M&A | In Principle

Does a company or limited partnership have to have its own website? Does it have to operate the site itself? What information must be posted there? Practical pointers under the amended Commercial Companies Code

How is the M&A market changing in Poland and around the world? Find out in this year’s report from Lex Mundi

With the New Year, an amendment to the Polish Commercial Companies Code will enter into force requiring every joint-stock company or joint-stock limited partnership to maintain its own website for communicating with shareholders. The new obligation is motivated by the process of digitalisation of joint-stock companies, but is also designed to increase protection of shareholders’ rights.

Along with the systemic transformation from the 1980s to 1990s and the inflow of foreign investment into Poland, the country was exposed to forms of contract already applied in international trade. It wasn’t that before then the law in Poland had been homogeneous and “truly Polish.” Historically, numerous factors contributed to the development of the Polish legal system, with a dominant role played by solutions from the German and French systems.

When is it necessary to hold a shareholders’ meeting, and when can it be dispensed with? Comments under the amended provisions of the Commercial Companies Code

The condition of the Polish M&A market depends on many factors, such as the economic and political situation in the country and the legal and tax environment for businesses. But another significant element impacting the size and structure of investments in Poland is the legal restrictions on conducting transactions. They affect both share deals and asset deals.

There have been few transactions on the pharmacy market in Poland since 25 June 2017, when the amendment to the Pharmaceutical Law popularly known as “Pharmacies for Pharmacists” entered into force. The transactions that did occur carried significant regulatory risk. This situation may change due to a recent interpretation by the Ministry of Health. Will we witness a gradual departure from the restrictive limitations under the 2017 amendment?

On 1 March 2019, an important amendment to the Civil Code comes into force, providing for the possibility of validating actions by a “false” corporate body. Up to now, such a possibility has applied only to actions by a “false” attorney-in-fact.

Foreign managers appointed to serve on boards of Polish subsidiaries often do not know what they can do and what they must do. Consequently they are not aware of what liability goes with either of these. They should be.

In the context of an M&A transaction a business lawyer is often perceived as necessary evil, a hardly justified cost. Even experienced market operators, when reflecting on how counsels contribute to their deals, seem to only focus on the most obvious, technical aspects of our job. “We have to engage and pay lawyers because they know the exact words that need to be put to paper for things or money to change hands and for us to be able to seek recourse” their reasoning seems to go. In more extreme cases clients are certain that lawyers, by definition, always impair the prospects of their enterprise.

The Commercial Companies Code regulates in detail the rules for shareholders’ participation in the general meeting of a joint-stock company. The resulting legal conditions should be taken into account when planning the timeframe for M&A transactions to adequately secure the rights of the buyer of shares, and in particular, the possibility for the buyer to participate in the general meeting of a non-public joint-stock company after the closing of the transaction.

According to the applicable regulations, in order to transfer the ownership of shares, it is necessary to have a tangible element in the form of transfer of possession of registered shares or delivery of bearer shares. The transfer of ownership of registered shares additionally requires the conclusion of an agreement between the seller and the buyer (either on the share document itself or in a separate document), while the transfer of bearer shares may take place even without the conclusion of a formal agreement, through the mere delivery of the shares. Considering the significant legal consequences of delivering a bearer instrument, it is necessary to consider how to understand the term “delivery of shares”.