General partnership (spółka jawna)
General Partnership is governed by the Polish Codeof Commercial Companies and Partnerships in Articles from 22 to 85 and from 8 to 10 (1) (Kodeks Spółek Handlowych)
General partnership is an association of two or more persons which was established with the goal of earning a profit. The owner of the partnership may be an individual as well as a legal entity. General partnership runs business and therefore may not be founded just for one transaction. It is required for the partnership’s formation an entry in the National Court Register (Krajowy Rejestr Sądowy). General partnership is a legal person and business entity. It may acquire rights and incur liabilities, acquire title to real estate and sue or be sued.
Partnership agreement and registration
General partnership is created by an agreement. It is required written form under a clause of nullity for the partnership agreement. However, notarial deed is required if the contribution to the partnership is the real estate. General partnership may not be formed under a verbal agreement. An entry in the court register, National Court Register (Krajowy Rejestr Sądowy), is mandatory for the partnership’s formation. The general partnership is formed at the moment of an entry in the Court Register. Thus, two elements are essential for the partnership’s formation: conclusion of an agreement and registration. The cautious drafting a partnership agreement is necessary. Without the definite provisions at the contract some movements after partnership’s formation regarding to, inter alia, transfer of all duties and obligations of a partner, the manner for the distribution of profits and losses are impossible. The subsequent amendments to the partnership agreement are possible, but the consent of all partners are required unless the agreement provides otherwise.
Contribution of each partner to the partnership
Value and object of the owners’ contributions shall be defined in the partnership agreement. Contributions may be, inter alia, cash, performance of work, service, real estate, moveable property, intangible assets, obligations right.
Profits & losses distribution
Partners may govern the method of dividing profits and losses in the partnership agreement. Such solution is recommended. They may relate the manner of dividing profits and losses to the value of the contribution to the partnership. The partner may be released from the share of losses. If no agreement is made between the partners, profits and losses are to be shared equally regardless of the type and value of the contribution. The partner is entitled to demand the distribution of profits and payment of a dividend at the end of the year.
Liability of partners
The owners bear personal unlimited liability for the obligations of the partnership jointly and severally with the partnership. Each partner in a partnership is jointly liable for the partnership’s obligations and debts. This principle may not be changed in the relationship between the partnership and outside. The owners may change the principle of liability only in the internal relationship and, for example, limit some owners’ liability, but such a modification causes only internal implications between owners. Leaving the partnership does not realise the owner from liability for the partnership’s obligations and debts which have been incurred before owner’s leaving. Partnership liquidation does not preclude the owners’ liability, and creditors may claim for partnership’s debts against owners. The person who joined a partnership shall be liable for the partnership’s obligations and debts incurred prior to the joining.