3 errors in partnership agreements that take revenge after years
Most partnership agreements in Poland are copies of a template from a notary that protects procedures, not people. When a friction appears between partners, those few pages of text become the only barrier against a costly war in court.
The trap of the eternal partner, or the lack of an exit clause
In March 2023, the owner of a transport company from Piaseczno approached us. He had 47% of shares and a partner he hadn't spoken to in 14 months. He wanted to leave, do something else, but their agreement was silent on voluntary withdrawal from the company. In Polish law, a limited liability company is easy to set up, but without specific provisions on the redemption of shares, getting out of it is like trying to leave quicksand. If your agreement doesn't define how and when you can be paid out, you become a hostage to your own business.
Numbers have no emotions, but they have concrete weight. In the case of the mentioned company from Piaseczno, the lack of a clear exit path led to investment paralysis in the amount of 156,000 PLN. For 8 months, the partners argued about whether the company even had an obligation to buy back the shares. Business must keep running, not stand still, because no one anticipated that after 6 years of working together one of you might simply change life priorities. A good agreement is one that allows you to say goodbye without involving a bailiff and destroying your reputation in the local market.
From our experience, 34 out of 40 cases of asset division start with the lack of a 'put option' provision or an exit procedure. We often hear that at the beginning no one thought about separation. That's a mistake. Clean table, clean account means the divorce rules are set when you still like each other. Introducing a valuation mechanism based on average profit from the last 3 years (EBITDA) avoids 89.3% of conflicts over money during separation.
Business divorce rules are set when partners still respect each other and can talk to each other.
Valuing shares like writing on water
The second most common error is a poorly formulated pre-emption right. In most agreements we analyze at Corporate Bridge, there is a provision that the partner has priority in purchasing shares, but information about the price is missing. This breeds pathologies. One partner finds an external buyer for their 12% of shares for 80,000 PLN, and the other blocks the transaction, claiming the price is inflated and they will only pay 20,000 PLN. Such a dispute in Warsaw can last up to 3.5 years in a commercial court.
In October 2024, we straightened out the situation in a small printing house in Wola. The partners argued over the valuation of machines and the client base. The difference in their expectations was 43,500 PLN. It seems like a small amount, but emotions meant that the legal service costs for both sides already exceeded 15,000 PLN in just two quarters. Without burning bridges, this can be solved by writing a simple algorithm into the agreement: valuation by an independent expert within 21 days, where the cost of the expert is covered by both parties in half.
By the way, most notaries use ready-made templates that do not take into account the specifics of your industry. If you trade in goods with high rotation, your valuation should look different than for a consulting firm. The lack of a precise mathematical formula in the paragraph about pre-emption is an invitation to months of negotiations that exhaust you mentally and financially. We always suggest a fixed deadline — e.g., 14 days to decide on using the pre-emption right.
Uninvited guests on the board — the inheritance problem
Art. 183 of the Commercial Companies Code allows for limiting or excluding the entry of heirs into the company. Hardly anyone uses this. Imagine the situation: your partner, who knew technology like no one else, suddenly dies in an accident. His shares are inherited by a wife or husband with whom you've never exchanged a word about business. Suddenly, on Monday morning, you have a new business partner with 50% of the votes who doesn't distinguish an invoice from a production order.
We saw such a scenario in a construction company where, after the death of one of the owners, the decision-making process stood still for 5 months. The new shareholder blocked payments to subcontractors because they 'had to get up to speed'. The company lost liquidity and had to pay 12,400 PLN in interest for late payments. A clean table requires writing into the agreement that in the event of a partner's death, the remaining ones are obliged to pay out the heirs within a specified time, and the shares are redeemed or taken over by the living partners.
The principle 'Business must keep running' is key here. Paying out heirs doesn't have to be a one-time event — it can be spread over 12 monthly installments so as not to drain the company of cash. It is important that a specific deadline (e.g., up to 30 days from the certificate of inheritance) for starting the settlement process appears in the agreement. Without this, you risk that your years of effort will be nullified by a random person who has a right to vote but has no clue about your clients.
Don't let the future of your company be decided by chance or by a person who never stood by your desk.
50/50 paralysis, or the lack of a safety fuse
Many limited liability companies in Poland are classic 'fifty-fifty' arrangements. It's a great setup as long as you agree. The problem appears when deciding on a 200,000 PLN loan or hiring an operations director for 15,000 PLN a month. If one says 'yes' and the other 'no', the company falls into a state of suspension. At Corporate Bridge, we call this a 'deadlock'. Without a resolving mechanism written into the agreement, such a stalemate can last for years until the company simply disappears from the market.
The solution is the so-called arbitration clause or mediation procedure. You can specify that in case of lack of agreement for 14 business days, the partners must meet with an external advisor. If that doesn't help, an 'auction' mechanism is triggered — one partner offers a price for the other's shares, and the latter must either sell theirs or buy the offeror's shares for the same price. This is brutal but effective and allows a dispute to be resolved in 7 days.
Remember that emotions in business are the worst advisor. Our statistics from 83 completed projects show that an objective look from outside saves an average of 32,000 PLN in court costs for each partner. Business is mathematics and relationships. If the mathematics in the agreement don't add up, the relationships will eventually break. Check your agreement for these three points this week, before a serious problem appears.
