“The essence of strategy is choosing what not to do.”
Michael Porter, professor at Harvard Business School and architect of modern thinking about competition, repeated this sentence throughout his career. Most companies fail not because they do too little—but because they do too much. They disperse, overextend, lose focus. They try to be everything to everyone and end up as nothing to anyone.
A company division in Poland is the operational realization of this principle: a conscious decision to cut away what does not serve the core purpose.
Jack Welch and the Logic of Separation
When Jack Welch took the helm at General Electric in 1981, he inherited a conglomerate manufacturing everything from light bulbs to jet engines. His first decision? Sell or close every business that was not first or second in its market.
Wall Street called him “Neutron Jack”—after the bomb that destroys people but leaves buildings standing. Welch preferred a different term: focus.
Over two decades, GE’s value increased fortyfold. Not through addition, but through subtraction.
The Lesson for International Investors in Poland
A company that has grown organically over the years often contains businesses with different dynamics, different risks, different capital requirements. Keeping them together—under one roof, in one legal structure—may make sentimental sense, but rarely makes strategic sense.
Company division under Polish law allows you to separate what should be separated—whether you are a domestic entrepreneur or a multinational restructuring your Polish operations.
Gary Hamel and Core Competencies
“The future belongs to companies that can forget faster than they learn.”
Gary Hamel, one of the most influential thinkers on strategy, co-developed with C.K. Prahalad the concept of “core competencies”—what a company does better than anyone else and what constitutes the foundation of its competitive advantage.
Everything else is unnecessary ballast.
Corporate Spin-Off as a Tool for Focus
A manufacturing company that over time developed its own logistics, its own IT department, its own distribution network—may discover that these “supporting” divisions consume more managerial resources than the core business. That warehouse problems obscure product problems. That accounting cannot separate what earns from what loses.
A corporate spin-off in Poland allows you to sever the periphery from the centre. The separated business becomes a distinct entity: with its own balance sheet, its own management, its own accountability for results.
The centre can finally concentrate on what it does best.
Andrew Carnegie and the Time to Sell
“The man who dies rich dies disgraced,” Andrew Carnegie, the steel baron of the nineteenth century, used to say. But before he began giving away his fortune, he had to build it—and sell it.
In 1901, Carnegie Steel became part of U.S. Steel for four hundred and eighty million dollars—the largest transaction in history up to that time. Carnegie knew something that many entrepreneurs ignore: there is a time to build and there is a time to harvest.
Company Division as Transaction Preparation
A company division in Poland is often preparation for a sale.
An industry buyer wants to acquire your production but does not want your distribution. A private-equity fund is interested in the profitable part of the business but does not want to drag along the segment generating losses. A potential acquirer sees value in the real estate you own but not necessarily in the operations you conduct.
Without a demerger, the transaction is difficult or impossible. The buyer would have to acquire everything and perform the separation himself—which means risk, cost, time. Most prefer to avoid this.
Carve-Out Before Sale
A pre-sale company division—a so-called carve-out—is a manoeuvre that isolates the attractive component and packages it in a structure ready for acquisition. Clean history, clean assets, clean liabilities.
The price rises when the buyer knows what he is buying.
Roger Martin and the Conflict of Strategies
“A strategy that says ‘yes’ to everything is not a strategy.”
Roger Martin, former dean of the Rotman School of Management, studied for years why corporate strategies fail. One reason: the attempt to reconcile objectives that are mutually contradictory.
The Problem of Mixed Strategies
A mature business generates cash and expects stability. A growing business consumes cash and requires risk. A business in crisis requires restructuring and hard decisions.
Keeping them in one structure forces management into constant compromise—and compromise in strategy is a recipe for mediocrity.
Demerger as Conflict Resolution
Company division in Poland allows each business to pursue its own strategy:
- The mature segment goes into a structure optimized for dividends
- The growth segment goes into a structure that can raise external financing without burdening the rest
- The troubled segment goes into a separate entity that can be restructured, sold, or liquidated without infecting the healthy parts
This is not dismemberment of the company. This is surgical removal of a conflict of interest.
Types of Company Division Under Polish Law
The Polish Commercial Companies Code (Kodeks spółek handlowych) provides several paths for company division—but only for capital companies: limited liability company (sp. z o.o.), simple joint-stock company (prosta spółka akcyjna), and joint-stock company (spółka akcyjna).
Division by Spin-Off (Podział przez wydzielenie)
The company continues to exist, and part of its assets pass to a new or already existing entity.
The classic corporate spin-off: the parent company remains, a subsidiary is born. This is the most common form of company division in Poland when the goal is to separate one business line while maintaining core operations.
Division by Split-Up (Podział przez rozdzielenie)
The divided company ceases to exist, and its assets pass to at least two entities (existing or newly formed).
The company separates into parts; itself disappears from the register. Split-up is used when there is no reason to maintain the original structure—for example, in succession planning among multiple heirs.
Division by Acquisition (Podział przez przejęcie)
The assets of the divided company pass to already existing companies, without creating new ones.
This form of demerger in Poland allows incorporation of separated parts into existing structures within a corporate group.
Company Division Procedure in Poland: Step by Step
Each path for company division under Polish law requires a formalized procedure:
Division Plan (Plan podziału)
Management boards of the companies participating in the division prepare a division plan containing:
- Type of division and data of participating companies
- Share exchange ratio
- Rules for allocating shares to shareholders
- Date from which shares entitle to dividends
- Rights granted to shareholders or specially entitled persons
- Special benefits for board members
- Detailed description and allocation of assets
Reports and Opinions
- Management board report justifying the company division
- Financial statements of participating companies
- Auditor’s opinion (required in most cases)
Resolutions and Registration
- Shareholder resolutions of participating companies
- Applications to the National Court Register (Krajowy Rejestr Sądowy, KRS)
- Publication of division announcement
Effective Date
The company division becomes effective on the date of registration. From that moment, rights and obligations pass to the acquiring or newly formed companies.
Tax Aspects of Company Division in Poland
A company division that is neutral under civil law may be highly non-neutral fiscally. Tax analysis must precede every division decision.
Tax Neutrality Requirements
A corporate spin-off in Poland can be tax-neutral (no income recognition) if:
- The separated assets constitute an organized part of an enterprise (zorganizowana część przedsiębiorstwa, ZCP)
- The assets remaining in the divided company also constitute a ZCP
- The division has economic justification (is not conducted solely to obtain a tax advantage)
Tax Risks
When neutrality conditions are not met:
- The divided company recognizes taxable income
- Shareholders may recognize income from receiving shares
- Tax authorities may challenge the transaction as a tax avoidance scheme
General Anti-Avoidance Rule (GAAR)
Since 2016, Polish tax authorities can challenge company divisions conducted primarily to achieve a tax benefit. Economic justification must be genuine and documented.
Company Division in Poland: Continuity and Its Limits
The law provides that the rights and obligations of the divided company pass to the acquiring or newly formed companies. But “pass” does not mean “pass automatically and unconditionally.”
Licences, Permits, Concessions
Some require notification to authorities; some require new administrative proceedings. A company division involving regulated permits requires advance coordination with relevant authorities.
Contracts with Change-of-Control Clauses
The counterparty may have the right to terminate the contract in case of significant structural change. Key contracts must be analysed before the demerger.
External Financing
The bank will almost certainly want to renegotiate credit terms. Financing agreements often contain clauses requiring consent to reorganization—including company division.
Employees
In a spin-off, employees assigned to the separated part transfer to the new employer under Article 23¹ of the Polish Labour Code (transfer of undertaking).
Company Division in Poland for Foreign Investors
International companies restructuring Polish operations encounter specific considerations:
Cross-Border Dimensions
Company divisions in Poland involving EU parent companies or subsidiaries may qualify as cross-border divisions under the EU Mobility Directive (implemented in Poland in 2023). Cross-border demergers follow a harmonized procedure with employee participation rights and creditor protection mechanisms.
Holding Structure Optimization
Foreign groups often use corporate spin-offs in Poland to:
- Separate real estate from operating businesses
- Isolate IP or licensing activities
- Create clean acquisition targets for partial exits
- Ring-fence regulatory or liability risks
Coordination with Parent Jurisdiction
A company division under Polish law may have tax and corporate consequences in the parent company’s jurisdiction. Effective planning requires coordination between Polish counsel and advisors in the home country.
Company Division in Poland: Our Services
We conduct company divisions like strategic operations—from diagnosis to stabilization.
Purpose Analysis
Why the company division? What do you want to achieve? What are the alternatives? Sometimes division is not the optimal solution—we verify this at the outset.
Structure Design
Which part goes where? How do we divide assets, liabilities, employees? What are the tax consequences of the proposed demerger?
Environment Preparation
Banks, counterparties, licensing authorities—everyone must know in advance. Surprises in a company division generate resistance and delays.
Procedure Execution
Documentation, resolutions, applications, deadlines. Coordination of accountants, auditors, notaries. A corporate spin-off is an operation requiring synchronization of multiple processes.
Stabilization
Is the new structure working? Does anything require adjustment? We monitor the company division even after its formal completion.
When to Consider a Company Division in Poland
A company division makes sense when:
- The company contains businesses with different dynamics, risks, or capital requirements
- You are preparing part of the business for sale (carve-out)
- You want to attract an investor to one segment without burdening the whole
- You are planning succession and want to divide the company among heirs
- A segment requires restructuring that would burden healthy parts
- A holding structure needs reorganization after years of organic growth
- You are optimizing a multinational group’s Polish operations
Summary
Porter was right: strategy is choosing what not to do. A company division in Poland is the moment when that choice becomes reality.
It is not failure or retreat. It is an act of strategic hygiene—cutting away what does not serve the purpose so that what does can grow.
Considering a company division, spin-off, or carve-out in Poland? Contact us to analyse your structure and identify the optimal path forward.
