Since 14 February 2014, a Starter private limited liability company (S-PLLC) no longer needs to convert into a "regular" PLLC at the latest five years after its incorporation or as soon as the company is employing the equivalent of five full-time employees.
Besides modifications to the rules on the protection of the main residence of a self-employed person and on the status of accountants and tax consultants, the Act of 15 January 2014, published in the Official Gazette on 4 February 2014, has made a few changes to the status of the S-PLLC aimed at improving it.
Until recently, at the latest five years after its incorporation or as soon as the company employed the equivalent of five full-time employees, an S-PLLC had to increase its capital to at least the minimum capital of a "regular" PLLC (i.e. EUR 18,550) (art. 214, §2, second subsection of the Companies Code). At that point, even if the company did not voluntary increase its capital, it lost its special "starter" status by law, and consequently became subject to all the regular capital requirements (including the obligation to pay up the capital to at least EUR 6,200, the alarm bell procedure and the mandatory formation of a reserve fund amounting to 10% of the capital, but also the possibility to decrease the capital).
The Act of 15 January 2014, which entered into force on 14 February 2014, has abolished the mandatory conversion into a "regular" PLLC. As a consequence, an S-PLLC is now able to retain its "starter" status for more than five years (and even indefinitely) and is able to grow into a fully-fledged, experienced enterprise without losing this status – provided, of course, that its capital does not exceed the upper limit of EUR 18,549.99. As long as the company maintains its "starter" status, it is shielded from possible dissolution as a result of the alarm bell procedure of articles 332 and 333 of the Companies Code. Although the reference to the five-year term was abolished in the second article only, the temporal nature of the exclusion of the S-PLLC from the scope of article 332 of the Companies Code has also been implicitly abolished. This variant of the PLLC also remains spared from the obligatory minimum paying-up to EUR 6,200 – for as long as it itself sees fit.
Nonetheless, the shareholders of an S-PLLC still need to bear in mind the constraints permanently attached to starter status, which include: (i) the "stigmatising" effect of the obligatory addition of the word "starter" to the company-form designation, (ii) the increased allocation obligation (25% of the net profit) until the subscribed capital and the reserve fund amount to EUR 18,550, (iii) the prohibition against reducing the capital, (iv) the ban on shareholders holding securities in another limited liability company which represent 5% or more of the aggregate voting rights of that company, and (v) the joint and several liability up to a maximum of EUR 18,499 that weighs (and keeps weighing as long as starter status is maintained) on the shareholders as soon as the S PLLC has been in existence for three years.