In Poland, activities of public benefit organisations can be undertaken in two legal forms: as a foundation or as an association. Both of these forms operate on the basis of different laws and have certain characteristics that make it easier to operate one or the other form of the above-mentioned organisation in specific circumstances.
Within an ongoing association, it is possible to change the form of operation to a foundation. This will mainly be the case if the number of members of the association starts to decrease. In order to operate as a so-called "registered association", you need to have fifteen members. To be able to operate as a so-called "registered association", you need to have fifteen members. Especially for an organisation working for a niche cause or a small community, it may happen that there are not enough activists. In such a situation, a chance to sustain activities is to re-qualify as a foundation.
Polish law does not know the institution of transformation of an association into a foundation and vice versa. In order to change the form of activity, it is necessary, on the one hand, to close down the existing organisation and open a new one in its place.
This will involve a procedure for winding up the existing structure with all the consequences: the need to close down all the company's financial affairs, putting all matters in order, closing previously concluded contracts, etc.
The decision to liquidate will probably be taken by the board of directors or possibly by a resolution of the general meeting of delegates. It is worth noting that, without reading the specific statutes, it is difficult to predict exactly which body should do this and whether additional conditions need to be fulfilled (the existence of specific circumstances, a sufficient majority, or an adequate quorum at a board meeting).
Once a resolution has been passed, minutes must be drawn up and signed by the chairman and the secretary (minute taker) of the meeting. The resolution contains: the date, the subject (what it concerns) and the signatures of the authorised persons, i.e. the secretary and the chairman of the meeting. There is no legal template for the resolution and there is no obligation to number them. The court will require the following documents on the self-dissolution to be submitted for filing: (resolution on self-dissolution, resolution on the allocation of assets, attendance list, resolution on the election of a liquidator).
The assets of the association must be earmarked for the purpose specified in the statutes or in the resolution of the general meeting of members. In case neither of these documents specifies the purpose of the assets, the court decides to allocate the assets to a specific social purpose. The assets will be used to cover the possible costs of the liquidation of the association.
In simple terms, the establishment of a foundation takes place in 3 steps: determination of the foundation fund and establishment of a declaration of will in the form of a notarial deed or a will, determination of the foundation's statutes on the basis of which the foundation's mode of operation is adopted registration in the National Court Register. According to the Law on Foundations, foundation funds may be established by natural persons regardless of their citizenship and place of residence or by legal persons having their registered office in Poland or abroad. This must always be done in the form of a notarial deed or established by a will. It is very important to take care of the proper form of this document.
The assets earmarked for the purpose of the foundation should enable it to commence operations. The decision as to the amount of the founding fund is taken by the founder. If the foundation is not planning to carry out business activities, the minimum value of the assets will be between PLN 500 and PLN 1,000. If the foundation also has business purposes, at least PLN 1,000 is needed for business purposes and at least the same amount for statutory purposes. This means that the smallest possible assets of a foundation conducting business activity is PLN 2,000 (PLN 1,000 each for statutory business purposes).
Given the convergence of the objectives of both the foundation and the association, as well as practical considerations, one should consider whether a procedure that would allow one to transform into the other in one go is advisable in the Polish legal system. In the light of the activism still developing in Poland, it is worth taking care of proper legal preparation and creation of a law, convenient for activists.
Monika Kordowska, advocate
Stanislaw Skrzypek
Kordowska Law Group, Rytel
Advocates and Legal Advisers sp.p.