Civil law partnership - characteristics

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A civil law partnership is a specific form of running a business. It is not necessary to register with the National Court Register when establishing it - separate regulations of civil law apply to it. A civil law partnership is an opportunity to act together with another entrepreneur. It must therefore consist of at least two partners. A civil law partnership is not an entrepreneur, i.e. it does not operate as a company because it has no personality or legal capacity. The partnership was legally formed to create the possibility of maximizing capital (more people = more contribution) and thus increasing profits. Low start-up and maintenance costs make the civil law partnership a leader among the available forms of joint business activity. Let's see the financial consequences of the decision to establish just such a form of business.

Civil law partnership as a form of business activity

A civil law partnership is a relatively simple method of running a business, subject to the Civil Code. Its core is collective business activity - that is, it excludes a situation in which a civil partnership would be a sole proprietorship. Moreover, this form of undertaking can be initiated by both natural persons and already operating enterprises. The key is that each of the partners can contribute - in the form of capital, work or unique skills. By default, such contributions are considered equivalent.

A considerable drawback of a civil law partnership is joint and several liability - with their own property - of partners for the obligations of the entity being run. Importantly, this also applies to their spouses (statutory joint ownership system). The exception is the existence of intercourse. Therefore, the actions of the partner must be taken into account, because the creditor may choose the method of debt repayment: either from the company's assets or from the personal capital of the partner and his spouse.

The above results from the fact that a civil law partnership does not have legal personality, and thus also does not have its own property. The rights and obligations are on the shareholders' account - and constitute their joint property. In a civil law partnership, the partners are the legal entities - the partnership itself is only a contract they have concluded with each other.

How is a civil law partnership established?

A civil law partnership is established thanks to an agreement concluded between the partners. The content of such a document is regulated by the articles of the Civil Code - from 860 to 875. The civil partnership agreement should be concluded in writing (for evidence purposes). Any changes must be made by means of annexes. If the articles of association transfer the ownership of the real estate, the articles of association must be concluded in the form of a notarial deed.

Below are the basic elements that should be included in a civil law partnership agreement:

  • information about shareholders - identification of the parties,
  • the date of conclusion of the contract,
  • information about the economic goal to be pursued by the company,
  • information on how to achieve the set goals,
  • information on the scope of activities according to the Polish Classification of Activities,
  • information on the amount of own contributions.
Attention!
The amount of the contribution is subject to tax on civil law transactions in the amount of 0.5%.

The company must be registered at the commune or city office on the CEIDG-1 form. As regards the type of taxation, a civil partnership may use all forms of taxation.

One drawback is the obligation to run the company's affairs, which is incumbent on each of the partners. A shareholder may - without obtaining confirmation by means of a resolution - carry out an urgent action, necessary when the entire business is at risk with significant losses. Other provisions for this can be included in the articles of association.

It is also important to determine the value of own contributions - there are no statutory lower and upper limits. The contribution may take the form of:

  • cash,
  • private property,
  • other rights to movable and immovable property,
  • services,
  • work for the company.

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How to dissolve a civil law partnership?

The Civil Code contains provisions concerning the functioning of a civil partnership. According to the provisions of the Civil Code a civil law partnership may be dissolved only when:

  • there are circumstances mentioned in the contract that will cause its termination,
  • the company's partner will be declared bankrupt,
  • the partners will terminate their activities by a unanimous resolution,
  • the partner dies or is declared bankrupt, i.e. when only one partner would remain,
  • a partner or a partner's creditor terminates the partnership agreement,
  • the court will issue a final decision to dissolve the company (each partner has the right to demand the dissolution of the company for important reasons).