13/08/2024
Can the ownership of even a single share in a company be considered as conducting business activity by a foreigner? 🤔
Any lawyer who doesn’t deal with immigration law issues on a daily basis would intuitively say that of course not —the company is the one conducting business activity, not its shareholder.
But it’s not as obvious as it looks❗
You may ask—what significance does this have for a foreigner❓
It turns out to be quite significant:
1️⃣ If it is determined that a foreigner holds shares, then even if they are simultaneously employed, they must apply for a residence permit in connection with conducting business activity.
2️⃣ Moreover, obtaining a residence permit based on business is not straightforward. One of the prerequisites is to show that the entity in which the foreigner holds shares has achieved a profit of at least 12 times the average monthly gross salary in the voivodeship where the entity is located.
3️⃣ What is more, following this reasoning, if a foreigner who works under an employment contract and simultaneously holds shares applies for a residence permit based on employment, this may have far-reaching consequences, such as the refusal to initiate proceedings. Often, in such situations, the foreigner no longer has a chance to correct this mistake and resubmit the application, because, for instance, their previous residence card has already expired.
Over the past years, administrative bodies—both at the first instance, Voivodeship Offices for Foreigners, as well as the central body, the Head of the Office for Foreigners—have adopted the view that the ownership of even one share in a company is equivalent to conducting business activity, and this carries with it the consequences mentioned above.
In my experience handling residence proceedings, I have encountered such a position. Detailed legal arguments pointing out the incorrect interpretation of the regulations by the authorities were to no avail.
❗Fortunately, this issue finally reached the Supreme Administrative Court👨⚖️, which, in its judgment of November 16, 2021, in case II OSK 1114/21, ruled that:
▶ “The applicable regulations do not imply that mere ownership of shares in a capital company is equivalent to conducting business activity. Two conditions must be met simultaneously—being both a shareholder and a member of the management board. The mere possession of shares or stocks does not constitute conducting business activity.” ◀
One would like to say that since the Supreme Administrative Court has indicated the path to follow in the interpretation of the regulations concerning foreigners, the matter is now clear.
However, I still encounter situations where, contrary to the conclusions resulting from this judgment, authorities attempt to assert that ownership of shares is conducting business.