The General Partnership: On the Oldest Way of Doing Business Together
The general partnership represents a direct continuation of merchant traditions stretching back to the medieval guilds and trading companies. When two or more traders joined forces for a common venture—whether a trading expedition to the Levant or the operation of a currency exchange—they did so in precisely the form we now call a general partnership: founded on mutual trust, shared assets, and joint liability for all obligations.
That same formula, refined through centuries of commercial practice and legal codification, remains the foundational type of commercial partnership in the Polish legal system today. For entrepreneurs whose scale of operations does not require elaborate corporate structures, and whose mutual trust permits simpler forms of collaboration, forming a general partnership represents a rational choice that combines flexibility with business credibility.
The Essence of the General Partnership: Between Simplicity and Responsibility
The general partnership occupies a distinctive place in the taxonomy of Polish commercial law. It lacks legal personality in the strict sense, yet possesses legal capacity—it may acquire property rights in its own name, including real estate ownership, incur obligations, sue and be sued. This subtle distinction matters primarily to lawyers; for the entrepreneur, what counts is understanding the practical consequences of choosing this form.
Partners in a general partnership may be natural persons or legal entities—including other companies. Decisions are made, as a rule, by resolution of the partners authorized to conduct the company’s affairs, ensuring a flexibility unavailable in more formalized corporate structures.
Joint and Several Liability: The Price of Simplicity
The fundamental characteristic of the general partnership remains the unlimited liability of partners for the company’s obligations. Each partner is jointly and severally liable with the partnership and the other partners, with their entire personal assets, without limitation. This principle—a direct inheritance from medieval merchant companies—constitutes both the primary disadvantage and the source of particular credibility for this form of business.
A creditor of the general partnership may direct claims against any partner, knowing that the obligation is secured not only by the partnership’s assets but by the full resources of each partner. This transparency — reinforced by mandatory of company registration in the National Court Register — translates into trust from contractors and financial institutions.
Advantages of the General Partnership in Commercial Practice
Formal Simplicity and Lower Costs
Unlike capital companies, forming a general partnership does not require a notarial deed. The partnership agreement may be prepared in ordinary written form—its drafting in a law firm by a legal counsel or attorney is sufficient. This eliminates notarial costs and shortens the formation process.
Tax Transparency
The general partnership is not a taxpayer for corporate income tax purposes. It constitutes a so-called tax-transparent entity—income is taxed only at the partner level, with personal income tax (for natural person partners) or corporate income tax (for legal entity partners) as appropriate.
This construction eliminates the double taxation characteristic of capital companies and enables effective tax planning, particularly when partners utilize different forms of taxation.
Simplified Accounting
A general partnership whose revenues do not exceed the equivalent of two million euros annually may maintain simplified records in the form of a tax revenue and expense ledger. Only exceeding this threshold obligates the partnership to maintain full commercial books. For smaller ventures, this means a significant reduction in accounting service costs.
Business Credibility
Compared to the civil law partnership—which is not subject to registration in the National Court Register—the general partnership offers greater transparency to contractors. Registration in the entrepreneurs’ register enables verification of basic information about the partnership, its partners, and manner of representation, building trust in commercial relations.
Forming a General Partnership Step by Step
The principles for creating and operating general partnerships are regulated by Articles 22–85 of the Commercial Companies Code. The process of forming a general partnership encompasses three essential stages: preparing the partnership agreement, making contributions, and registration in the National Court Register.
Stage One: The Partnership Agreement
The general partnership agreement requires written form under pain of nullity. The Commercial Companies Code specifies the minimum elements the agreement must contain:
The firm name must include the surnames or firm names of all partners, or alternatively the surname or firm name of one or several partners, together with the mandatory designation “general partnership” (in commercial dealings, the abbreviation “sp.j.” is permissible). When a partner is a legal entity, the full name of that legal entity is placed in the partnership’s firm name.
The registered office determines the jurisdiction of the registry court and venue in disputed matters.
Partner contributions require precise specification as to type and value. In case of doubt, partner contributions are deemed equal—therefore their careful description lies in all parties’ interest.
The business activity defines the scope of the partnership’s commercial activity, specified according to the Polish Classification of Activities (PKD).
Duration of the partnership—if the partners decide on a partnership formed for a definite period.
Stage Two: Contributions and Their Significance
If the general partnership is to conduct business activity, it must be capitalized. A partner’s contribution may take various forms: transfer of property ownership, encumbrance of rights, contribution of funds, or even performance of work or services for the partnership.
All rights contributed by a partner are deemed transferred to the partnership. A partner’s capital share corresponds to the value of the contribution actually made, and the partnership’s assets comprise both property contributed as capital and property acquired by the partnership during its existence.
The matter of contributions deserves particular attention for two reasons. First, a partner making even a minimal contribution is liable for the partnership’s obligations jointly and severally with the other partners, regardless of any disproportion in contribution amounts. Second, given the general partnership’s tax transparency, partner contributions may constitute tax-deductible costs—for example, upon liquidation of the partnership. Proper documentation and valuation of contributions at the formation stage prevents complications in future tax settlements.
Stage Three: Organizational Arrangements
Beyond the mandatory elements, a carefully drafted partnership agreement should regulate matters that would otherwise be governed by general statutory provisions—not always corresponding to the partners’ intentions:
Rules of representation determine which partners and in what manner may make declarations of will on the partnership’s behalf. By default, each partner has the right to represent the partnership independently, but the agreement may introduce joint representation or other restrictions.
Conduct of partnership affairs concerns internal management—making operational decisions that do not require representation vis-à-vis third parties. The agreement may differentiate partners’ competencies in this regard.
Profit distribution and participation in losses are subject to contractual freedom. In the absence of contrary provisions, partners participate in profits and losses in equal parts, regardless of the type and value of contributions made.
Rules for dissolution and liquidation specify procedures in the event of termination of the partnership’s activity, including the manner of distributing liquidation assets.
Registration of the General Partnership in the National Court Register
The general partnership comes into existence upon entry in the entrepreneurs’ register of the National Court Register. Until that moment, the partnership agreement binds the partners, but the partnership as a legal entity does not exist and cannot undertake commercial activities.
Formal Requirements for Filing
The application for registration of a general partnership with the National Court Register must contain the data specified in the Commercial Companies Code and the Act on the National Court Register, in particular: the firm name, registered office and address of the partnership, business activity, partner data, and manner of representation.
Formal errors or irregularities in the application result in a request to cure deficiencies, which delays registration. Depending on the workload of the relevant registry court, delays may amount to several months—a period during which the partnership remains in suspension, incapable of legally conducting business.
Traditional and Electronic Registration
Forming a general partnership may proceed via two routes:
Traditional registration involves preparing the partnership agreement in written form and filing the application with the National Court Register through the Court Registers Portal. This route permits complete freedom in drafting the partnership agreement’s contents.
Electronic registration via the S24 system enables formation of a general partnership within 24 hours, using a template agreement available in the Ministry of Justice’s IT system. Costs are lower, but the template agreement offers limited possibilities for individualization of provisions.
The choice of route depends on the circumstances of the particular case. For simple structures with typical partner relations, the S24 system offers an attractive combination of speed and economy. When, however, partners require non-standard solutions—special profit-sharing rules, complex decision-making mechanisms, or specific exit clauses—the traditional route with an individually drafted agreement remains the appropriate choice.
Central Register of Beneficial Owners
Since October 13, 2019, all commercial companies subject to registration in the National Court Register must additionally report beneficial owner data to the Central Register of Beneficial Owners maintained by the Minister of Finance. This obligation, introduced as part of anti-money laundering and counter-terrorism financing measures, applies to general partnerships as well.
The report must be filed within seven days of the partnership’s entry in the National Court Register. Failure to comply carries financial penalties.
Partner Liability: What It Means in Practice
The principle of unlimited partner liability in a general partnership—expressed in Article 22 § 2 of the Commercial Companies Code—is the foundation of this legal form and requires thorough understanding before deciding on its selection.
The Mechanics of Liability
Each partner is liable for the partnership’s obligations without limitation with their entire personal assets, jointly and severally with the other partners and with the partnership. In practice, this means that a partnership creditor may—after fulfilling certain conditions—seek satisfaction of their claim from the personal assets of any partner, regardless of the amount of contribution made by that partner.
This liability has, however, a subsidiary character: a creditor may execute against a partner’s assets only when execution against the partnership’s assets proves unsuccessful. This subsidiarity—introduced by the Commercial Companies Code in 2000—constitutes a significant relaxation compared to the earlier regulation, which provided for primary liability.
Practical Consequences for Partners
Before an obligation arises, a partner should consider:
- Whether the risk profile of the planned activity is adequate for the general partnership form
- Which personal assets may be exposed to execution
- Whether a spouse has consented to the partnership incurring obligations (which may extend execution to the spouses’ joint marital property)
During the partnership’s operation, a partner bears liability risk for:
- Contractual obligations incurred by the partnership (supplies, services, loans)
- Non-contractual obligations (tort liability, contractual penalties)
- Public-law obligations (taxes, social security contributions, administrative fines)
After leaving the partnership, a former partner remains liable for obligations that arose during the period of their participation. This liability does not expire automatically upon deletion of the partner from the register—it continues until claims become time-barred.
Joint and Several Liability
Joint and several liability means that a creditor may demand the entire performance from all partners jointly, from several of them, or from each separately. Satisfaction of the creditor by any of the partners releases the others. A partner who paid the partnership’s debt acquires a recourse claim against the other partners—proportionally to their share in losses as specified in the partnership agreement.
In practice, situations frequently arise where a creditor directs execution against the most solvent partner, leaving that partner with the burden of seeking reimbursement from the others. Therefore, precise specification of loss-sharing rules in the partnership agreement has significance extending far beyond internal settlements.
Internal Versus External Obligations
An important distinction concerns the character of the partnership’s obligations. Partners’ joint and several liability encompasses primarily obligations to third parties—contractors, suppliers, banks, tax authorities.
Obligations arising from the partnership’s internal relations—the right to share in profits, interest on capital contribution—are subject to different settlement rules and generally cannot be pursued from other partners on the basis of Article 22 § 2 of the Commercial Companies Code. These claims are realized within the framework of the partnership’s annual balance sheet or upon dissolution of the partnership.
Partner Withdrawal and Consequences for Liability
A partner may withdraw from a general partnership in several ways: by terminating the partnership agreement, transferring the entirety of rights and obligations to another person, or by agreement with the remaining partners. Each of these routes produces different consequences for liability for the partnership’s obligations.
Liability After Withdrawal
The key principle: withdrawal from the partnership does not release a partner from liability for obligations that arose during their participation. The date the obligation arose—not the date it became due—is decisive for determining the circle of liable partners.
If the partnership concluded a premises lease agreement in January and a partner withdrew in March, that partner remains liable for obligations under that agreement that arose through March—even if particular rent installments become due in subsequent months after their withdrawal. The question of liability for periodic performances due after a partner’s withdrawal remains subject to doctrinal discussion; however, it is safer to assume a broader scope of liability.
Transfer of the Entirety of Rights and Obligations
Article 10 of the Commercial Companies Code provides for the possibility of transferring partnership membership to another person, if the partnership agreement permits this. The transferor is jointly and severally liable with the transferee for partnership obligations that arose before the transferee’s accession. This solution permits effective “exit” from the partnership without its dissolution, but does not eliminate liability for earlier obligations.
Dissolution and Liquidation of the Partnership
Deletion of the partnership from the register does not end partners’ liability. After termination of the partnership’s legal existence, partners remain jointly and severally liable among themselves—this time without the limitation arising from subsidiarity, since the partnership has ceased to exist. A creditor may direct claims directly to the partners.
Limitation of Claims Against Partners
The question of limitation of claims arising from partner liability has significant practical importance and is sometimes a source of court disputes.
Commencement of the Limitation Period
The dominant position in doctrine and case law holds that the limitation period for a claim against a partner runs from the same date as the limitation period for the claim against the partnership—that is, from the day the obligation became due. The subsidiary character of partner liability does not postpone the commencement of the limitation period.
Interruption of the Limitation Period
Actions taken against the partnership to pursue a claim—filing suit, a conciliation petition—interrupt the limitation period against partners as well. However, actions taken against one partner have effect only with respect to that partner.
The Limitation Defense
A partner may raise the limitation defense available to the partnership, even if the partnership itself did not raise that defense. This right derives from Article 35 of the Commercial Companies Code and constitutes an element of partner protection against claims that the partnership could have successfully avoided.
Partner Liability and Marital Property
A general partnership partner who is married should particularly carefully consider the consequences of liability for the spouses’ joint marital property.
General Principles
If a partner’s spouse consented to the partnership’s incurring an obligation—or if the obligation arose in connection with operating an enterprise—a creditor may execute against the spouses’ joint marital property. In the absence of such consent, execution is limited to the partner’s separate property and certain components of joint property (wages, income from business activity).
Protective Solutions
Some partners decide to establish separation of property with their spouse before joining a general partnership. Separation of property protects the spouse’s assets from execution for the partnership’s debts, but requires careful planning—the marital property agreement must be concluded before the obligation arises and disclosed in the register to be effective against creditors.
Clause Proceedings: Simplified Execution Against Partners
Article 778¹ of the Code of Civil Procedure provides a special procedure for pursuing claims from general partnership partners. A creditor holding an enforcement title against the partnership may obtain an enforcement clause against a partner without the need to file a separate lawsuit—if they demonstrate the unsuccessful nature of execution against the partnership’s assets or the obvious future unsuccessful nature thereof.
Practical Significance
This procedure significantly accelerates pursuit of claims from partners and eliminates the costs of separate proceedings. For partners, this means that a judgment against the partnership may relatively quickly transform into an enforcement title against their personal assets.
Limitations
This provision does not apply to a person who was no longer a partner of the partnership at the time proceedings against the partnership were commenced. This results from the Constitutional Tribunal’s judgment of October 3, 2017 (SK 31/15), which found the earlier broader scope of the provision incompatible with the Constitution.
Practical Aspects of Conducting Partnership Affairs
Decision-Making
In the absence of contrary provisions in the partnership agreement, each partner may independently conduct partnership affairs not exceeding the scope of ordinary activities. Activities exceeding this scope require a resolution of all partners.
Determining what constitutes an “ordinary activity” and what exceeds it depends on the partnership’s business activity, its scale, and prior practice. For a partnership operating a building materials wholesale business, purchasing a shipment of goods for several hundred thousand zlotys may be an ordinary activity; for a small service firm—no longer.
Partnership Representation
As a rule, each partner has the right to represent the partnership independently. The partnership agreement may, however, introduce joint representation—requiring cooperation of two or more partners—or restrict the representation rights of certain partners.
Representation restrictions entered in the register are effective against third parties. A contractor may verify the partnership’s manner of representation in the National Court Register before concluding an agreement.
Documentation
A general partnership conducting business with revenues not exceeding two million euros annually may use simplified accounting in the form of a tax revenue and expense ledger. Exceeding this threshold obligates the partnership to maintain full accounting books from the following fiscal year.
Regardless of the form of accounting, the partnership should maintain corporate documentation: minutes of partner resolutions, documentation of amendments to the partnership agreement, records of contributions.
Changes in Partner Composition
Accession of a New Partner
A new partner joining an existing general partnership is liable for partnership obligations that arose before their accession, jointly and severally with the other partners. There is no possibility of limiting this liability vis-à-vis creditors—any arrangements among partners have effect only in their mutual relations.
Before joining a general partnership, a new partner should conduct due diligence comprising analysis of the partnership’s obligations, pending court proceedings, and potential claims.
Death of a Partner
A partner’s death leads, as a rule, to dissolution of the partnership, unless the partnership agreement provides otherwise. The agreement may provide for continuation of the partnership with participation of the deceased partner’s heirs or without their participation—with an obligation to pay them out.
Careful regulation of legal succession in the partnership agreement prevents disputes and ensures business continuity.
For Whom Is the General Partnership? Typical Applications
The general partnership works best in certain business configurations:
Ventures with moderate risk, where exposure to potential obligations remains controlled and partners consciously accept personal liability in exchange for structural simplicity.
Family businesses and trust-based partnerships, where partners know each other personally and prefer flexible decision-making mechanisms over corporate formalism.
Smaller-scale activity that does not generate revenues exceeding two million euros and may benefit from simplified accounting.
Holding structures, where a general partnership with legal entity participation serves as a vehicle for specific business purposes, utilizing tax transparency.
The General Partnership Versus Other Forms of Business Activity
An entrepreneur considering forming a general partnership should understand its place among alternative organizational forms:
Compared to the civil law partnership, the general partnership offers greater credibility (National Court Register entry), a clearly defined asset structure (partnership assets separated from partners’ assets), and more precise statutory regulations.
Compared to the limited partnership, the general partnership is simpler and less expensive to maintain, but does not offer the possibility of limiting any partner’s liability.
Compared to the limited liability company, the general partnership provides tax transparency and lower formal costs, but at the price of unlimited personal liability of partners.
The choice of appropriate form requires analysis of specific circumstances—the scale of planned activity, risk profile, relations among partners, development prospects, and the individual tax situation of each partner.
Professional Support in Forming a General Partnership
Although forming a general partnership is among the simpler procedures in Polish commercial law, the consequences of decisions made at the formation stage extend throughout the entire years of its operation. A partnership agreement prepared without due care may lead to disputes among partners, tax inefficiencies, or problems with representation vis-à-vis contractors.
Professional advice at the stage of forming a general partnership — encompassing both legal and tax aspects—constitutes an investment whose cost is disproportionately low compared to the potential consequences of structural errors that may emerge in the future.
General Partnerships in Poland – further reading
The Transformation of Civil Partnerships into General Partnerships
