Limited partnership

In essence, a limited partnership may be presented as a situation where one person has capital (a limited partner) and the other person has the know-how or a business concept, but has no capital and needs support to carry out the plan (a general partner). As a result, natural persons usually become limited partners and legal persons controlled by limited partners, e.g. limited liability companies, become general partners.

A general partner is an active investor which means that he manages and represents the company. However, this active participation in the management of the company is combined with unlimited liability for the partnership's obligations, with all assets of the general partner .

A limited partner's liability is restricted to the amount specified in the deed of partnership, called a limited liability amount – it is the ceiling of his liability. Most often the limited liability amount is equal to the limited partner's contribution. If the contribution was paid in full, the limited partner is released from liability. In such a case, when a partnership's assets are inadequate to satisfy claims, a limited partner's assets cannot be subject to seizure by a court executive officer.

A limited partnership, regardless of its income, is obliged to maintain comprehensive bookkeeping and that is why it has to prepare annual financial statements and submit them to the KRS .

Preferres scope of activity	Conducting business activity in any size
Purpose	The objective of a limited partnership must be to conduct business activity
Company	The business name of the company has to contain the surname of at least one or more general partners and the additional designation “spółka komandytowa” (limited partnership). Where the general partner is a legal person, the business name of the limited partner has to contain the full business name (also the full name of the legal form) of the legal person and the additional designation “spółka komandytowa”. This does not preclude the inclusion of the surname of the general partner who is a natural person, e.g. “Architecture limited liability company limited partnership”, or “Kowalski, Architecture limited liability company limited partnership”. Where the limited partner’s surname or business name is incorporated into the business name of the partnership, the extent of his liability changes and he bears the same liability as the general partner.
Appropriate register	The register of entrepreneurs of the National Court Register (KRS). A regional court adequate to the partnership’s registered office.
Minimum capital	No requirement of minimum capital
Founders/Partners	At least two founders from among natural persons, legal persons, organisational units without legal personality to whom the law grants thereof. A limited partnership may be formed by different entities, e.g. a natural person with a legal person.
Type of contract	In the form of a notarial deed otherwise it shall be null and void (amendments to the deed of partnership – also in the form of a notarial deed otherwise they shall be null and void)
Contributions	Contributions may be in cash or in kind – e.g. a transfer of the ownership title to things (understood as the transfer to an ownership by the company), an establishment of rights to use or to benefit from goods or rights, a performance of labour and services.
Partnership's assets	Assets raised by a partnership while operating, as well as contributions made by partners are assets of the partnership, not of the partners – differently than in a civil-law partnership. The partnership and partners are “separate” entities.
Partner's share in profits and losses	The share of profits between partners may be specified in the deed of partnership. If it is not, the share of all general partners is even regardless of the kind and value of the contribution. The share of every limited partner is proportional to his contribution. A partner cannot be excluded from a partnership’s profits. The deed of partnership may exempt a partner from a share in the losses.
Partnership's representation	General partners represent the partnership as legal representatives unless they were deprived of the right to represent the partnership under the deed of partnership or a final and unappealable court ruling. A limited partner may represent the partnership only in the capacity of an attorney
Managing partnership's affairs	Every general partner has the right and duty to manage the partnership’s affairs, but it may be entrusted to one or to some partners (excluding others). Entrusting the management of a partnership’s affairs to third parties, with the partners excluded, is prohibited. Limited partners do not have the right or duty to manage the partnership’s affairs unless the deed of partnership provides otherwise. A partner is not paid for managing the affairs of a partnership.
Taxation	A partnership is not an income tax payer. Income tax payers are particular partners: PIT for partners who are natural persons and CIT for partners who are legal persons. A partnership is a value added tax (VAT) payer and an excise tax payer.
ZUS premius	Partners of a limited partnership pay social and health care premiums on the same grounds as persons conducting business activity. A partnership shall be a premium payer only if it engages employees or contractors.
Partnership's liability	The partnership is liable for its debts or obligations with all its assets, unlimitedly, jointly and severally with partners.
Partner's liability	The scope of a partner’s liability: a general partner - with all his assets, a limited partner: up to the limited liability amount, but he is exempt from liability up to the value of his contribution to the partnership Where a limited partner’s surname or business name is included in the business name of a limited partnership, the limited partner bears the same liability towards third parties as a general partner.

Actions necessary to establish a limited partnership

1. Execution of a deed of partnership in the form of a notarial deed .

Note: While executing a deed of partnership, partners authorised to represent the partnership under the deed of partnership may put notarised signature samples which will have to be attached to the partnership’s application in the registry court

Notary fees:

A notary’s remuneration, the so-called notarial fee, depends on the value of the contributions .
The tax on civil-law transactions, which is collected by the notary and thereafter paid by him to an adequate Inland Revenue Office – 0.5% of the value of the contributions .
Preparation of official copies (at least three copies). The cost of making official copies amounts to 6 PLN (plus VAT) for every commenced page of the deed. Some notaries charge extra 30 PLN (plus VAT) for each copy when the deed of partnership is longer than five pages.
Notarising signature samples of partners authorised to represent the partnership – 20 PLN (plus VAT) per signature. The alternative is to set a signature in the presence of a clerk of a registry court, which is free of charge.

2. Limited partnership registration in the KRS

The main application form is the KRS-W1. It has to be appended with KRS-WC, KRS-WK, KRS-WM and potential extra forms depending on the actual facts of the case.
The application has to be submitted together with paper attachments such as the deed of partnership (an official copy of the notarial deed), a list of partners and their addresses, and possibly their addresses for service; notarised (or set in the presence of a judge or an authorised court clerk) signature samples provided by partners authorised to represent the partnership, and the proof of payment – of 500 PLN as the court’s fee and 100 PLN for an announcement in Court and Business Monitor (Monitor Sądowy i Gospodarczy).
At the moment, a partnership does not have to fill in extra forms to obtain NIP and REGON numbers. Those numbers are given automatically based on basic data from the KRS entry. Only after having been entered into the KRS, a partnership has to complete the data by submitting a proper application to the Inland Revenue Office.

3. Submitting supplementary data to the Inland Revenue Office

Supplementary data are data essential for the Inland Revenue Office, the Central Statistical Office (GUS), and ZUS. Such data are undisclosed in the KRS or the entrepreneur does not have them at the moment of submitting an application to this register. Supplementary data are provided on the NIP-8 form and submitted to an adequate Inland Revenue Office within 7 days of the KRS entry date. The Inland Revenue Office passes the supplementary data on to ZUS and GUS on the partnership’s behalf.

4. ZUS registration

ZUS will open a premium payer’s account for the partnership which will be used to calculate particular insurance premiums of all employees subject to insurance. ZUS will also prepare insurance declarations (ZUS ZPA, ZUS ZAA, ZUS ZBA) on condition that basic data were duly and precisely filled in on the KRS application form and the NIP-8 form was submitted to the Inland Revenue Office within 7 days of the KRS entry date. After a premium payer’s account is open, all engaged persons and their family members have to be reported for insurance within 7 days of the inception of an insurance obligation.
Partners in a limited partnership pay the social and health premium themselves. Each partner has to submit an insurance application: on the ZUS ZUA form if a partner is subject to social and health insurance, or on the ZUS ZZA form if a partner is subject only to health insurance. Reporting oneself for insurance has to be done within 7 days of the inception of an insurance obligation. Sickness insurance is voluntary for an entrepreneur. ZUS will cover him with this insurance only if he applies for it. The application may be submitted at any time during business activity.