Mandatory Social Insurance for the Sole Shareholder of a Limited Liability Company
The Demise of the “Near-Sole Shareholder” Doctrine and the Emerging Problem of Sham Multi-Member Structures
Introduction: A Jurisprudential Reversal of First-Order Significance
For more than a decade, the practice of Polish social insurance law was shaped by a concept that appeared in no statute: the “near-sole shareholder” (niemal jedyny wspólnik). The Supreme Court had fashioned this extra-statutory category to bring dominant shareholders of formally multi-member limited liability companies — those holding 95%, 99%, or even 99.5% of the equity — within the ambit of mandatory social insurance contributions under Article 8(6)(4) of the Social Insurance System Act of 13 October 1998 (ustawa o systemie ubezpieczeń społecznych, hereinafter “the System Act”), treating them de facto as sole shareholders of single-member companies.
The doctrinal appeal of this construction was not negligible; it served an ostensible policy of universality in social insurance coverage. Yet it operated contra legem. Article 4 § 1(3) of the Code of Commercial Companies (Kodeks spółek handlowych, hereinafter “CCC”) defines a single-member company with unambiguous clarity: it is a company in which all shares belong to a single shareholder. Where a company has two shareholders, it has two shareholders. Arithmetic, one might observe, is not susceptible to purposive interpretation.
Since the landmark judgment of 15 September 2021 (I USKP 44/21), the Supreme Court has systematically abandoned its prior approach, holding — at last — that mandatory pension and disability insurance attaches exclusively to the sole shareholder of a single-member limited liability company, and not to a majority shareholder, however “near” or “almost” sole that shareholder may be. This position has since been affirmed in a remarkably consistent line of authority: the Supreme Court judgments of 30 November 2023 (III USKP 17/23 and III USKP 31/23), 17 January 2024 (III USKP 73/23), 23 July 2024 (II USKP 52/23), 27 August 2024 (II USKP 49/23), and 15 January 2025 (I USKP 164/24), as well as the orders of 9 January 2024 (I USK 472/23), 13 March 2024 (III USK 22/23), 13 May 2025 (I USK 38/25), and 29 October 2025 (I USK 350/24).
The line is now so firmly established that in its most recent orders the Supreme Court has declined to accept the Social Insurance Institution’s (Zakład Ubezpieczeń Społecznych, hereinafter “ZUS”) cassation appeals for review, stating in terms that admit of no ambiguity that “it cannot, with any degree of certainty, be confirmed that the interpretation of Article 8(6)(4) of the System Act continues to generate divergences in the case law.”
The Doctrinal Foundations of the New Interpretive Framework
The revised jurisprudential position rests upon three distinct pillars, each warranting separate examination.
First, the primacy of textual interpretation in public law. Social insurance law is, in its essential character, a domain of public law. The grounds for mandatory insurance coverage are enumerated numerus clausus in Article 6(1) of the System Act. Given that the legislature employed the term “shareholder of a single-member limited liability company,” and that the statutory definition of a single-member company in Article 4 § 1(3) CCC is unequivocal, there exists no defensible basis for extending this concept to shareholders of dual-member companies, irrespective of the distribution of equity. Expansive interpretation operating to the detriment of a person subject to a public-law obligation — in what is functionally, if not formally, the domain of fiscal law sensu largo — is fundamentally irreconcilable with the rule-of-law principles enshrined in Article 2 of the Polish Constitution.
Second, the autonomy of shareholder volition. As the Supreme Court aptly observed in the reasoning accompanying its judgment in I USKP 44/21, where a shareholder of a multi-member company consciously elects to conduct economic activity through a legal form that does not trigger mandatory social insurance coverage, it is impermissible — in defiance of the plain text of an unambiguous provision — to conclude by way of contra legem interpretation that such coverage nonetheless obtains. Such a shareholder is not, it bears emphasis, left without recourse; voluntary participation in the social insurance system remains available.
Third, the conceptual separation of insurance liability from contribution obligations. The insurance obligation of a sole shareholder of a single-member limited liability company is linked to the possession of that legal status, not to the actual conduct of business activity or the performance of work. This entails that the category of “near-sole shareholder” — constructed as it was upon an analysis of de facto corporate control — was from its inception doctrinally flawed, inasmuch as it relied upon a criterion that is legally irrelevant to the emergence of the insurance title.
Sham Multi-Member Status: The New Frontier
It is at this juncture that one arrives at what is, in the present author’s assessment, the most refined and practically consequential element of the new jurisprudential line — and, at the same time, the dimension that has received insufficient attention in the scholarly literature to date.
In departing from the “near-sole shareholder” doctrine, the Supreme Court did not foreclose every avenue by which ZUS might challenge the multi-member character of a company. On the contrary, it opened a new path — significantly narrower, yet doctrinally sound. In its judgment of 15 January 2025 (I USKP 164/24), the Court stated expressis verbis that a court of general jurisdiction retains, in every case, the authority to examine whether the relevant legal acts — here, the formation of a limited liability company — were genuine and produced the legal situation in the form declared in those acts. In other words, the court remains competent to determine whether a minority shareholder is, in truth, a fictitious participant — a mere figurant.
This distinction is of cardinal importance, and it merits precise articulation. Under the new interpretive framework, two fundamentally different analytical perspectives must be recognized:
The first perspective: minimal engagement in corporate affairs. The minority shareholder exists as a genuine equity holder but displays little or no activity in the company’s operations. Under the current jurisprudence, this circumstance is legally immaterial to the question of mandatory social insurance coverage. The company is multi-member; the dominant shareholder is not the sole shareholder of a single-member company; mandatory insurance does not attach.
The second perspective: the multi-member entity does not, in substance, exist. The minority shareholder is a figurant — a person installed solely to create the appearance of multi-member status. The company agreement (or the subsequent acquisition of shares by a second person) constituted a sham transaction within the meaning of Article 83 of the Civil Code, or was effected in circumvention of the law. In such circumstances, the court may determine that the company is de facto a single-member entity and that its dominant shareholder is subject to mandatory social insurance.
The Supreme Court itself perceived this duality and expressed it with commendable precision: “A different perspective thus applies to ‘minimal engagement in the affairs of the company’ than to a situation in which ‘a multi-member entity does not, by design, exist in fact.'”
The Burden of Proof: Where the Decisive Battle Will Be Fought
It is here that one encounters the issue that will prove determinative in practice — and that, from the vantage point of counsel litigating against ZUS, assumes a dimension that is nothing short of strategic.
In its judgment in I USKP 164/24, the Supreme Court resolved the question of the allocation of the evidential burden in unequivocal terms: where the evidentiary record establishes that a company is multi-member (regardless of the percentage distribution of equity), the onus of demonstrating that the acts directed at the creation of that entity were sham transactions falls upon the party contesting that status — namely, ZUS. This burden may not be shifted onto the insured person.
The practical ramifications of this holding are far-reaching. The Supreme Court set aside the judgment of the Katowice Court of Appeal in part because that court had relied upon a negative finding — that “the appellant had not demonstrated that the minority shareholder performed any activities” — thereby effectively reversing the burden of proof. Yet it is ZUS, in invoking the sham character of the arrangement, that must discharge the corresponding evidentiary obligation.
Consider the following paradigmatic scenario: a limited liability company has two shareholders — one holding 99% and the other 1% of the equity. The company is duly registered in the National Court Register, its articles of association have been executed in notarial form, and the share capital has been fully paid up. ZUS issues a decision subjecting the dominant shareholder to mandatory insurance as the shareholder of a “single-member” company. Under the established jurisprudence, ZUS will fail — unless it demonstrates that the acquisition of shares by the second shareholder was a sham.
What evidence would ZUS be required to adduce? This is a question to which the case law has not yet furnished a comprehensive answer, but certain contours may already be discerned.
The Anatomy of a Sham — What ZUS Must Establish
A sham transaction (czynność pozorna) within the meaning of Article 83 § 1 of the Civil Code requires proof that both parties to a declaration of intent made that declaration, by mutual agreement, pro forma — that is, without the intention to produce the legal effects flowing from the content of the act. In the context of the subscription or acquisition of shares in a limited liability company, this entails the necessity of establishing that:
- the minority shareholder did not intend to participate genuinely in the company as an equity holder;
- the dominant shareholder did not intend to share corporate governance prerogatives with the second shareholder; and
- both parties agreed ab initio that the acquisition of shares served exclusively to create the appearance of multi-member status.
This is an evidentiary burden of exceptional difficulty. The doctrine of sham transactions requires proof of the concordant intent of both parties, not merely the passivity of one. The bare fact that a minority shareholder does not attend shareholders’ meetings, does not receive dividends, and does not engage in the management of the company does not establish a sham — it establishes, at most, passivity, which is the prerogative of every shareholder.
Moreover, it is essential to distinguish between a sham (pozorność) and an act in circumvention of the law (obejście prawa) under Article 58 § 1 of the Civil Code. ZUS could, in theory, contend that the formation of a dual-member company with a symbolic minority stake was designed to circumvent Article 8(6)(4) of the System Act. Yet following the change in jurisprudential direction, such an argument becomes paradoxical: if the provision unambiguously states that mandatory insurance attaches to the shareholder of a single-member company, and a dual-member company is not a single-member company, then the alignment of a corporate structure with the text of a statutory provision can hardly be characterized as circumvention of the law. It is, rather, an exercise in legitimate legal planning — the selection of a legal form that is consonant with the regulatory framework as it stands.
Sham Single-Member Companies and Genuine Single-Member Companies: A Doctrinal Distinction of Practical Consequence
The judgment in I USKP 164/24 introduces into the discourse an important doctrinal element, drawing upon the taxonomy advanced by Professor A. Kidyba. In the scholarship of commercial law, a distinction is drawn between:
- genuine single-member companies (spółki jednoosobowe rzeczywiste) — entities in their pure form, with a single shareholder; and
- sham single-member companies (spółki jednoosobowe pozorne) — entities that are formally dual-member, yet in which the capital dominance of one shareholder over the other is so overwhelming that the latter has no effective voice in corporate decision-making, and this state of affairs exists on the basis of an understanding between the shareholders — that is, with the acquiescence of the minority shareholder.
Under the new jurisprudential line, this latter category — sham single-member companies in the commercial law sense — is not coextensive with the concept of a sham transaction under Article 83 of the Civil Code. A company may be “apparently single-member” in the commercial law taxonomy (one shareholder dominates) while simultaneously constituting a genuine dual-member company in civil law terms (both declarations of intent regarding the subscription of shares were made animo obligandi). Only the latter form of sham — civil law sham — can furnish the basis for subjecting the dominant shareholder to mandatory social insurance.
This distinction is subtle but decisive. A considerable number of practitioners — including, it would appear, counsel for ZUS — continue to conflate these two categories, with consequences that are both analytically and forensically pernicious.
Practical Recommendations
In light of the now-established jurisprudential position and the reasoning articulated in I USKP 164/24, the following practical guidance may be offered.
For dominant shareholders. A dual-member corporate structure — even one involving a symbolic minority stake — affords effective protection against mandatory social insurance under Article 8(6)(4) of the System Act, provided that the second shareholder is a genuine participant rather than a figurant. The reality of the minority shareholder’s participation is worth documenting: attendance at shareholders’ meetings (even if infrequent), the conscious exercise of voting rights, participation in dividend distributions (even if nominal), and correspondence confirming awareness of shareholder status.
For companies engaged in structural planning. It is advisable to ensure that the articles of association reflect genuine, even if minimal, engagement by the minority shareholder — for instance, through the allocation of supervisory rights, rights to information, or a defined role in specified corporate governance decisions. The richer the documentary record confirming the authentic character of the multi-member structure, the more onerous the evidentiary path for ZUS. For more complex arrangements, strategic advisory encompassing comprehensive corporate planning is worth considering.
For counsel in disputes with ZUS. In challenging a decision subjecting a dominant shareholder to mandatory insurance, the critical strategy lies in invoking the established jurisprudential line and insisting that ZUS discharge its burden of proving the sham character of the minority shareholder’s equity participation. The evidential onus rests upon the social insurance authority. Proof of the minority shareholder’s passivity is, standing alone, insufficient to establish a sham. Effective litigation in this area demands precise command of the distinction between passivity and sham.
Conclusion: The Reconfigured Landscape
The current state of the case law places ZUS in a position that requires a fundamental reconstruction of its litigation strategy. The approach that prevailed for more than a decade — demonstrating the dominance of one shareholder and the marginality of the other — has been rendered obsolete. ZUS can no longer argue that a shareholder holding 99% of the equity is a “near-sole” shareholder and is, on that basis, subject to mandatory insurance. It may, however — and will foreseeably attempt to — prove that the second shareholder is a figurant and that the multi-member character of the company is a sham.
This is, however, a path of considerably greater difficulty, demanding an entirely different evidentiary apparatus. ZUS would need to establish the concordant intent of both parties as to the sham character of the transaction, rather than merely the passivity of the minority shareholder. In practice, this necessitates the conduct of evidentiary proceedings of a depth and character wholly unlike those that have hitherto been typical — proceedings closer in nature to those concerning the sham character of an employment relationship than to the routine issuance of insurance coverage decisions.
One may anticipate that, over the coming years, a distinct body of case law will emerge concerning the criteria for establishing the sham character of multi-member status in a limited liability company for the purposes of social insurance law. At present, only the general guidance furnished by the judgment in I USKP 164/24 is available — but even this suffices to establish that the evidential threshold has been set at a considerable height.
Statutory references: Article 6(1)(5) and Article 8(6)(4), Act of 13 October 1998 on the Social Insurance System (consolidated text: Journal of Laws 2025, item 350, as amended); Article 4 § 1(3), Act of 15 September 2000 — Code of Commercial Companies; Article 83 § 1 and Article 58 § 1, Act of 23 April 1964 — Civil Code.
Jurisprudence cited: Supreme Court judgment of 15 September 2021, I USKP 44/21; Supreme Court judgments of 30 November 2023, III USKP 17/23 and III USKP 31/23; Supreme Court judgment of 17 January 2024, III USKP 73/23; Supreme Court resolution of 21 February 2024, III UZP 8/23; Supreme Court judgment of 23 July 2024, II USKP 52/23; Supreme Court judgment of 27 August 2024, II USKP 49/23; Supreme Court judgment of 15 January 2025, I USKP 164/24; Supreme Court order of 13 May 2025, I USK 38/25; Supreme Court order of 29 October 2025, I USK 350/24.
Founder and Managing Partner of Skarbiec Law Firm, recognized by Dziennik Gazeta Prawna as one of the best tax advisory firms in Poland (2023, 2024). Legal advisor with 19 years of experience, serving Forbes-listed entrepreneurs and innovative start-ups. One of the most frequently quoted experts on commercial and tax law in the Polish media, regularly publishing in Rzeczpospolita, Gazeta Wyborcza, and Dziennik Gazeta Prawna. Author of the publication “AI Decoding Satoshi Nakamoto. Artificial Intelligence on the Trail of Bitcoin’s Creator” and co-author of the award-winning book “Bezpieczeństwo współczesnej firmy” (Security of a Modern Company). LinkedIn profile: 18 500 followers, 4 million views per year. Awards: 4-time winner of the European Medal, Golden Statuette of the Polish Business Leader, title of “International Tax Planning Law Firm of the Year in Poland.” He specializes in strategic legal consulting, tax planning, and crisis management for business.
