Recent tax changes in the scope of a limited partnership force us to answer the question – what to do with an unnecessary limited partnership?
Recently, on our Facebook and LinkedIn we have offered you several possibilities in this regard. If you are not considering, for example, a merger or transformation of a limited partnership, and its continued maintenance is unfavorable for you, the solution and removal of the company from the National Court Register may be a good way.
The dissolution of a company is usually associated with a liquidation procedure, which is generally a complex and time-consuming process. Its overall implementation takes over 6 months. However, such a complicated procedure is required in the case of capital companies, while in the case of partnerships, entrepreneurs may take advantage of the possibility of dissolving a limited partnership without liquidating it.
This solution relieves the entrepreneur of the burden of performing many activities, i.e. announcing the opening of liquidation at Court and Economic Monitor, and thus waiting several months for creditors to come forward to settle outstanding liabilities, prepare liquidation reports (it is enough to prepare a balance sheet) and carry out several-stage reports to the National Court Register. In order to dissolve a limited partnership in this manner, the partners must agree on a different method of terminating the partnership’s activities and adopt a resolution in this regard. This arrangement constitutes an amendment to the articles of association, so partners should first go to a notary public to adapt the content of the contract to their needs.
An interesting issue at this stage of liquidation is the need to grant a specific power of attorney. According to the general structure of a limited partnership, the general partner is a limited liability company, while its limited partners are members of the management board of this company (often also its partners). Therefore, there is a risk that a person who is both a limited partner and a member of the management board of a general partner will want to sign under the new wording of the articles of association – i.e. one natural person performing two functions. In this case, it is necessary to appoint an attorney representing the limited liability company based on Article. 210 of the Commercial Companies Code, because otherwise the amendment to the articles of association will not be effective.
Then the general partners must:
- end current business in a way that is beneficial for the company and its contractors, i.e. complete the performance of concluded contracts;
- collect debts owed to the company;
- perform the pecuniary and non-pecuniary obligations incumbent on the company, incl. tax liabilities to employees or the Social Insurance Institution, and then
- liquidate the company’s assets, e.g. in the form of its division among the company’s partners.
The last step is to submit the appropriate KRS form with attachments and wait for the decision of the National Court Register on the deletion of your company.
As you can see, the process of dissolving a limited partnership without liquidation is a much “simplified” procedure compared to the classic liquidation of a capital company. We hope that among the methods of dealing with the often redundant limited partnership, you will find a satisfactory solution that will allow you to comfortably continue your business.
Author: Oliwia Kruczyńska, Junior Associate at Kolecka & Partners Law Firm LLP
