Impact of timing on the future of the joint-stock company

A joint-stock company in organisation is, so to speak, a preliminary form of joint-stock company, which is created in order to enable the company to start its business quickly, without having to wait for its registration with the KRS. One of the requirements for the formation of a joint-stock company, is precisely the registration of the company in the court register. This entry is constitutive in nature, that is it is only upon its entry that a joint-stock company in organisation becomes a joint-stock company and acquires legal personality. At that very moment it also becomes the subject of the rights and obligations of the joint-stock company in organisation.

The members of the management board are required to register the company in the register within six months from the date of signing the articles of association. The relevant application should be submitted to the registration court with jurisdiction over the company’s registered office. If deficiencies are found in the application, the court shall set an appropriate deadline for the company in organisation to rectify them or they will be refused entry in the register. However, it should be borne in mind that in accordance with the wording of Article 317 § 2 of the Companies Act, the registration court may not refuse to enter the company in the register on the grounds of minor shortcomings that do not infringe on the interest of the company or the public interest and cannot be removed without incurring disproportionately high costs.

At this point the question may be asked: What happens if the company is not registered within the prescribed period or if the court’s decision refusing to register the company becomes final?

If the company is not filed with the court within six months, or if the court order refusing to register the company has become final, the company is dissolved. This means that the memorandum of incorporation loses its legal force as the source of establishing the joint-stock company into existence, so that the actual joint-stock company will never be established again. Interestingly, on the other hand, the joint-stock company in organisation itself does not cease to exist at that time, but due to the non-acquisition of legal personality, it continues to be a crippled legal person. Pursuant to Article 11 § 1 of the Companies Act, such a company may, in its own name, acquire rights, including ownership of real estate and other rights in rem, sue and be sued.

In conclusion, a joint-stock company in organisation that is not filed with the court within the prescribed period or where the court’s decision refusing to register the company has become final continues to exist, but will never become a proper joint-stock company. In practice, this means that the entire procedure for setting up a joint stock company has to be carried out from scratch.

Author: Jarosław Rudy, Aleksandra Kostrzewska