Succession planning in Poland

Succession planning is crucial for any type of business, regardless of its size or the sector in which it operates. A common misconception is that this only applies to family businesses. In fact, it is essential for any business that has natural persons as shareholders to have a well thought out succession plan in place to ensure uninterrupted operational continuity and secure the future of the business.

Such a plan should not only take into account the delegation of authority, but also include detailed safety mechanisms that are activated in the event of the sudden absence of key executives or founders. In this way, the company can continue to operate without major interruptions regardless of unforeseen events, which is reflected in the stability of the company and the trust of customers, employees and partners.

Work on a succession plan should begin as early as possible - ideally, it should be an integral part of the strategic planning for the development of the company from the outset. Such early planning allows for a smoother implementation of change and better preparation of all stakeholders for the future management handover.

Furthermore, a succession plan is not a static document. It should be regularly reviewed and updated to reflect the company's current situation and evolving goals and strategies. Changes in ownership, management, the market or even personal changes in the lives of key executives may require adjustments to the succession plan. Therefore, a constant willingness to adapt the plan is just as important as its initial development.

A family foundation is a special type of legal entity established by one or more persons (the founders) with the intention of accumulating and managing assets for the benefit of a specific group of beneficiaries, usually family members of the founder. The main purpose of a family foundation is to protect the assets from various risks and dangers and to ensure that they are used in the interests of the founder.

A key element for the functioning of a family foundation is the constitution, the founding document drawn up by the founder, which sets out the purpose of the foundation, the way it is managed and the rules for the use of the assets and the benefits for the beneficiaries.

A major advantage of a family foundation is the tax benefits. The transfer of assets to the foundation is generally exempt from corporation tax, which is an important tax advantage. The obligation to pay corporation tax only arises when the benefits are distributed to the beneficiaries, which should be accompanied by strategic tax and financial planning

A family foundation therefore offers a unique opportunity to protect assets and pass them on from one generation to the next, in accordance with the rules laid down by the founder and with tax advantages. You can find more information about the family foundation HERE

Any natural person can become the founder of a family foundation.

The founder does not have to be a Polish citizen. Persons without Polish citizenship and persons living abroad can also establish a family foundation in Poland.

The assets contributed to a foundation can take various forms, e.g. a company, shares in public limited companies, shares or other property rights. The flexibility in the type of contribution in kind allows a wide range of options for tailoring the foundation to the founder's individual needs and objectives and creating a solid foundation for the protection and management of family assets for the future.

The founder plays a key role in the establishment and operation of the family foundation, as he determines the goals, vision and behaviour of the foundation. His influence manifests itself on several levels:

1. Drafting the articles of association:  The founder formulates the content of the foundation's articles of association, which are the foundation's most important document. The statutes set out the foundation's objectives, the rules for managing the assets, the criteria for selecting beneficiaries and the way in which the foundation makes decisions and operates. This allows the founder to determine exactly how the foundation should pursue its goals in the future and which values it prioritises

2. Asset management: :   The founder decides which assets are brought into the foundation and how they are managed in order to serve the foundation's purposes and secure the future of the beneficiaries. This can include a wide range of decisions on investments, asset management or tax planning.

3. Selection of beneficiaries:  The founder determines who the beneficiaries of the foundation will be, i.e. who can benefit from the foundation's funds and in what form. This can be a precisely defined group of people (e.g. family members) or a broader range of beneficiaries, depending on the foundation's objectives. .

To summarise, the founder has a fundamental and lasting influence on the family foundation, from its establishment and day-to-day management to the definition of its long-term strategy and objectives. This enables the foundation to effectively achieve its stated goals and serve the generations.

Succession management is a form of management provided for by law that enables the business activities of a company to be continued temporarily during a succession period, e.g. after the death of the owner, until the succession issue has been resolved. It is a solution designed to ensure the continuity of the company during a difficult transitional phase.

Succession management can be set up for sole traders, i.e. for natural persons who carry out their own business activities. Succession management is not possible for commercial companies, with the exception of a civil law partnership, where this form of management is permitted.

The successor managing director, who is usually a person previously nominated by the business owner or appointed by the court, assumes responsibility for the continuation of the company's business. This includes managing day-to-day business, maintaining liquidity, managing liabilities and assets and representing the company externally.

No, a successor administrator and an heir have two different legal roles and statuses. The appointment of a successor administrator is intended to ensure the continuity of the company after the death of the owner during the transition period, but this does not automatically mean that the successor administrator also becomes an heir.

An heir is a person who has been appointed as the deceased's heir either on the basis of a will or in accordance with the rules of intestate succession. This means that the heir is authorised to assume the rights and obligations relating to the estate of the deceased.

A future heir can be appointed as successor administrator if this is in accordance with the wishes of the deceased business owner or the decision of the other heirs. Such an arrangement can be particularly useful if the heir has the necessary expertise to manage the company and if it is in line with the succession plan defined by the owner.

Any natural person with full legal capacity can become a successor administrator. Often a trustworthy person who knows the company well and is able to manage the day-to-day business effectively during the transition period is chosen for this task. This could be:

- Family member: A person who is closely related to the company owner, knows the company and enjoys the trust of both the entrepreneur and the family

- Employee: Someone from the company's team who has the relevant management skills and experience and is very familiar with the company's processes

- Authorised representative: A professional, e.g. a legal or management consultant, who has previously been involved in advising on the company

- Other trustworthy person: Any other person who enjoys the trust of the entrepreneur and is considered capable of managing the company in a difficult succession phase

A foreigner can also become a successor administrator, provided they fulfil the legal requirements for full legal capacity and are able to effectively manage a company in Poland. It is important that the person selected not only has the appropriate qualifications, but is also willing and able to take on this responsible task.