“ABC” OF THE ENTREPRENEUR – SUCCESSOR ADMINISTRATOR

The issue of business succession did not emerge until the Act of 5 July 2018 on the succession administration of a natural person’s business and other facilitations related to business succession.

Why these provisions?

The provisions are intended to prevent paralysis in the functioning of a business in the event of the entrepreneur's death, and also give time for their heirs to decide what to do with the inherited business next.

In short, a successor administrator is a person appointed by the entrepreneur (or their heirs) to temporarily manage the business after the owner's death.

Who can be a successor administrator?

• only a natural person who has full legal capacity and, also, has not been prohibited from operating business activity or convicted of a penal or protective measure involving a ban on business activity operated by an entrepreneur or on the management of property. A legal person, such as a company, cannot be a successor administrator.

How to appoint a successor administrator?

1. A successor administrator can be appointed by entrepreneurs themselves. The successor administrator's consent to perform this function (in writing) is necessary for this.

In practice:

• the business owner submits a relevant application to CEiDG in writing, electronically or by post (in which case the signature must be certified by a notary). The entrepreneur can appoint a successor administrator directly or indicate that a holder of commercial proxy will hold this function. In addition, it is possible to appoint a so-named “auxiliary administrator”, should the first one be unable to fulfil this role for various reasons.

2. If the entrepreneur fails to take action on time, the successor administrator can be appointed after the death of the entrepreneur by:

1. a spouse if he or she is entitled to a share in the undertaking,
2. a statutory or testamentary heir who has accepted the inheritance, or
3. a legatee of a specific bequest who has accepted a bequest relating to the business.

It is noteworthy that these persons must, however, hold a share in the business of more than 85/100. The appointment of the successor administrator after the owner's death is only possible before a notary, who must report this fact to the CEiDG.

Resignation or loss of the function of the administrator

As we indicated above, the function of the administrator is voluntary, so the volunteer has the right to resign from it at any time by submitting a resignation in writing. The function may also be lost in the event of death, dismissal or limitation or loss of legal capacity.

What does holding of the function of a successor mean in practice?

The successor administrator, after assuming office, shall continue operating the business, but shall use the existing name of the business with the notation “in succession”.

1. They shall be entitled to engage in judicial and extrajudicial actions, and for certain actions may also appoint an attorney.
2. They may sue and be sued, as well as participate in administrative, tax and administrative court proceedings in matters concerning a business in the inheritance.
3. Their actions are limited to acts of ordinary management, and for acts in excess of the ordinary management they must obtain the consent of all owners of the business (heirs).

Let us remember that the inherited business continues to be owned by the heirs and it is they, and not the administrator, who are financially liable for the undertakings associated with its operation. Also, the successor administrator can receive remuneration for their function.

Term of the succession administration

Succession administration as a general rule:

• should last for a maximum of 2 years from the date of the entrepreneur's death (in the case of appointment by the owner before his death).
• in exceptional situations the court can extend this term to 5 years.
• administration can also expire earlier if:

1. it has been established that the business in the inheritance has been acquired by an heir or legatee of a specific bequest,
2. the entire business has been acquired by one person,
3. within 2 months of the death of the owner of the business, no one has entered the succession,
4. a new administrator has not been appointed within 1 month of the deletion of the administrator from the CEiDG, the business has been declared bankrupt or the inheritance, which includes the company, has been divided.