permanent, and for the purpose of non-profit, and that it determines its objectives and action programs independently. Whereas a foundation must be established for the purposes consistent with the fundamental interests of the Republic of Poland which are socially or economically useful, in particular: health protection, development of the economy and science, education, culture and art, social care and assistance environmental protection and protection of historic monuments. Lastly, a Social Enterprise operating as a for-profit Enterprise is not subject to any unique ESG requirements.

No.

No major classes of investors are required to verify ESG issues when making investment decisions.

Nevertheless, as a result of implementing Directive (EU) 2017/828 of the European Parliament and of the Council of 17 May 2017 amending Directive 2007/36/EC as regards the encouragement of long-term shareholder engagement, investment firms conducting particular activities while investing in shares of public companies shall prepare investment policies describing how a given shareholder involvement impacts an investment firm’s investment strategy.

The policy should address, among others, the way of company verification from the perspective of social and environmental influence and governance.

The investment firm is required to apply the ‘comply or explain’ rule in the above regard. Therefore, if the entity does not have an investment policy as specified above, it shall explain the reasons thereto.

Social Enterprises mainly benefit from grants provided by public institutions and donations or capital (cash or in-kind) contributions made by individuals and enterprises, depending on a category of the Social Enterprise.

For-profit impact investments have been growing in Poland, but their prevalence is relatively insignificant.

Until 2023, the "National Program for the Development of the Social Economy until 2023. Economics of Social Solidarity (KPRES)”, adopted by the Council of Ministers, will be effective. Although it does not constitute the basis for granting financing, it sets out, among others, the guidelines for allocating the funds.

• Social economy entities, in particular, social enterprises, can use subsidies and repayable financial instruments – loans, guarantees and re-guarantees.
• Subsidies are granted by the Social Economy Support Centres, which acquire funds from the European Social Fund (under Regional Operational Programs). They are to be continued in the new financial perspective of the European Union for 2021-2027. These funds are intended particularly to create new jobs in existing or newly created social enterprises.
• Social economy entities may also use - just like everyone starting a business - subsidies from the Labour Fund paid out by Country Labour Offices.
• It is also possible to obtain a subsidy from the State Fund for Rehabilitation of Disabled Persons for the employment of disabled people.
• Loans are granted under the National Social Entrepreneurship Fund (KFPS).
• Loans are granted by selected Financial Intermediaries, e.g. Towarzystwo Inwestycji SpoÅ‚eczno-Ekonomicznych TISE S.A. and the WaÅ‚brzych Region Fund.
• The support provided by the Social Economy Support Centres includes - apart from subsidies - non-financial support, i.e. local animation, assistance in creating social enterprises, consulting and training support.

In 2020, a special loan program for social economy entities was launched in connection with the socio-economic situation in the country caused by the coronavirus epidemic. Social enterprises affected by the difficult situation related to the COVID-19 pandemic may also benefit from special solutions including changes in the terms and conditions of loan repayments from, for example, the Knowledge Education Development Operational Program.

For-profit impact investments have been growing in Poland, but their prevalence is relatively insignificant.

Parliament and of the Council of 22 October 2014 amending Directive 2013/34/EU as regards disclosure of non-financial and diversity information by certain large undertakings and groups, some companies, after meeting certain financial and employment thresholds, additionally include, as a separate part of the Director’s Report on Activity, a statement on non-financial information including, among others, a description of policies applied by the entity in relation to social and labor issues, natural environment, respect for human rights, and anti-corruption, as well as a description of the results of applying these policies.

• The statement shall present the information to an extent permitting the valuation of development, results and state of the entity as well as the impact of an entity’s activity on subject matters.
• The company is required to apply the ‘comply or explain’ rule in the above regard. Therefore, if the entity does not have a policy for one or more of the issues identified above, it shall explain the reasons thereto.

Additionally, in March 2021 the Sustainable Finance Disclosure Regulation (SFDR) will enter into force, which aims to achieve greater transparency on how sustainability risks that arise within the activities of financial market participants and financial advisers are analyzed.

• The Regulation imposes new obligations on financial institutions, including banks, to be transparent and disclose their approach to managing sustainability risks in their investment activities and investment decisions.
• Currently, work is still underway on a parliamentary act implementing the regulation and amending existing acts.

Social impact bonds have been developing in Poland for several years. However, they are not yet an introduced investment strategy and their prevalence is still relatively low.

There are no regulations restricting foreign investments unique to Social Enterprises.

Yes, crowdfunding is legal and, depending on its form, may constitute regulated or unregulated activity. Crowdfunding is used, in practice, to fund various charity initiatives in Poland and, to a limited extend, business projects organized by small and medium enterprises.

Polish securities laws provide a softer regulatory regime for public offerings of securities of total value below a threshold of EUR 1,000,000 per annum. This facility is available to all entrepreneurs and is not specifically addressed to Social Enterprises. 

It is also worth noting that a new EU Regulation 2020/1503 of 7 October 2020 on European crowdfunding service providers for business will establish a new regulatory framework for investment crowdfunding. The Regulation will come into effect in November 2021 and will introduce new license requirements for investment crowdfunding services providers to businesses.

As a legal form, a Social Enterprise is not singled out for tax purposes and there are no tax exemptions or tax benefits that are uniquely available to a Social Enterprise, as such.

• Organizations that qualify as a Public Benefit Organization (“PBO”) are exempted from corporate income tax with regard to income assigned to conducting certain public benefit activities, regardless of the source of the income (e.g. donations).
• Organizations that do not qualify for PBO status, including Nonprofits (e.g. foundations and associations) and Enterprises, are exempted from corporate income tax with regard to income, including income from business activity assigned to statutory objectives within particular categories, such as science, education, culture, sports, environmental protection, support for technical infrastructure in rural areas, health care, social care, and charity, regardless of the source of income (e.g. donations, contributions, business activity).
• A Social Cooperative is exempted from corporate income tax with regard to income spent on the social and professional reintegration of its members, unless the expenditure has already been deducted as tax-deductible costs.
• Donors are entitled to deduct donations made to public benefit objectives, or for vocational training purposes from their income, up to 10% of their income.

No.

No. Nonprofits may benefit from an exemption from, or a preferential rate of real estate tax. 

Donations for public benefit activities conducted by organizations from the European Union and European Economic Area, which are equivalent to Public Benefit Organizations, are exempted from income tax, up to 10% of income.

Poland has an official strategy for developing social entrepreneurship. The official strategic documents on this include “Strategy for Responsible Development” (Strategia na rzecz odpowiedzialnego rozwoju)[1] and the “National Development Programme for a Social Economy” (Krajowy Program Rozwoju Ekonomii SpoÅ‚ecznej)[2]. Both documents promote a social economy and announce the introduction of different instruments supporting social enterprises.

Currently, no Regulatory Sandboxes exist specifically for Social Enterprises, however some instruments of a similar nature are available for Social Enterprises (please refer to OWES described in point 2 below). Social Enterprises may use existing sandboxes that have been established for specific sectors of the economy (e.g. FinTech Sandbox established by the Financial Supervisory Commission).

[1] https://www.gov.pl/documents/33377/436740/SOR.pdf

[2] https://www.ekonomiaspoleczna.gov.pl/download/files/EKONOMIA_SPOLECZNA/Aktualizacja_KPRES.pdf

Some government programmes are available for Social Enterprises and small businesses, particularly in the new tech sector. These programmes consist of financial support (through various instruments), mentoring and other services (e.g. support with promotion of products and services on foreign markets). Below are examples of such programmes addressed specifically to Social Enterprises:

• Regional Centres for Supporting the Social Economy (OÅ›rodek Wsparcia Ekonomii Spolecznej – OWES) – these are regional centres that provide various types of support to Social Enterprises (e.g. workshops, advice, training); 
• National Social Entrepreneurship Fund (Krajowy Fundusz PrzedsiÄ™biorczoÅ›ci SpoÅ‚ecznej) – a PLN 143 million fund providing financial support to Social Enterprises (in the form of preferential loans) and is distributed by Bank Gospodarstwa Krajowego (national development bank);

Most of these programmes are financed from the European Union’s social policy funds.

Yes. Please see I.7 above.

Yes, the Ministry of Family and Social Policy oversees the Social Economy in Poland. It maintains a register of Social Economy Entities and coordinates and monitors policies in this area.

No.

From the moment of the incorporation of the given entity (i.e. signing a relevant incorporation deed) and collection of documents to be filed with the commercial register (the scope of the documents depends on the formed entity), the registration proceedings should in general take about 4-6 weeks.

The fees for registration of a new entity amount to PLN 600 (approx. USD 160), not counting the costs of establishing the entity (this may vary depending on the form, share capital amount etc.) and taxes. Some of the organizational forms are exempted from the duty to bear registration fees (e.g. foundations or associations not conducting business activity, social cooperatives).

There are no governmental or third-party certifications or accreditations providing a beneficial tax or funding status.

Some certifications may improve the perception of a Social Enterprise, providing potential clients and investors with additional information regarding the Social Enterprise’s social impact.

We believe that, in principle, startups and other entrepreneurial Enterprises can easily form and flourish in Poland. Currently, they have access to significant public funding (supported largely by EU funds) and support, as well as access to a growing number of public and private accelerator programs.

Social Enterprises can form relatively easily regardless if they want to organize as Nonprofit or a for-profit Enterprise.

In general, with regard to for-profit Enterprise forms, the partners or shareholders undertake to pursue a common goal by making contributions and, where so provided in the articles or the statutes of the company, by other joint action. Therefore they are not prevented from considering other interests, such as the environment or the community. Whereas with regard to Nonprofit Enterprise forms such as associations and foundations, there is also a lot of freedom to pursue the objectives of choice, since these forms are not overly regulated.

No.

Providing tax benefits to Social Enterprises utilizing for-profit Enterprise forms.  

Implementing a uniform set of standards for ESG policies and reporting thereof would make it easier for investors, consumers and other parties to compare and evaluate which enterprises are truly worthy. Such accountability could drive the Enterprises to improve their performance in this regard.

N/A