Abstract

A single member limited liability company is undoubtedly one of the most popular forms of running a business in the majority of European countries and in Poland. As a result of the belief prevalent in the German case law that ab initio establishment of single member companies is inadmissible, fiduciary establishment of a limited liability company became widespread. Despite many doubts (especially as regards potential evasion of the law) the above practice had been accepted and universally applicable for several decades until full freedom of ab initio establishment of single member companies was introduced.

With respect to the above issue, a problem emerging under the Commercial Companies Code should be noted. In Art. 151 § 2 the Commercial Companies Code prohibits de lege lata establishment of single member limited liability companies by other single member limited liability companies. The role of the above restriction is de lege lata marginal and does not function as expected by the legislator. This is due firstly to the acceptance of fiduciary establishment of a single member company, and secondly to the absence of e.g. a ban on establishment of several single member companies by the same person. This means that the purpose of the prohibition (restriction of the possibility to create vertical concerns, security of business transactions, exclusion of companies with (virtual share capital”) has not been attained in practice. Moreover, in the context of the planned reform of share capital the earlier arguments in favour of the prohibition become pointless.

Experience gained in German legal studies and judicature deserve more extensive presentation in view of the similarity of trust in both legal systems and the practical aspect of fiduciary establishment of a single member limited liability company in business transactions.