Contact me
Suslo Optimal Solution
Attorney-at-law Dr Joanna Susło, Ph.D.
E-mail: [email protected]
Mobile phone / WhatsApp: + 48 668 841 990
Statistical Identification Number (REGON): 380671665
How to verify a Polish company before signing a contract? Learn how to check a contractor’s registration, financial standing, representation rights and potential risks.
Signing a contract with a Polish company without first checking its legal and business situation may involve significant risks. This applies both to businesses operating in Poland and to foreign contractors planning to start cooperation with a Polish company.
The mere fact that a company is registered in the National Court Register (Krajowy Rejestr Sądowy – KRS) does not mean that the business partner is reliable, solvent, or that the person presenting themselves as a member of the management board can actually validly sign a contract on behalf of the company.
Before entering into a contract, it is therefore advisable to conduct a basic verification of the Polish company and business partner. In the case of larger transactions, it may be appropriate to conduct a broader legal investigation, commonly referred to as due diligence.
The scope of the verification should primarily depend on the type and value of the planned transaction.
In the case of standard commercial cooperation, it is advisable to check at least:
Not every piece of information will have the same significance in every case. A business partner with whom a contract for the supply of goods worth PLN 20,000 is being signed should be verified differently from a company entrusted with a multi-million-zloty project.
The first step should be to verify the company’s details in the National Court Register (Krajowy Rejestr Sądowy – KRS).
The KRS makes it possible to confirm basic information about the company, in particular:
It is advisable to obtain a current KRS extract and, in the case of a significant transaction, also analyse previous entries and changes (the so-called full information).
The history of the KRS may provide information that is not immediately visible in the current extract. Frequent changes to the management board, registered office, shareholders or rules of representation may require additional clarification. It is also important to determine whether the company has subsidiaries or is itself a subsidiary. The nationality of the persons managing the company and its shareholders may also be relevant.
One of the most important issues before signing a contract is determining whether the person signing the contract is properly authorised to represent the company.
It is not sufficient to check whether a person presents themselves as the president or a member of the management board. The company’s rules of representation disclosed in the KRS must also be checked.
For example, if the company’s representation rules require two members of the management board to act jointly, signing a contract by only one member of the management board may create serious legal problems. In extreme cases, it may even constitute a criminal offence, which can significantly complicate the recovery of invested funds.
The authority of a commercial proxy, attorney-in-fact or any other person acting on behalf of the company should also be verified.
As a general rule, there should be no discrepancies between the company’s documentation and the information disclosed in public registers. All changes should be reported to the register within 7 days of their occurrence.
Before entering into an important contract with a Polish company, it is worth knowing not only the name of the business partner, but also who stands behind the company.
Depending on the type of company and the information available, it may be possible to check:
It may be particularly important to determine whether the company belongs to a larger corporate group and whether its activities are connected with other entities.
In the case of high-value transactions, analysing only one company may be insufficient. It may also be necessary to verify related entities, including whether the parent company is required to give its prior consent to the performance of a specific legal act.
In some cases, an important element of business partner verification is checking the beneficial owner, meaning the individual who ultimately exercises control over the entity.
Information concerning beneficial owners may be particularly important in the case of:
If the actual ownership structure is unclear, this may be a signal that a more detailed legal analysis is required before signing the contract.
The next step may be to analyse the available financial statements.
Financial data make it possible to obtain a basic picture of the contractor’s economic situation. In particular, attention should be paid to:
Conclusions should not, however, be drawn solely on the basis of one indicator or one financial year.
For the purposes of assessing risk, it is primarily important to determine whether the company’s financial situation is improving, remaining stable or deteriorating. In the case of contracts involving high amounts, it is natural to request financial documents from the Polish business partner. Some of them may be available in public registers, but not all.
Business partner verification should also cover, to the extent possible, information concerning the company’s indebtedness.
In the case of larger transactions, it is worth considering checking information concerning:
The mere fact that a company has been operating for many years does not determine its current solvency.
Before signing a high-value contract, it is worth checking whether restructuring or insolvency proceedings are pending against the business partner.
This is particularly important if the other party is expected to:
Information about the business partner’s financial problems may have a direct impact on how the contract should be structured and how the interests of the other party should be secured.
It often happens that, before a particular contract is concluded, numerous enforcement proceedings are already being conducted against a Polish company. Such information can be obtained as part of a detailed analysis before signing the contract.
In the case of business transactions, it is also worth verifying the contractor’s tax status.
It may be particularly important to determine whether:
This is important not only from the perspective of payment security, but also because of potential tax consequences.
The current KRS extract does not always provide a complete picture of the company’s activities.
As part of a more detailed verification, it is worth analysing the history of changes concerning, among other things:
Sudden or frequent changes may have completely legitimate reasons, but in certain circumstances they should prompt additional questions.
Publicly available information online may also provide information about a business partner.
It is worth checking, among other things:
Information found online should not, however, be treated as independent proof of a company’s reliability or unreliability.
Online reviews, including reviews on a Google Business Profile, may be useful as a warning signal, but they should be verified against more reliable sources.
When verifying a business partner, it is worth paying attention to so-called red flags, meaning circumstances that may increase transaction risk.
Examples of warning signs may include:
A single “red flag” does not necessarily mean that the business partner is unreliable. It should, however, prompt further verification.
In the case of larger transactions, a standard KRS check may not be sufficient.
A broader due diligence process may be conducted, covering an analysis of the company’s legal, financial and organisational situation.
The scope of the investigation may include, among other things:
The scope of due diligence should always be adapted to the type of planned transaction.
Before signing an important contract, it is worth answering at least the following questions:
Discovering a potential problem does not always mean that the transaction should immediately be abandoned.
Depending on the circumstances, appropriate safeguards may be considered, such as:
A properly conducted business partner verification can therefore not only answer the question of whether it is worth signing the contract, but also indicate under what terms the contract should be concluded.
Yes. A foreign business does not have to conduct business in Poland in order to verify a Polish business partner.
In practice, however, language, knowledge of Polish registers and familiarity with the legal rules governing the representation of companies may constitute a barrier.
Therefore, a foreign business planning a significant transaction with a Polish company may instruct a Polish lawyer to conduct a business partner verification and review the draft contract.
This is particularly important in transactions involving significant amounts, real estate, investments, the supply of goods or long-term cooperation.
Business partner verification is one of the basic elements of legal risk management in business.
A few hours spent checking a company before signing a contract may help identify problems whose discovery only after the contract has been performed may be considerably more costly.
Particularly in the case of cross-border transactions, it is worth checking not only the company itself, but also its rules of representation, the persons behind the business, its financial situation and potential risks associated with the specific contract.
If the planned transaction is significant in value or the business partner is a new business partner, it is worth considering professional verification of the Polish company before signing the contract.
A lawyer can not only check information disclosed in public registers, but also assess it in the context of the planned transaction, review the draft contract and identify potential legal risks.
For foreign businesses, the assistance of a Polish lawyer can be particularly useful because it combines document analysis with practical knowledge of Polish company law and the rules governing the conclusion of contracts.
Before signing a contract with a Polish company, it is worth conducting at least a basic verification of the business partner.
The key issue is not only to determine whether the company exists, but also:
In the case of larger or more complex transactions, it is worth considering professional due diligence of a Polish company and a review of the contract itself before signing it.
The entire process can be completed online with legal assistance from a Polish lawyer.
Dr Joanna Suslo, Attorney-at-law
E-mail: [email protected]
Mobile WhatsApp 24/7: + 48 668 841 990
SOS-Legal-Law-Firm
Lawyer in Poland