Finding a company quickly for purposes of a transaction
During a transaction it may suddenly appear that a special-purpose company is needed immediately. A solution could be to buy a shelf company with all the necessary registrations already in place.
When beginning operations in Poland, is it possible to avoid the delays caused by the time-consuming registration of a company in the National Court Register, obtaining a tax identification number, registration at the statistical office, establishing a bank account and so forth?
This question may arise when a Polish company must be established quickly, for example to serve as a party to an M&A transaction. Buying a shelf company may be the solution.
A shelf company is a company that was established solely for the purpose of subsequent resale to a party that wishes to buy a ready-made company and skip the process of establishment and registration.
While certain acts are required in order for an investor to obtain control of a shelf company, the entire documentation is prepared by a service company that handles the formation and sale of shelf companies.
The cost of a shelf company may vary from seller to seller, but typically the price will reflect the share capital plus an additional amount reflecting the seller’s fee.
What steps must be borne in mind when buying a shelf company?
The purchase of the company itself requires a share sale agreement between the seller and the buyer, in writing, with notarised signatures. The agreement may be signed pursuant to a power of attorney (also made in writing, with notarised signatures).
A new management board is appointed (typically just prior to signing of the share sale agreement), and a new list of shareholders is drawn up.
Sometimes, service firms that sell shelf companies continue to cooperate with the buyer afterwards by providing an office address. Otherwise, new office space must be found and the company must obtain a document (such as a lease or deed) confirming the right to use the space which will serve as its registered address. If the seller of the shelf company also offers a sublease of office space as an added service, it may be convenient because there is no need to rent separate space, which is typically unnecessary at the initial phase.
The new management board acts for the company immediately upon appointment. Thereafter, the change in board membership must be entered in the National Court Register, along with any change in the registered office or address.
Changing the existing name of the shelf company requires a meeting of shareholders to amend the company’s articles of association. Other desired amendments to the articles of association may be made at the same time, for example to reflect the desired rules for organisation and operation of the company (e.g. by appointing a supervisory board, or revising the allocation of authority among the corporate bodies, the rules for representation of the company, the subject of the company’s business and so on). Because the founding deed of a shelf company is typically worded very simply, with the provisions limited to the statutory minimum, the buyer should review the articles of association to identify adjustments that should be made to reflect the buyer’s business plans for the company and related legal considerations.
In short, while purchasing a shelf company may cost more than establishing a new company from scratch, but it can be the perfect solution if the parties cannot afford to wait for the full registration process. The shelf company should be fully registered and ready to do business, and the changes that need to be made to adapt the shelf company to its ultimate use may be carried out without interfering with the company’s immediate operations.
Łukasz Koziński, Corporate Law, Restructuring, and Business-to-Business Contracts practices, Wardyński & Partners