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Civil law partnership - amendments to the contract and dissolution of the partnership (part 5)

Change of the content of the civil law partnership agreement

The civil law partnership agreement may be amended by means of annexes and resolutions, which, pursuant to Art. 860 § 2 of the Civil Code, it is required to be in writing. However, if the civil law partnership was concluded in the form of a notarial deed contract, its amendment requires the same form. In the case of other contractual reservations made by the partners, e.g. providing that a written form with signatures certified by a notary is required to amend the content of the articles of association, a restricted form must be kept for the effectiveness of the amendment to the contract. Moreover, the content of the document amending the civil law partnership agreement should clearly indicate the date of the amendments.

Attention!
The introduction of changes to the civil law partnership agreement requires the concerted action of all partners

A civil law partnership agreement may be amended by:

preparation of an annex containing new provisions of the contract,
drawing up a new contract with the necessary indication of the purpose of its preparation - replacing the previous one; the lack of such a reservation will result in the formation of a new civil partnership,
adopting a resolution by the shareholders specifying the modified provisions.

If the amendment to the civil law partnership agreement concerns the proportion of the share in profits and losses, then it is subject to notification to the Tax Office.

This is due to the influence of the size of the proportion of the share in profits and losses on the settlements in the income tax. As a rule, the income of a partner in a civil law partnership is determined in proportion to his right to participate in the company's profit. The same are tax deductible costs and losses deducted.

The application to the Tax Office may be made by sending an excerpt - depending on the form used - an annex to the articles of association or a resolution along with a cover letter containing the company's tax identification number (NIP).

The amendment to the civil law partnership agreement may also result from the fact of changing the subject of activity. In addition to changing the articles of association, such a state of affairs also requires actions to be taken against offices. If the amendment to the articles of association in the scope of its activities results in a significant change in the type of the company's activity, it should be reported to both the tax office and the statistical office.

It may also be necessary to notify the change to CEIDG. Such a situation will occur when the subject of activity of partners who are natural persons disclosed in the register does not include the modified subject.

Civil law partnership and change of personal composition

As a rule, a civil law partnership has an unchanged composition. However, the legislator allows for the possibility of changing the composition of partners, which may occur as a result of:

a partner's withdrawal from the company,
a partner joining the company,
death or termination of legal existence of a partner.

Important!
Changing the personal composition of a civil law partnership also requires changing its contract.
A partner's right to withdraw from a civil law partnership is exercised by submitting to the partners a declaration of withdrawal from the partnership within 3 months before the end of the financial year, when the partnership agreement was concluded for an indefinite period. Moreover, if there are important reasons, the shareholder may terminate the contract without the deadline, however, it is necessary to prepare a justification. The conclusion of a partnership agreement for a specified period does not deprive the partners of this right. A shareholder cannot be deprived of this right.

Particular attention should be paid to the right of a personal creditor to terminate a partner's participation in the company. The creditor is entitled to this right if he has obtained attachment of the rights of a partner in the event of withdrawal from the company or its dissolution. In addition, the premise for the termination of a partner's participation in the company by his personal creditor is the fact that in the last 6 months an ineffective enforcement against the partner's movable property has been conducted. This is called compulsory termination of the company.

A change in the personal composition of a civil law partnership may also occur through the accession of a new partner to the partnership, which requires the consent of the remaining partners and amendments to the partnership agreement.

The annex concerning the accession of a new partner should contain at least the following elements:

indication of a new partner,
identification of his contributions and their value,
define the participation of the new partner in managing the company's affairs and in representing it.

A change in the articles of association in connection with the accession of a partner may be replaced by a completely new articles of association, the choice of solution depends on the partners or the provisions of the articles of association, if it somehow relates to the issue of extending the composition of the company. However, it should be remembered that the newly drawn up contract must clearly indicate that it was drawn up to replace the existing contract, as the lack of such a provision will result in the creation of a new company.

For evidence purposes, the articles of association should be amended in writing and, as a rule, an annex to the contract is a sufficient form. However, this principle has some limitations:

when the articles of association were concluded in a special form,
when the articles of association were concluded in writing and during its term, the partners acquired components to the joint property of the company, the transfer of which requires a special form (e.g. perpetual usufruct right, real estate ownership right).

The last way in which a change in the personal composition of partners may occur is the death of a partner or the cessation of legal existence, if the partner is an organizational unit without legal personality.

A civil law partnership agreement may provide for the heirs to replace the deceased partner with an indication of which of them will exercise the rights in the partnership. Lack of such indication will result in the shareholders being able to take actions relating to the running of the partnership's affairs. If the articles of association do not provide for inheritance, the solutions may be as follows:

there is a settlement with a partner whose membership terminated as a result of death, and the articles of association, if it was not a two-person partnership, bind the remaining partners,
the agreement may provide that as a result of the death or cessation of legal existence of any of the partners, it causes the dissolution of the partnership.

Attention should be paid to the fact of settling accounts with heirs in the event of loss of membership by a partner as a result of death or termination of legal personality. The rules of this settlement may be regulated by the articles of association, and if the agreement is silent in this matter, the code rules apply. In accordance with the code rules, the deceased partner is paid primarily a part of the company's assets, corresponding to the share of the partner in the profits, after deduction of contributions from other partners. Payments in kind are subject to those things which the shareholder has brought only for use by the company and pays in money the value of his contribution specified in the partnership agreement or the value that the shareholder had at the time of making the payment. However, the value of the contribution consisting in the provision of services by the partner or the use by the company of things belonging to the partner is not refundable.

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Civil law partnership - how to dissolve?

Pursuant to the provisions of the Civil Code, a civil law partnership may be dissolved as a result of various events:

each of the partners may request the dissolution of the civil law partnership by the court, if there are important reasons for doing so, which may apply to both the company itself and the partner, and the event causing the dissolution of the partnership will then be a final court decision,
partners may adopt a unanimous resolution to dissolve the company, the event causing the dissolution of the company is the mere adoption of a unanimous resolution by the partners, and at the same time the partnership ceases to exist (in the resolution, the partners may indicate a different dissolution date),
the shareholders' agreement may indicate events causing the dissolution of the company, for example:

fulfillment of the economic purpose for which the company was established,
arrival of the deadline, if the company has been concluded for a specified period of time.

the company will cease by operation of law if, as a result of certain events, a situation arises in which only one partner will remain in the company:

death of a partner,
declaration of bankruptcy of a partner
termination of the articles of association by other partners or a partner if the partnership consists of two members.

Regarding the occurrence of the events specified in the contract as the events causing the termination of the articles of association, it should be noted that even if certain events occur, but the will of the partners will be the continued existence of the company, they may adopt an appropriate resolution, which is deemed to amend the contract and continue to operate, recognizing that the company was concluded for an indefinite period.

The most important consequence of the dissolution of the civil law partnership seems to be the transformation of the joint property of partners into a fractional joint property. This means that the company's assets become the subject of joint ownership in fractional parts and the fractional shares of individual partners are distinguished in it. The partners are primarily responsible for paying their liabilities, so the creditors should be satisfied by paying off the company's debts. The remaining part of the joint property is divided and contributions are returned on the same terms as for the partner's withdrawal from the company, that is:

the value of each partner's contribution is paid in cash in the amount specified in the articles of association or according to its value at the time of payment,
the things to be used brought into the company are returned in kind,
value of the contribution consisting in the provision of services by a partner or the use by the company of things belonging to the partner.

The remaining part of the joint property is divided between the partners in the proportion in which they participated in the company's profits. It should be noted that the indicated rules for dealing with property in the event of dissolution of a civil partnership apply when the partners have not regulated this issue differently in the partnership agreement.

An important obligation of partners related to the dissolution of a civil law partnership is to prepare a physical inventory for VAT purposes on the date of dissolution or cessation of taxable activities. Therefore, it is obligatory to attach to the tax return information about the inventory, value and amount of the tax due. The physical inventory includes all assets - goods and goods manufactured by the company, for which there was a right to reduce output tax by input tax, and which were not sold by the company before its dissolution.

The partners may decide to liquidate the joint property. This is done by selling the assets to people outside the company. On the other hand, such a sale to one of the partners is admissible, but it may happen that the partner would be both the seller and the buyer. Therefore, an ownership transfer agreement is a better solution.

Important!
The dissolution of a civil law partnership must be reported to CEIDG within 7 days from the date of its dissolution by each of the partners. Within this period, an application for deletion or change of data should be submitted if the partner continues to conduct business.

Deregistering the company itself requires additional steps from the shareholders. It is therefore necessary to submit an application to the statistical office (RG-2) in order to be removed from the REGON register within 14 days from the date of termination of the existence of the civil partnership.