Poland: New law on control over particular investments
Clearstream Banking1 would like to inform customers that effective
24 July 2020
the “Law on control over particular investments” (“the Law”) published in the Journal of Law will come into force. In accordance with the Law, during the next 24 months, investors not residing in the European Union/European Economic Area (EU/EEA) or in Organisation for Economic Cooperation and Development (OECD), when reaching a significant or dominant position in a company which is subject to this regulation, in particular by reaching or exceeding 20% or 40% of voting power, will require consent of the Office of Competition and Consumer Protection (UOKiK).
Impact on customers
Over a 24-month period, investors outside of the EU/EEA/OECD, are required to seek UOKiK approval, when reaching a significant or dominant position in a company which is subject to this regulation, in particular reaching 20% or 40% of votes at the general shareholders meeting of public issuers with their seats in Poland.
Background
The new Law comes into force on 24 July 2020 and is aimed at protecting local issuers (with registered seats in Poland) from hostile takeover during the COVID-19 period. The Law:
- Becomes binding for a 24-month period.
- Covers all public companies, which during any of the last two years (prior to the event resulting in investor motion to receive approval for the acquisition or approval after the acquisition) has exceeded EUR 10 mn revenue from the sale of its products and services in Poland.
- Generally covers acquisition or reaching substantial participation, including purchase or exceeding, 20% and 40% of votes at the general meeting of shareholders (directly, indirectly or based on written or oral agreements). This purchase or excess may also result from shares redemption, spin-off or changes in voting power of the shares. In the first case the motion is submitted by the investor, in the latter by the issuer.
- Impacts investors outside of the EU/EEA/OECD (there is minimum two year period required for the seat of the investor prior to the motion to UOKiK).
- States that consent for the above purchase or acquisition is issued by the President of UOKiK. The consent may be given generally prior to the transaction or in certain cases after the transaction. Within 30 days of the motion, UOKiK may issue no objection letter, otherwise a control proceeding is implemented, which may take up to 120 days (this period may be interrupted by certain administrative proceedings). The investor has to submit a motion via written form or send it electronically (by electronic form approved by the Office of Competition and Consumer Protection). The Law does not specify what documentation needs to be submitted in detail, but broadly defines the scope of information required.
- Mentions that such approval should generally be submitted prior to a direct reaching significant/dominant position (no fixed dates) with some exceptions for indirect or post-factum acquisitions.
- Describes that acquisition or purchase without consent of the UOKiK is subject to a PLN 50 mn penalty or prison sentence up to five years.
- Mentions that acquisition or purchase without consent of the UOKiK, by virtue of law is invalid. No rights emerging from such shares can be exercised except for their sale.
The above regulation also covers private companies in certain strategic sectors as defined in the Law. Seeking legal advice is recommended as the regulation is very broad and detailed (in particular when defining the definition of acquisition or reaching substantial participation).
Further information
For further information, customers may contact Clearstream Banking Client Services or their Relationship Officer.
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1. Clearstream Banking refers collectively to Clearstream Banking S.A., registered office at 42, avenue John F. Kennedy, L-1855 Luxembourg, and registered with the Luxembourg Trade and Companies Register under number B-9248, and Clearstream Banking AG (for Clearstream Banking AG customers using Creation Accounts), registered office at 61, Mergenthalerallee, 65760 Eschborn, Germany and registered in Register B of the Amtsgericht Frankfurt am Main, Germany under number HRB 7500.