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Family Foundation – new legal entity in Polish law
Changes and new legal regulations taking effect over the years, mostly allow to create a new legal entity, which form is known in highly developed countries. Family foundation Act was crafted by Ministry of Development and Technology, was signed by President of the Republic of Poland and pending entry into force includes on 23rd of May 2023 new entity to set up or run business on family relationship. Let’s prepare for upcoming changes, because family foundation, popularity is increasing worldwide. The solutions offered by the family foundations are beginning, to be used by the largest family companies, particularly in German.
As planned, creation of a new legal entity allows to make it easier to succession process e.g., allow to hold asset in the country of the founder of a family business, for many generations and increase capability national investment without risk of dividing firm. Author pays attention to ability to meet, the needs of beneficiaries (family members).
The Act contains rules for the constitution and functioning of foundations. In accordance with Article 21, to the formation of family foundation are required: submission of a declaration on establishing family foundation in memorandum of association or testament, establishment of the statutes, draw up document with inventory, transfer of statutory fund and entry in the special register. The most important issue is establishment of the statutes. Founders create statute in notarial deed. This statute must contain: the specific goal of the family foundation, the rules of the maintain the list of beneficiaries, the value of the statutory fund, the rules for the appointing and dismissing of the members of the organs, the rules of representation and other element included in Article 26.
Founder and beneficiaries decide on: rules assets management, who can be the beneficiary and how high benefit is. The act introduces benefits on condition or objection. This is an exception to the succession law in our Civil Code.
Family foundation acquires legal personality at the time of entry in the special register of family foundation. The register is kept by Regional Court in Piotrków Trybunalski. Family foundation is taxed CIT. The legislator has provided tax exemption. The dividend and capital gains are not subject to taxation until payment of benefits. Family foundation will be placed to invest capital with friendly taxation.
Moreover, bodies of the family foundation are board of directors, supervisory board, and beneficiaries’ assembly. The tasks of board of directors include managing the affairs of the family foundation and representing it and achieving the aims of the family foundation as defined in the statutes. Supervisory board supervises the board of directors. Supervisory board is mandatory if the number of beneficiaries are more then 25. However, Beneficiaries must be given the permission to participate in the assembly. Beneficiaries’ assembly is called by board of directors.
In conclusion, when planning a change in the structure of a family business, consider introducing a family foundation into this structure. It can be an appropriate way to ensure the continuation of the business.