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$Unique_ID{COW02958}
$Pretitle{362}
$Title{Poland
Investor's Guide How to Do Business in Poland}
$Subtitle{}
$Author{Zbigniew Piotrowski}
$Affiliation{Polish Embassy, Washington DC}
$Subject{foreign
company
companies
polish
parties
law
article
company's
poland
economic}
$Date{1990}
$Log{}
Country: Poland
Book: Poland's Economic Transformation
Author: Zbigniew Piotrowski
Affiliation: Polish Embassy, Washington DC
Date: 1990
Investor's Guide How to Do Business in Poland
An Invitation To Work Together
As of January, I am the new President of Foreign Investment Agency, which
has been in existence a little over a year.
I have taken on this post at a decisive moment for Polish society: as
from the beginning of 1990, the Polish government - the first non-Communist
government in Central Europe - is putting into effect an unprecedented
economic programme. For the first time since World War II there exists a basis
on which to act together in all spheres of economic, social, political and
cultural life. Our new programme has been given credence through democratic
transformations.
The government's economic programme has the fundamental task of opening
up to the world, particularly Europe. We are not trying to create an enclave
of foreign capital in Poland, but are opening up the Polish economy as a whole
to foreign investors. We welcome partners who are interested in permanent,
long-term co-operation, partners who see in Poland a chance for themselves,
their firm, and also the Polish public.
Poland is a land of people who are well-qualified - often very highly so.
Provided they have a good administration, they will give proof of their
ability.
A chance for foreign capital is also available in the extensive raw
material base, and likewise in the considerable and largely unexploited
industrial potential in the conditions of a healthy market economy.
For our part, we are interested in an influx of technology, modern
management techniques, access to foreign markets and also an increase in the
prosperity of the Polish public, as a result of co-operation with foreign
capital.
I would like to declare my readiness to serve you by helping to
establish contacts with Polish Partners.
Zbigniew Piotrowski, Ph.D.
President of Foreign Investment Agency
FOREIGN INVESTMENT LAWS
Foreign investors have been active in the Polish economy for the last 12
years. The laws governing legal conditions for their activity have been
modified several times during that period and every change widened the areas
open to the foreign companies. Since 1976 foreign entities may establish in
Poland businesses and enter into small industry companies. Since 1986
companies with foreign capital participation can enter almost any
business - with few exceptions - without any constraints on the size of the
company. On December 23, 1988 the Polish Parliament adopted a law on economic
activity with the participation of foreign parties, thus making another step
towards the opening of the Polish economy to investment cooperation. The law
liberalized considerably the conditions for foreigners as regards the taking
up and carrying out of economic activity in Poland. In December 1989, as a
result of essential political changes in the country, the whole economic
system underwent the process of a far-reaching transformation. Those changes
aim primarily at replacing the centralized system based on a model of
"state-ownership" economic management with a market-oriented economy (with
special emphasis placed on private entrepreneurship whose role so far has been
undermined).
Among the changes implemented in December 1989 the most significant one
was the introduction of a limited convertibility of the zloty, the elimination
of exemptions and tax preferences in the form of export subsidies, and the
setting of all economic subjects on an equal footing. Bearing in mind
especially the realisation of the last task, in December 1989, the Sejm
amended the December 23, 1989 law (in force since January 1, 1990) concerning
economic activity carried out with the participation of foreign parties.
WHO CAN UNDERTAKE ECONOMIC ACTIVITY IN POLAND?
In accordance with the Law (Article 3, Paragraph 2) economic activity may
be undertaken by foreign companies, banks, foundations and other organizations
with a legal status and domiciled abroad, as well as natural person domiciled
abroad and companies established by persons referred to above, which have no
legal personality.
The country of the investor's origin is unimportant. The Law establishes
the same principles for investors from the West and the East. Thus, according
to the Law a Polish citizen permanently domiciled abroad is also a foreign
investor.
WHAT ARE FORMS OF SUCH ACTIVITY?
A foreign investor, who decides to invest in Poland, has several modes of
operation to choose from.
Firstly, he can establish a limited liability company in which he will
hold 100 per cent of shares (Article 2, Paragraph 1 of the Law).
Secondly, he can establish a limited liability or joint stock company,
with the equity contributed by the founders jointly with other foreign and/or
Polish parties (Article 2, Paragraph 2 of the Law).
Thirdly, a foreign party can, together with other foreign and/or Polish
parties, establish a joint stock company, with equity raised through a public
subscription of shares (Article 8, Paragraph 2).
Fourthly, foreign parties can enter business in Poland through the
acquisition of shares or stock in the existing Polish limited liability or
joint stock companies. If these companies did not have foreign shareholders,
the purchase of shares or stock by foreign parties is conditional upon the
increase of equity of these companies (Article 41).
The Law does not place any restrictions on the choice of a Polish partner
with whom the company is established. Thus, foreign investors can enter into
partnerships with state enterprises, the Treasury, other companies (including
those with a private capital), research institutes, universities, foundations,
cooperatives, social organizations and with natural persons domiciled in
Poland (Article 3, Paragraph 1). Due to the privileged treatment of companies
with foreign participation guaranteed by the Law, the contribution of foreign
parties cannot be lower than 20 per cent of equity (Article 2, Paragraph 1).
On the other hand, the Law does not determine the maximum share of foreign
parties in the equity of companies established jointly with Polish partners.
This is only a logical consequence of the provision of the Law, enabling
foreign parties to establish wholly foreign-owned companies. Nevertheless, the
Law enables the Authority that issues a Permit to establish a Company to
condition its issue upon a foreign party's undertaking business activity
jointly with a Polish party and the acceptance of a set ration between the
shareholder's contributions to a company equity (Article 8, Paragraph 1).
LIMITED LIABILITY COMPANIES?
JOINT STOCK COMPANIES?
A foreign investor, who wishes to establish a Company in Poland, may do
so either in the form of a limited liability company or a joint stock company
under the provisions of the Commercial Code of 1934. The regulations adopted
in this Code are based on the classical models of both kinds of companies,
shaped in Continental Europe between the two World Wars.
Both kinds of companies have a legal personality. The liability of
partners is limited to the amount of their contribution to the company's
equity.
Limited liability companies can be established by one or more partners.
The founding act (contract) should have the form of a notarial deed. A
Company is managed by a Director (or directors) and the Shareholders Meeting.
A Board of Directors of a company may also be established. The Company's
equity, through the shares held by all partners, should be raised before the
Company's registrat