What are recurring benefits in kind in a limited liability company?
Recurring benefits in kind in a limited liability company is an institution described in art. 176 of the Code of Commercial Companies. It consists in the fact that pursuant to the articles of association of the Polish limited liability company part or all of the shareholder’s shares in the limited liability company is encumbered with the obligation of the partner to perform various services for or in the interest of the company. These benefits cannot be of a monetary nature. In human terms: it’s about different kinds of “works” or deliveries. These benefits are to be repetitive. In small companies, based on the partners’ own work, it will most often be their additional personal contribution, consisting in repetitive performance of certain activities for the company.
What is the purpose of recurring non-cash benefits in a limited liability company?
The purpose of the provision of Art. 176 of the Commercial Companies Code is to protect the interests of the company in the event of imposing additional obligations on the shareholders other than making contributions and establishing permanent economic links between the company and the shareholders, on the one hand, to ensure that the company obtains on favorable terms raw materials, goods or services necessary for the company’s operation, on the other on the other hand, to provide partners with a relatively constant demand for their own products or services. Historically, the idea of recurring non-cash benefits originated in Germany, and the prototype for Art. 176 of the Code of Commercial Companies was §55 Aktiengesetz (Law on joint-stock companies), the purpose of which was to meet the economic needs of a joint-stock sugar company.
Recurring non-cash benefits and ZUS
Recurring non-cash benefits in the context of ZUS are not an entitlement to cover the partner with ZUS contributions and NFZ contributions. They do not appear in the act on the social insurance system as an entitlement to contributions. So I am not surprised that they became in 2022 and are still the most popular way of not paying NFZ and ZUS in a limited liability company.
How should recurring non-cash benefits in a limited liability company be formulated?
As stipulated in Art. 176 of the Commercial Companies Code, if a partner is to be obliged to make recurring non-cash benefits, the articles of association should indicate the type and scope of such benefits. Recurring non-cash benefits (Polish: powtarzające się świadczenia niepieniężne) can therefore be introduced only in the notarial articles of association. As for the type, it is the subject of the benefit, an indication of what the partner’s benefit will consist of. The scope is an indication, first of all, of the size and period in which the benefit is to be provided. If the performance is to be “repeated”, it is necessary to at least indicate this repetition. If the company deed does not specify the performance period, the obligations of the partner are indefinite and expire at the latest upon completion of liquidation and deletion of the company from the register of entrepreneurs. As for the scope, I usually indicate in the articles of association the maximum weekly/monthly range counted in hours, while indicating that the details will be clarified in the agreement between the company and the shareholder or the resolution of the shareholders. No registry court has ever challenged such provisions as invalid or ineffective. Some indicate that a given benefit will also be provided a certain number of times a week, month or year.