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Succession management is about the longevity of one-manperson businesses

The article addresses the issue of protecting securing continuity of sole traders’ businesses in the event of their death.

The death of athe sole trader does not necessarily mean the end of the business. Indeed, based on the provisions of the Act of 5 July 2018 on Ssuccession management of a natural person’s enterprise and other facilities arrangements related [8] to facilitating the succession of enterprises, it is possible to establish rules under which the business will be transferred to the heirs. The regulations also permit the establishment of a succession management during the transition period.

What is succession management?

Succession management is nothing but a form of temporary management of athe business, after the death of the entrepreneur. It undoubtedly gives successors  the time to make key decisions about whether they want to continue the business after the entrepreneur’s death on their own account, or perhaps close the business.

A succession manager is the equivalent of to the well-known management board in corporationscompanies, which is responsible for, among other things:

●       performing acts of ordinary management in matters arising from the operation of the enterprise in succession,.

●       performing acts beyond the scope of ordinary management may be done with the consent of all owners of the enterprise in succession, and in the absence of such consent -– with the permission of the court,

●       running the enterprise in succession and to judicial and extrajudicial actions related to the running of the enterprise in succession.

The succession manager acts in his own name, however, on account of the owners of the enterprise in succession.

How to appoint a succession manager?

An entrepreneur during his lifetime may appoint a succession manager by either naming a specific person to act as succession manager or stipulating that upon his death the named commercial attorney[9]  will become the succession manager.

The appointment of a succession manager requires:

●       a declaration of the entrepreneur on the appointment of a succession manager, which must be made in writing,

●       consent of the person appointed as succession manager to perform this function,. This onewhich must also be made in writing,

●       notification (entry) of the administrator manager in the CEIDG (Central Registration and Information on of Business).

If the entrepreneur did not appoint a succession manager or did not submit an application for entry of a succession manager in the CEIDG, after the entrepreneur’s death the succession manager may be appointed within two months of the entrepreneur’s death by:

●       the spouse of the entrepreneur, who is entitled to a share in the enterprise in succession

●       thea statutory heir of the entrepreneur who accepted the inheritance

●       a testamentary heir of the entrepreneur who accepted the inheritance or a legatee of the entrepreneur who accepted the legacy of the entrepreneur, if he is entitled to a share in the enterprise in succession according to the announced will.

In order to appoint a succession manager, it is required to obtain the consent of persons who collectively have a share in the enterprise in succession greater than 85/100.

The appointment of a succession manager after the entrepreneur’s death and other related statements must be made before a notary. Otherwise, they will be invalid!

In this case, the notification to CEIDG is made by a notary. He registers the notarial deed in the Register of Succession Managers of Natural Persons’ Enterprises, which is maintained as part of the NotarialNotary Register System. This information is then directly transmitted by the Notary Register System to the CEIDG.

Who can be a succession manager?

Only a natural person who has full capacity for acts in law can be appointed as a succession manager.

The succession manager cannot be a person against whom the following has been validly adjudicated:

●       a ban on business activity,

●       a punitive measure or injunctive relief in the form of a ban on the business activity carried out by the entrepreneur, or on business activity with respect to asset management.

The function of succession manager can only be performed by one person at a time.

However, the entrepreneur may appoint an “understudy” manager, in case the succession manager appointed in the first instance place resigns or is unable to perform this function due to death, limitation or loss of his capacity for acts in law, his dismissal by the entrepreneur or a validation of thea judgement prohibiting him from conducting business activity or business activity with respect to asset management.

The details of the “understudy” manager are must be reported and entered in the CEiDG.

How long does succession management last?

As a general rule, succession management expires within 2 years from the date of the entrepreneur’s death, however, for important reasons, the court may extend this period, for a maximum of 5 years.

Iwona Smolińska

Iwona Smolińska

Counsel | Advocate

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