Business succession is the process of transferring a company from business owners to potential candidates of successors – most often family members or trusted managers – in an orderly and safe manner for both the business owner and the continuation of the business. In Polish legal conditions, properly prepared business succession plan is crucial, especially for family businesses that want to ensure the sustainability of the business after the founder leaves. This process requires not only a well-thought-out strategy, but also adaptation to the applicable provisions of civil, commercial and tax law. The basis for effective business succession plan is a clear definition of succession candidates.
In Poland, the most popular form of running a business is a sole proprietorship (JDG). Although it is not possible to inherit a sole proprietorship, current regulations allow the legal potential successors of the deceased small business owner to run the business and continue business operations, provided that the many business owners had appoint a so-called succession managers during their lifetime. This manager will handle the company’s affairs until the probate formalities are completed. Additionally, if no succession management was established at the time of the entrepreneur’s death, a succession manager can be appointed after their death by the entrepreneur’s spouse, statutory heir, or testamentary heir.
Succession Manager is a form of temporary management of a business after the death of the entrepreneur, thanks to which the legal successors have time to decide whether they want to continue the business on their own account, sell or close the company.
A succession manager can be a natural person who has full legal capacity.
A person against whom a final and binding ban on conducting business activity or a penal or security measure in the form of a ban on conducting business activity by an entrepreneur or business activity in the field of real estate management has been imposed cannot be a succession manager.
Also a succession manager cannot be a legal person.
To appoint a succession manager, the entrepreneur must submit a written declaration, obtain the consent of the person appointed to perform this function and report this to CEIDG (Central Register and Information on Economic Activity). If the succession management was not established during the entrepreneur’s lifetime, the manager may be appointed within two months after the entrepreneur’s death by the spouse, heir or legatee, after obtaining the consent of persons holding more than 85% shares in the enterprise. The appointment must be approved by a notary and reported to CEIDG.
Succession planning process in businesses brings numerous benefits, ensuring long-term success and stability. By preparing for leadership transitions, entrepreneurs can maintain continuity and avoid disruptions in operations. A well-organized small business succession plan helps retain valuable employees, fostering a sense of security and loyalty. It also ensures that the future leaders are in place to guide the business through future challenges. Ultimately, succession planning allows for a smooth transfer of power, preserving the company’s legacy and enhancing its prospects for continued growth and success for many small business owners.
