Simple Joint-Stock Company (PSA) – for startups & investors

Simple Joint-Stock Company (PSA) – a modern legal form for startups and investors in Poland

The Simple Joint-Stock Company (Prosta Spółka Akcyjna, PSA) represents the Polish legislature’s response to the growing needs of the innovation economy and the dynamically developing startup ecosystem. Introduced into the Polish legal framework on July 1, 2021, the PSA combines the flexibility of a limited liability company with investment mechanisms characteristic of traditional joint-stock companies. This hybrid legal structure was designed specifically for ventures based on innovation, knowledge, and intellectual capital, where traditional organizational forms often proved too rigid or inadequate for business models focused on rapid growth.

Fundamental assumptions and purpose of the PSA

The Simple Joint-Stock Company emerged from years of analysis of legal barriers hindering the development of Polish startups and observation of solutions functioning in other European jurisdictions. The legislature’s primary objective was to create a legal form that eliminates excessive formalism while maintaining appropriate mechanisms for protecting creditors and investors. The PSA addresses the specific needs of early-stage ventures, where the ability to rapidly raise capital, flexibly shape relationships between founders and investors, and adequately compensate individuals contributing primarily their work and competencies to the company is of paramount importance.

The PSA’s structure is based on the assumption that the modern economy requires legal instruments enabling effective commercialization of innovations without the necessity of possessing significant initial capital. In the traditional joint-stock company model, the minimum share capital requirement of PLN 100,000 constituted a significant barrier for many technology ventures, where project value is concentrated in knowledge, technology, and growth potential rather than in tangible assets.

Share capital and no-par-value shares

One of the most revolutionary features of the Simple Joint-Stock Company is the departure from the concept of share capital in favor of equity capital. The minimum equity capital of a PSA amounts to a symbolic one Polish zloty – 1 PLN) , which eliminates the financial barrier when establishing a company and allows resources to be concentrated on actual business development. However, the equity capital does not constitute a rigid amount entered in the company’s articles of association but rather a variable value reflecting actual shareholder contributions.

Shares in the Simple Joint-Stock Company are no-par-value shares, meaning they do not have a specified nominal value. This solution fundamentally changes the way of thinking about the company’s capital structure. Instead of the traditional division of capital into a specified number of shares with a fixed nominal value, the PSA operates on the concept of shares representing property and corporate rights without an assigned unit value. This mechanism significantly simplifies conducting subsequent financing rounds, issuing new shares, or implementing employee incentive programs without the necessity of carrying out share capital increase procedures characteristic of traditional capital companies.

An important element of the PSA’s capital system is the obligation to create a reserve for equity capital of at least 8% of profit for the given financial year until this capital reaches 5% of the total company liabilities as shown in the approved financial statements for the last financial year. This mechanism represents a compromise between flexibility of the capital structure and creditor protection.

Non-cash contributions – work and services as a source of capital

The Simple Joint-Stock Company is the only Polish capital company that permits contributions in the form of work or provision of services. This groundbreaking solution addresses the reality of startups, where founders often possess primarily competencies, technical knowledge, and time rather than financial capital. In traditional capital companies, work could not constitute a contribution, which forced the use of complex legal constructions to compensate founders contributing mainly their time and skills to the venture.

Contributions in the form of work and services are not counted toward equity capital but constitute the basis for acquiring shares by the person providing work or services. This means that a founder-programmer can acquire shares in exchange for a commitment to perform specific development work, and an industry expert can become a shareholder in exchange for providing consulting services. This structure requires precise specification in the company’s articles of association of the type and scope of work or services and the period of their provision, which ensures transparency of the relationship between the company and the shareholder.

Flexible corporate governance structure

The Simple Joint-Stock Company offers shareholders a choice between two corporate structure models.

• The first model, similar to solutions known from limited liability companies, provides for a management board as the body managing the company’s affairs and representing it externally, with the possibility of establishing a supervisory board overseeing the management board’s activities.
• The second model introduces a board of directors as the sole body of the company, combining management and supervisory functions within a single structure.

The board of directors represents a novelty in Polish company law and references Anglo-Saxon solutions. In this model, the board may consist of executive directors, who have the right to manage company affairs and represent it, and non-executive directors, performing control and supervisory functions. Such a structure allows for greater flexibility in shaping the management structure and may be particularly attractive to foreign investors accustomed to the board of directors model.

Regardless of the chosen model, the Simple Joint-Stock Company ensures considerable freedom in determining the rules for body functioning in the articles of association. Shareholders can adapt decision-making procedures, required voting majorities, or representation rules to the specific needs of the venture and investor expectations.

Registration and operational aspects

The process of establishing a Simple Joint-Stock Company has been maximally simplified. The company can be registered electronically through the S24 system within 24 hours, using the template articles of association available in the IT system. Alternatively, for more complex corporate solutions, it is possible to draw up the articles of association in the form of a notarial deed. The court fee for registering a PSA in the S24 system is PLN 250, making it one of the least expensive organizational forms to establish.

Shares in the Simple Joint-Stock Company do not take document form and are subject to mandatory dematerialization. The company maintains a register of shareholders, which may be kept by a notary, bank, investment firm, or the Central Securities Depository of Poland (KDPW). Entry in the register of shareholders constitutes a condition for effective acquisition of shares, which ensures transparency of the ownership structure and facilitates share trading.

The Simple Joint-Stock Company may be established by one or more persons, both natural and legal, for any legally permissible purpose. The only limitation is the prohibition on establishing a PSA solely by a single-member limited liability company.

PSA attractiveness from an investor perspective

For venture capital and private equity investors, the Simple Joint-Stock Company offers a range of mechanisms known from international startup financing practice. Flexibility in shaping rights and obligations associated with shares allows for creating different share classes with varying voting rights, dividend rights, or liquidation preferences. It is possible to introduce preferred shares giving investors priority in repayment in case of company liquidation or sale.

The PSA structure facilitates implementation of standard investment clauses such as tag-along rights, drag-along rights, anti-dilution provisions, or founder share vesting mechanisms. The possibility of contributing work and services naturally fits into incentive models used in startups, where part of team compensation consists of equity participation.

The simplified liquidation procedure constitutes an additional advantage of the PSA. In case of venture failure, it is possible to conduct liquidation within several months, without the necessity of carrying out numerous formalities characteristic of traditional capital companies. This solution addresses the startup reality, where a significant portion of projects do not achieve commercial success and efficient termination of operations is necessary.

Tax and accounting aspects

From a tax perspective, the Simple Joint-Stock Company is treated analogously to other capital companies. The company is subject to corporate income tax at a rate of 19% or a preferential rate of 9% for small taxpayers and taxpayers commencing operations. The PSA may benefit from tax reliefs available to capital companies, including the R&D tax relief and IP Box.

Contributions in the form of work and services generate specific tax consequences. Acquiring shares in exchange for work or services may generate taxable income for the shareholder, the amount of which depends on the market value of the received shares. This issue requires careful tax analysis when structuring transactions, particularly in the context of multi-year incentive programs.

The Simple Joint-Stock Company maintains full accounting records and prepares financial statements in accordance with the Accounting Act. Reporting obligations do not differ significantly from requirements imposed on other capital companies, which ensures comparability of financial data and facilitates due diligence processes conducted by potential investors.

Perspectives and practical recommendations

After several years of functioning in the Polish legal system, the Simple Joint-Stock Company has proven its usefulness as an organizational form for innovative ventures. The number of registered PSAs is systematically growing, and this form is gaining increasing recognition among startup founders and investors. At the same time, the practice of using PSAs reveals areas requiring further interpretation and development of case law, which is a natural process for a relatively new legal institution.

For founders considering the choice of legal form for a new venture, analysis of the planned development model and financing needs is of key importance. The PSA works best for projects assuming acquisition of external investment capital, implementation of share-based incentive programs, and flexible shaping of relationships between founders and investors. For ventures with a stable business model that do not require rapid scaling and external financing, a traditional limited liability company may remain a more appropriate option due to greater legal predictability and more extensive case law.

The decision to choose a PSA should be preceded by consultation with a legal and tax advisor who will help identify optimal structural solutions tailored to the specifics of the planned venture and expectations of all interested parties.