Dissolution and liquidation of companies and partnerships entered in the National Court Register (KRS)

What does it mean to dissolve a company or a partnership?

A company or a partnership is dissolved once it is removed from the register of businesses kept by the National Court Register (KRS). Removing a company or a partnership from the register is made ex office or at the request of an authorised entity, such as the company liquidator. Only once the company/partnership is removed from this register, the company/partnership is fully dissolved.

Dissolution of a company/partnership ends its legal existence and in general means that:

• the organisation of persons formed for the purpose of the company/partnership ceases to exist
• their shared aim of operating a business and generating income is no longer pursued

Companies or partnerships that are dissolved by being removed from KRS include:

• partnerships: general partnership (spółka jawna), professional partnership (spółka partnerska), limited partnership (spółka komandytowa), partnership limited by shares (spółka komandytowo-akcyjna)
• companies: limited liability company (spółka z ograniczoną odpowiedzialnością), joint-stock company (spółka akcyjna)

Please note! Although partnerships limited by shares are categorised as partnerships, they combine characteristics typical of partnerships (limited partnerships in particular) and joint-stock companies.

Ways to dissolve a company or a partnership

There are various ways to dissolve a company/partnership. The choice of one of them depends, among other things, on the reasons behind the decision to dissolve a company/partnership.

The decision to remove a company/partnership from KRS may be the result of:

• the end of bankruptcy proceedings – the application to remove the company/partnership from KRS is in this case submitted by an insolvency administrator
• end of the liquidation procedure – the application to remove the company/partnership from KRS is in this case submitted by its liquidators
• dissolution of a partnership without the liquidation procedure – in this event the application is submitted by the partners
• a merger, division or transformation – in this case a registry court ex officio removes the company/partnership that went through a merger, division or transformation from KRS based on the application to enter the acquiring/spin-off company/partnership in the register
• dissolution of a company/partnership ex officio by the registry court, for instance as a result of its failure to submit financial statements to the Repository of Financial Documents, despite the notices from the court

general partnership, professional partnership, limited partnership	limited liability companies, joint-stock companies, partnerships limited by shares
bankruptcy	bankruptcy
with or without the liquidation procedure	compulsory liquidation procedure
transformation	transformation

However, regardless of the reasons behind the dissolution, and before the actual removal of the company/partnership from the register, it is necessary to complete certain actions to close the business operations, settle obligations and sell the assets.

What are the possible reasons for dissolution of a company or a partnership?

Some reasons for dissolution are the same for both companies and partnerships. These include, for instance:

• reasons specified in the articles of association or the statute:

  • lapse of the period for which the company/partnership has been set up
  • achieving the purpose of the company/partnership specified in the articles of association or statute

• a resolution of partners or shareholders:

  • in partnerships, this resolution should be adopted unanimously by all partners
  • in companies and partnerships limited by shares this resolution should be adopted by the meeting of partners or the general meeting of shareholders with a qualified majority of votes, and in partnerships limited by shares an approval from all general partners is required

• dissolution by the court, as a result of a legal action to dissolve the company/partnership:

  • for partnerships – due to material grounds, such legal action may be brought by any partner
  • for companies – such legal action may be brought by a partner or a member of the company’s body if the company’s purpose has become impossible to achieve, or there are other important reasons caused by the company’s relationships
• end of the bankruptcy proceedings.

Please note! Declaring bankruptcy does not dissolve the company/partnership if the bankruptcy proceedings has ended in an agreement with creditors or has been discontinued for other reasons.

Also, a partnership may be dissolved due to:

• the death of a partner
• one of the partners being declared bankrupt
• a situation when only one of the partners has the right to pursue a liberal profession

In the case of companies the reasons for dissolution may include:

• the objects of the company specified in the articles of association or the statute are illegal
• the articles of association or the statute do not specify the company’s business name, objects, share capital or contributions
• at the moment of signing the articles of association or the statute not all signatories had the legal capacity to do so.

If any of the reasons justifying dissolution of the company/partnership arises, this does not mean that the entity is automatically dissolved. Such a company/partnership is put into liquidation.

How does a company/partnership operate during the liquidation procedure?

If it is justified to dissolve a company/partnership – that is there are preconditions to dissolve it – then typically the stage of liquidation will start.

Please note! Partners in a general partnership, a professional partnership or a limited partnership have the right to resign from the liquidation proceedings and agree on a different manner of closing down the partnership.

For instance, if partners adopt a resolution to close down the partnership and divide the assets in kind, selling the partnership’s assets is not necessary.

The liquidation procedure is initiated upon:

• the court decision to dissolve the partnership/company becoming final and valid
• adoption of a resolution on the partnership/company dissolution by the partners or the general meeting of shareholders
• different grounds for dissolution arising

The company/partnership in liquidation keeps its:

• legal personality – in the case of companies
• legal capacity – in the case of partnerships

What changes are the rules of company/partnership operation – from this moment on its goal is to complete the liquidation procedure and remove the company/partnership from the register. In particular:

• the rules of handling company business and its representation change – the powers of company bodies or partners are taken over by company liquidators
• the company/partnership has a new business name, with the addition “w likwidacji” (“in liquidation”)
• the commercial power of attorney (proxy) expires and a new one may not be granted
• the assets may not be divided between the partners.

Please note! Appointment of liquidators does not mean that the terms of the members of company supervision bodies expire as well, if such members were appointed.

How to dissolve a company/partnership with the liquidation procedure

The main goal of liquidation procedure is to close down the company/partnership, that is to close its current business operations, collect any receivables, pay off any debts and sell the assets.

The dissolution process that involves the liquidation procedure includes several stages:

• appointment of liquidators
• notifying the register of the start of the liquidation procedure
• preparation of the liquidation opening balance sheet
• liquidation actions
• division of assets
• summing up the liquidation
• submitting the application to remove the company/partnership from KRS

Appointment of liquidators

Regardless of the company/partnership type, the liquidator may be only a natural person with full capacity to perform acts in law. Appointment of liquidators may be included in the articles of association, it may be performed under a resolution of partners or a court decision – if dissolution is ordered by the court. Liquidators may perform their role under an appointment, an employment contract or a contract of mandate.

Liquidators will be:

• in general partnerships and limited partnerships – all partners authorised to represent the partnership; partners may appoint as liquidators only some of them or they may appoint other persons, however, the resolution of partners on appointment of liquidators must be adopted unanimously (unless the articles of association specify otherwise).

Example

A general partnership is run by 3 partners. They have decided to dissolve the partnership and to initiate the liquidation procedure. The manner of partnership representation does not change and all of the partners are authorised to represent the partnership, and from this moment on they also all become the liquidators.

In practice, representation in a partnership that is put into liquidation remains unchanged while the partners that have been representing the partnership so far become its liquidators.

• in limited liability companies, joint-stock companies and partnerships limited by shares – members of the body running the entity’s matters and representing it outside, that is the management board

Example

The shareholders’ meeting of a limited liability company has adopted a resolution to dissolve and liquidate the company. The present members of the management board will act as the company liquidators.

Please note! Liquidators may be always appointed and dismissed for various reasons by the court, upon the request of persons which have a legal interest in it (such as company’s creditors, partners, or personal creditors of any of the partners).

Notifying the register of the start of the liquidation procedure

The liquidation procedure is initiated when the prerequisite for company/partnership dissolution is met, for instance when the partners in a partnership or the shareholders’ meeting of a limited liability company adopt a resolution on the company/partnership dissolution and liquidation.

Liquidators must notify KRS of the liquidation procedure within 7 days from the start date of the liquidation procedure, by submitting an application to change the data in KRS, together with:

• a resolution on the company/partnership dissolution and initiating its liquidation
• a statement from the liquidators on their consent to perform this function, together with their addresses for service of documents
• a proof of payment of the court fee and the fee for the announcement in the Official Court and Economic Gazette (Monitor Sądowy i Gospodarczy).

The application, together with the attachments, may be submitted only electronically, through the Court Registers Portal (Portal Rejestrów Sądowych, PRS) or the S24 system (if the company/partnership has been set up through this system).

Read the guidelines for filling in electronic applications in the PRS system.

The application should state:

• the reasons for company/partnership dissolution, and in particular the details of the resolution of partners on the dissolution, or of the court decision to dissolve the company/partnership
• names and surnames, addresses and PESEL (personal identification) numbers of the liquidators
• the manner of company/partnership representation by the liquidators.

Please note! Liquidators may grant a power of attorney (to a legal counsel or a solicitor) to represent the company/partnership before KRS – then the application will be signed and submitted by such representative.

Notifying KRS of the start of the liquidation procedure is subject to a court fee:

• PLN 250, if submitted through the Court Registers Portal
• PLN 200, if the company/partnership is registered in the S24 system.

The court will automatically announce the removal of the partnership from KRS in the Official Court and Economic Gazette (Monitor Sądowy i Gospodarczy). Such announcement costs PLN 100.

Additionally, in the case of limited liability companies, joint-stock companies, and partnerships limited by shares, liquidators must announce the start of the liquidation procedure in the Official Court and Economic Gazette (Monitor Sądowy i Gospodarczy), by submitting the MSiG-M1 form. The application to publish an announcement in the Official Court and Economic Gazette should be submitted at the Reception Point for Announcements in the Official Court and Economic Gazette. The announcement should state the reasons for the company/partnership dissolution and it is required to request any creditors to report their receivables:

• in the case of a limited liability company – once within three months from the date of the announcement
• in the case of a joint-stock company or a partnership limited by shares – twice within six months from the last announcement, where such announcements may not be published with the interval between the publications longer than a month and shorter than two weeks

Failure to make an announcement on the start of the liquidation procedure and to request creditors to report their receivables makes liquidators subject to liability for damages.

Please note! The contents of the announcement requesting creditors to report their receivables must be prepared by the liquidators and attached to the application.

The announcement on the start of the liquidation procedure is subject to a fee. The fee amount depends on the number of characters used – it is PLN 0.70 per character but no less than PLN 60 per one announcement. Characters include letters, digits, punctuation marks and spaces. If a special font is used and the text contains parts that are underlined or in bold, the fee is increased by 30%.

Preparation of the liquidation opening balance sheet

Immediately upon initiating the liquidation procedure, the liquidators must prepare the opening liquidation balance sheet. This balance sheet should contain all assets of the company/partnership valued according to their selling value – the actual price they could be sold for at the given time and place.

The balance sheet must be prepared as at the start date of the liquidation procedure, that is the date when the reason for the company/partnership dissolution arose.

Please note! The liquidation procedure may not last longer than one year. During this time, the company/partnership is required to keep its accounting books and prepare its financial statements, and file them with the National Court Register.

It may happen that between the opening liquidation balance sheet and the company/partnership dissolution it may be necessary to prepare the financial statements, which are usually filed at the end of the financial year.

Please note! You must file all financial statements with the National Court Register (KRS), including, for example, statements prepared as of the day before the opening of liquidation as well as statements for the year in which liquidation was opened – prepared for the period from the date of opening liquidation to the date ending the fiscal year.

Liquidation actions

Liquidation actions include mostly closing the current business operations, collecting receivables, paying off debts and selling the assets. The actions are performed by the liquidators, who are authorised to perform any action aimed at closing down the company/partnership.

Please note! Liquidators are authorised to conduct company’s/partnership’s matters and represent the company/partnership only as regards the liquidation actions, that is actions aimed at closing the current business operations. As a general rule, liquidators are not authorised to start new business operations, and in particular they may not take up new types of business activity, unless this is necessary to close down the company/partnership.

Division of assets

The liquidation procedure should – as liquidators sell the assets of the company/partnership – result in any debts being paid off or provided with a security (for instance, by means of depositing a specific amount with the court) and the remaining part of the assets being divided among the partners or shareholders.

Please note! If the assets of a partnership is not enough to pay off the shares and debts of the partnership, the missing amount should be paid by the partners, in proportions specified in the articles of association, and if the articles of association do not specify this, the missing amount should be divided between the partners proportionally to their shares in the partnership’s losses.

Please note! The assets remaining after paying off or securing any debts may not be divided earlier than after six months in the case of a limited liability company, and after a year in the case of a joint-stock company – from the date when the liquidation procedure was announced and creditors were requested to report their receivables.

Summing up the liquidation

After completing the liquidation actions, the liquidators must prepare:

• a liquidation balance sheet – for general partnerships, professional partnerships, and limited partnerships
• a liquidation report – for limited liability companies, joint-stock companies and partnerships limited by shares, that is financial statements as at the date preceding the division of the assets remaining after paying off any debts or providing a security for creditors.

The application to remove the company/partnership from KRS

Liquidators complete the liquidation procedure and submit an application to remove the company/partnership from KRS, together with the following documents:

• the liquidation balance sheet or the liquidation report as at the end date of the liquidation procedure
• a statement from the liquidators confirming that the liquidation procedure has been completed and the liquidation actions have been performed, that is all current business is closed, receivables are collected, obligations are met, and assets are sold
• a statement confirming that there are no pending court, administrative or debt collection proceedings and that all debts have been paid off
• a resolution of the partners or shareholders on the appointment of the safekeeper of the books and documents of the company/partnership dissolved

Please note! In the case of limited liability companies and joint-stock companies, the electronic application to remove the company from KRS should be submitted together with a resolution of the meeting of shareholders approving the liquidation report prepared as at the end date of the liquidation procedure.

The application to KRS may be submitted:

• in the S24 system – if the articles of association were prepared with the electronic model document
• through the Court Registers Portal (PRS) – in all other cases.

See the instructions for PRS users.

After verifying that the liquidation procedure has been correctly completed, the registry court issues a decision on removing the company/partnership from the register. Once the company/partnership is removed from the register, it is dissolved and thus has no longer a legal existence.

How to dissolve a partnership without the liquidation procedure

In the case of a general partnership, a professional partnership or a limited partnership, the liquidation procedure is not required.

Please note! The liquidation procedure is, however, required if the partnership is being dissolved due to a creditor of the partnership terminating the partnership deed. In this case the liquidation procedure is required.

If there are reasons for dissolution of the partnership, instead of the time-consuming liquidation procedure, the partners may close the partnership in another manner, provided they decide so unanimously. This decision saves time and cuts costs, for instance, it is not necessary to prepare the balance sheets as at the commencement and completion date of liquidation.

Another manner of closing down the partnership may be as follows:

• the partnership assets are taken over by one or more partners
• all partnership assets are sold and the obligations are paid.

Example

Partners in a general partnership have adopted a resolution on the dissolution of the partnership and also decided that instead of the liquidation procedure, the assets will be taken over by one of the partners, with the obligation to make settlements with other partners.

A decision on the manner of closing down a partnership other than through liquidation may be taken both before and after the reasons to dissolve the partnership arise.

Please note! If partners are not unanimous on this choice, a liquidation procedure is required.

If all matters of a partnership are completed as part of its dissolution without the liquidation procedure, including in particular payment of any debts, the partnership may submit an application to KRS to have it removed from the register of businesses.

The application is submitted by the partners authorised to represent the partnership:

• in the S24 system – if the partnership was set up through this system
• through the Court Registers Portal – in all other cases.

The application must be submitted together with:

• a resolution of the partners on the partnership’s dissolution without the liquidation procedure
• a resolution of the partners on the appointment of the safekeeper of the books and documents of the partnership
• a statement confirming that there are no pending court, administrative or debt collection proceedings and that all debts have been paid off.

See the instructions for PRS users.

The application to remove a partnership from the register is subject to a court fee in the amount of PLN 300. The court will automatically announce the removal of the partnership from KRS in the Official Court and Economic Gazette (Monitor Sądowy i Gospodarczy). Such announcement costs PLN 100.

If all those actions have been properly performed, the court issues a decision on removing the partnership from the register. Once the partnership is removed from KRS, it ceases to exist.

Please note! Deletion from the statistical register REGON of entities entered in the National Court Register (KRS) is based on the data transmitted to the REGON register electronically from the KRS. Hence, you do not need to submit an additional application for deletion from the REGON register; Statistics Poland (GUS) will delete the company based on the information sent by the KRS.

Additional obligations upon company/partnership dissolution

Obligations towards the tax office

In companies/partnerships where dissolution involves the liquidation procedure, once this procedure is initiated, the liquidators must:

• notify the tax office of any changes in the company/partnership details and of addition of the words “w likwidacji” (in liquidation) to the business name – by submitting the NIP-8 form
• submit to the tax office a copy of the liquidation report

Once a company/partnership is removed from KRS:

• you should cancel its status of the contribution payer in relation to employees, by submitting the NIP-8 form
• notify of the end of business activity subject to VAT, by submitting the VAT-Z form.

Read how to submit the NIP-8 form.

Additionally, in the event of dissolution of a partnership, the following must be filed with the relevant tax office:

• a list of assets as at the liquidation date
• a physical inventory count as at the date of dissolution, if the partnership is a VAT payer.

Check how to prepare:

• a list of assets
• a physical inventory count.

The notification of the end of business activity may be submitted to the tax office electronically, through the Tax Portal, or through the e-Deklaracje app.

Please note! Remember that upon closing down a company/partnership, you must settle any relevant tax.

Read how to settle the tax upon closing down a company/partnership entered in KRS.

Obligations towards the Social Insurance Institution (ZUS)

Closing down a company/partnership does not automatically result in termination of contracts with your employees. You must terminate the employment contracts with all your employees, by agreement or with a notice. This will also apply to any employees covered with general protection against dismissal, for instance, employees who are on a parental leave or those covered with pre-retirement protection.

Read how to terminate an employment contract.

During the liquidation procedure, the insurance coverage with ZUS for all employees must be cancelled – by submitting the ZUS ZWUA form. This must be done within 7 days from the termination of the employment relationship.

Please note! Partners in limited partnerships, general partnerships, professional partnerships and one-person limited liability companies who are contribution payers in relation to own insurance, upon closing down a partnership/company are required to submit the ZUS ZWPA form – in order to cancel their status of a contribution payer. Also, partners must submit the ZUS ZWUA form to cancel their insurance coverage with ZUS, and the ZUS ZCNA form to cancel the insurance coverage of their registered family members.

Read more about removing a company/partnership from KRS at the ZUS website.

Also, please remember to:

• deregister your cash register
• ensure the safekeeping of the company/partnership documents