Family business foundation and the key principles of creating it

On 22 May 2023, the Family Business Foundation Act will come into force. This is a completely new legal form of doing business that aims to tax-efficiently collect and manage family assets. It is an alternative for family business owners who are recommended to consider choosing this new form of business.

Family business foundation – how to set it up?

Prepare a funder’s statement to establish a family business foundation.
Establish the articles of association of a family business foundation.
Take an inventory of the property.
Establish the governing bodies of a family business foundation.
Establish the founding capital.
Register a family business foundation.

A family business foundation is established by a founder, who can only be a natural person. The founder must declare the establishment of the family business foundation either in the foundation deed or in the will. Both documents must be in the form of a notarial deed.

In order to establish a family business foundation, it is also necessary to establish the articles of association, which is also drawn up in the form of a notarial deed. The articles of association are intended to define the basic data of the family business foundation, for instance:

name and registered office,
specific objective of the family business foundation,
beneficiary or how to identify her or him,
the extent of the beneficiary’s entitlement,
and more.

PLEASE NOTE: The beneficiary can be a natural person, including the founder himself or herself, as well as a non-governmental organisation carrying out public benefit activities.

Another formal requirement is that the founder draws up an inventory of the property. The inventory shall include information on the property rights contributed to the family business foundation by the founder or by persons other than the founder, indicating the person contributing the property and specifying the value and type of all of the property contributed, in the amount determined according to the state and prices at the time of their contribution and their tax value.

In the case of an inventory of property, a written form is sufficient.

The next step is to establish the governing bodies of a family business foundation required by the law or the articles of association. According to the Act, the governing bodies of a family business foundation are:

management,
supervisory board,
assembly of beneficiaries.

PLEASE NOTE: The supervisory board is an optional governing body of the family business foundation.

Registration

A family business foundation acquires legal personality upon entry in the register of family business foundations kept by the District Court in Piotrków Trybunalski. Until the entry, the business foundation functions as a family business foundation in organisation.

Even before a family business foundation is entered in the register, founding capital should be established. In the event of the business foundation being established in a will, it should be done within 2 years from the date of registration of the business foundation in the register of family business foundations.

Legal basis:
– Articles 21 to 24 and Articles 26 to 27, Article 30, Article 43 and Article 64 of the Act of 26 January 2023 regarding the family business foundation (Journal of Laws item 326 as amended).