For many limited liability companies in Poland, the end of the calendar year is the end of the financial year and the time when the accounts are closed.The annual financial statements of companies are usually prepared as at 31 December.

It is worth analysing how each of the equity items looks like in the company’s balance sheet at that date because:

    • if some equity items are too low, this may result in significant restrictions on the company’s operations and additional obligations for the Management Board members (including the prohibition to make any payments to the Shareholder);
    • in the event of ignoring the restrictions or neglecting to fulfil their obligations, the Management Board members may face severe consequences;
    • remedial actions can be taken to avoid the above problems.

What potential problems may arise from the failure to maintain the required level of certain capital items in the company and what are the risks for the Management Board members?

Please find below summary of the required equity levels in limited liability companies and the consequences of a breach of that requirements.


Required level:

    • The company’s equity (net assets) should be higher than the share capital

Consequences of a breach:

    • If the equity level requirement is breached, the Shareholders may not receive payments from the company’s assets needed to fully cover the share capital on any account (this includes payments relating to commercial transactions, loan repayments, etc.)

Risks for the Management Board:

    • Joint and several liability of the Management Board members (with the Shareholder) for the return to the company of a payment made in breach of the law;
    • Liability of the Management Board members for the damage caused to the company by an unlawful act;


Required level:

    • The company’s monetary liabilities[i] should not exceed the value of the company’s assets (to simplify this, it can be assumed that the company’s equity should be a positive figure)

Consequences of a breach:

    • If the situation of a breach of the equity level requirement persists for more than 24 months, there are grounds for declaring the company bankrupt.

Risks for the Management Board:

    • The Management Board members should file an application for bankruptcy regarding the company within 30 days of the date on which the grounds for bankruptcy arose;
    • If an application for bankruptcy is not filed by the required deadline, the Management Board members may bear the following types of liability[ii]:
    • to third parties for damage caused by failure to submit the application by the required deadline;
    • for the company’s liabilities if enforcement proceedings against the company prove to be ineffective;
    • criminal liability for failure to file an application for bankruptcy despite the existence of conditions justifying such filing;


Required level:

    • The accumulated loss should not exceed the sum of the supplementary and reserve capitals and half of the share capital

Consequences of a breach:

    • In the event that the balance sheet prepared by the Management Board shows a breach of this requirement, the Management Board is obliged to immediately convene the Shareholders’ Meeting in order to adopt a resolution on the company’s continuation as a going concern;

Risks for the Management Board:

    • The registry court may impose a fine of up to PLN 20,000 on the Management Board members;
    • If the company suffers damage on that account, the Management Board members may be liable to the company for damages;

Please note that there are a number of ways to rectify such a situation and increase capital in a company (even without the Shareholders having to make any additional contributions).

Wiewiórski Legal provides comprehensive legal support in all corporate matters, including the preparation of all documents required to rectify the situation related with insufficient capitals in limited liability companies. We encourage you to contact the corporate team of Wiewiórski Legal, who will help you analyse the situation and advise you on how to deal with it.

Author: Agnieszka Woldan-Waleczek


[i] Article 11 of the Bankruptcy Act of 28 February 2003 (Journal of Laws 2022 item 1520, consolidated text) contains detailed regulations as to what type of monetary liabilities should be taken into account when assessing the situation in question. Please note that the aforesaid monetary liabilities specifically exclude future liabilities, including liabilities under a condition precedent and liabilities to a shareholder on account of a loan or other legal transaction with similar effects.

[ii] Such liability may be borne by the Management Board members provided that further specific conditions for such liability set out in the law are met.


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