Civil law partnership - everything you need to know about it
Establishing a civil law partnership is not complicated. The most important thing is a well-thought-out selection of partners. An irresponsible partner can ruin the partnership and you can go bankrupt. Check what is worth knowing before you decide that a civil partnership is the most appropriate form of running a business.
Civil law partnership - establishment and registration
A civil law partnership may be established by at least two natural persons or legal persons (e.g. joint-stock companies, limited liability companies, general partnerships). The civil law partnership does not have legal personality.
The basis for establishing a civil law partnership is the conclusion of an agreement between the partners. The contract should be concluded in writing. To be considered valid, it should contain:
- the date of conclusion of the contract,
- information about shareholders,
- the economic goal that the company is to pursue,
- name, registered office of the company and the period for which it is concluded,
- shareholders' contributions,
- profit sharing,
- issues of managing the company's affairs and its representation,
- signatures of the parties to the civil law partnership agreement,
- other provisions.
It is also worth defining the rules of cooperation in detail.
In order for a civil law partnership to function fully, it should have its own bank account. It should be provided in the company's registration application (NIP-2).
If the partners are natural persons, each of them reports to the Central Register and Information on Economic Activity (CEIDG). Entry must be obtained prior to commencing business within the company. The CEIDG-1 application may be submitted to the commune office or via the Internet, as long as the entrepreneur has an electronic signature recognized by CEIDG. The application may also be sent by registered mail, then the signature must be confirmed by a notary public.
Shareholders must also report to the Central Statistical Office (GUS) to obtain a REGON number. The RG-1 application is submitted to the competent statistical office for the company's seat.
The next step is to submit the declaration and pay the tax on civil law transactions at the tax office (PCC-3 / PCC-3A). In the Tax Office, entrepreneurs will also obtain NIP (tax identification number) of a civil partnership after an identification application.
A civil law partnership is not subject to registration in the National Court Register.
Liability of partners in a civil partnership
The partners are responsible for the activities of the civil law partnership. They are jointly and severally liable for any debts.
Art. 864 of the Civil Code
The partners are jointly and severally liable for the obligations of the company.
It is a mandatory provision. It cannot be modified by the agreement of the parties (contract). In practice, this means that it may happen that one of the partners incurs a number of liabilities, and the other is called upon to pay them. That is why it is worth choosing partners carefully. This is especially important in the light of Art. 865 and 866 of the Civil Code.
Art. 865 of the Civil Code
§ 1. Each partner is entitled and obliged to run the partnership's affairs.
§ 2. Each partner may, without a prior resolution of the partners, conduct matters that do not exceed the scope of ordinary activities of the partnership. If, however, before the end of such a case, even one of the remaining partners objects to its conduct, a resolution of the partners is needed.
§ 3. Each partner may, without a prior resolution of the partners, perform an emergency, the failure of which could expose the company to irreparable losses.
Art. 866 of the Civil Code
In the absence of a different agreement or resolution of the partners, each partner is authorized to represent the company within such limits as he is entitled to conduct its affairs.
Moreover, each of the partners is entitled to an equal share in the profits of the civil law partnership. The same applies to losses. In the provisions of the contract, you can specify exactly what the participation in the reaping of profits will look like.
Joint and several liability in a civil law partnership also applies to taxes. Each of the partners is liable with his property in the event of tax arrears resulting from the company's operations. Joint and several liability will not be satisfied if one of the partners would pay a proportional part of the debt. He cannot only pay for himself.
Assets contributed to a civil law partnership by partners become their joint property. However, it has a unique character - the co-owners cannot freely dispose of it.
A partner may not postulate the division of joint property during the partnership. Neither can he sell or donate the shares of other partners. It can, however, sell its share at any time.