Milewska Legal

Single-member Limited Liability Company

7 August 2023

Statistically, Limited Liability Company (spółka z ograniczoną odpowiedzialnością) is the most popular type of a commercial company. The provisions of Polish Commercial Companies Code permit a natural person to be a single member of an LLC. Incorporating such an entity seems to be a profitable arrangement. Can it be considered profitable in reality?

Single-member Limited Liability Company – what is it?

As the name indicates itself – a single-member Limited Liability Company is a company incorporated by a sole shareholder (single person). Such a company can be set up and registered in two ways – through the S24 system (in such an event the Articles of Association are created on the basis of a boilerplate which can be edited only within a limited scope) or through conclusion of the Articles of Association in a form of a notarial deed and filing a motion to register a company in an electronic system of court registers – Portal Rejestrów Sądowych (as of 1st July 2021 it is not possible to file a motion to register through the paper documents system).

However – provisions of the Polish Commercial Companies Code do not permit setting up of a single-member limited liability company by another single-member limited liability company (as a shareholder). It is not relevant whether the shareholder would be consider a polish or foreign entity.

At a glance, status of a sole shareholder of an LLC seems to be profitable. Such a shareholder is entitled to make decisions without the need of consulting other shareholders, and at the same time their personal assets are secured (due to lack of personal liability of the shareholders of a company for its debts). Nonetheless, single-member LLC is connected with lots of limitations imposed on the sole shareholder, and in some instances – the company itself.

Limitations of the single-member of a Limited Liability Company

Limited Liability Company obtains legal personality in the moment of its registration with the Registry of Entrepreneurs of the National Court Register (Rejestr Przedsiębiorców Krajowego Rejestru Sądowego). In the moment between conclusion of the Articles of Association of a company and before its registration with the National Court Register, the company operates in the form of a company in organisation. Such a company is not considered a legal person yet, although it has the legal capacity (capacity to conclude contracts) and the judicial capacity (to sue and to be sued). Generally, the company is represented by the members of the Management Board (the most common practice) or by appointed proxy (more rare occurrence).

In the event that the LLC which has only a sole shareholder also happens to have a sole member of the Management Board (the same person), such a Management Board member is not entitled to represent the company – besides the right to file a motion to register the company. So if the sole shareholder of a single-member Limited Liability Company in organisation is also a sole member of the Management Board of such a company, they are not entitled to execute contracts on behalf of the company, to open a bank account for the company etc. This situation is changed after the company is registered with the National Court Register – in that moment the company ceases to be an entity “in organisation” and becomes the “full-featured” LLC. This moment marks the beginning of the ability to represent the company by such a Management Board member.

Limitations of the sole shareholder of a Limited Liability Company after registration

Every statement of will made to the company by its sole shareholder has to be made in writing, otherwise null and void. What is more, if the sole shareholder is also a sole member of the Management Board (so the company is governed wholly by a single person) – every and each of the legal acts has to be made in a form of a notarial deed. So in the even that such a shareholder would intend to enter into a contract with the company – no matter whether it is a contract for provision of services, or e.g. loan or lease agreement – such an agreement has to be made in a form of a notarial deed – otherwise null and void.

Single member of an LLC and polish social security contribution

 The contribution obligations of a sole shareholder are perhaps the most acute consequence of such status. What is important – these obligations arise irrespective of the composition of the Management Board of a single-member Limited Liability Company. Thus, even if the company has, for example, a three-member Management Board, but at the same time has only one shareholder (or almost one – see below) – such a shareholder is obliged to make contributions to their social and health insurance (or at least to his health insurance – if they have another title to make social insurance contributions).

The sole shareholders of a Limited Liability Company – as well as shareholders holding almost all of the shares in the company (who are treated by ZUS (social security institution) as ‘almost sole shareholders’ – the limit usually oscillates around 90/95% of such a shareholder’s shares in the share capital), if they are natural persons, are subject to the obligation to pay contributions to the same extent as natural persons running a sole tradership.

What is worth highlighting, this obligation arises upon registration of the company in the Register of Entrepreneurs of the National Court Register. This obligation also applies to companies that do not carry out actual activities – the only thing that matters is the fact of being the sole shareholder of a Limited Liability Company, regardless of the operational activities undertaken by the company.


Aleksandra Kostrzewa                                                                      Daria Milewska

Asystent prawny                                                                               adwokat


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