Obligatory dematerialization of stocks – the situation with COVID-19 did not affect the deadlines

On January 1, 2020, the amendment to the Commercial Companies Code entered into force in the scope of obligatory dematerialization of stocks in all joint-stock companies. On January 1, 2021, all stocks in documentary form will be withdrawn from trading. All stocks of joint-stock companies will have a dematerialized form. The obligation of dematerialization applies not only to private joint-stock companies, but also to public JSC, some of stock of which are still material. The purpose of these regulations is to enable the identification of a stockholder (which is often impossible in the case of bearer stocks), to counteract money laundering, to increase the safety and efficiency of trading and to simplify legal structures.

Register of stockholders or securities deposit

Instead of material stocks, the stockholders will obtain an entry in the stockholders’ register kept by the entity authorized to keep securities accounts (e.g. brokerage house, bank) or in the securities depository kept by the National Depository for Securities (KDPW). The entry will contain, among others information about the company, stockholder details, number, value, type of stocks held, information on the establishment of limited property rights on stocks, etc.

New obligations of joint-stock companies

Joint-stock companies have time until January 1, 2021, because after this date the binding force of stock documents issued by the companies expires. By this date, the companies are to meet a number of basic obligations, which the legislature provided for them, namely:

• create a website with a separate place for communication with shareholders, on which all announcements required by law and statute will be published (on convening a general meeting, summoning shareholders, entries in the National Court Register, etc.),
• convene a general meeting at which resolutions regarding the selection of the entity keeping the register of stockholders will have to be adopted,
• conclusion of an agreement by the management board of a joint-stock company with an entity maintaining a register of stockholders,
• calling stockholders five times to submit stock documents (by registered mail or e-mail),
• forwarding the necessary documents to the stockholder register, etc.

The deadlines for performing the above obligations are presented in the diagram below.

Will the deadlines for fulfilling the obligations regarding dematerialization be moved in connection with the introduction of the COVID-19 epidemic status in Poland?

Despite significant difficulties that joint-stock companies may face in connection with restrictions introduced to combat the effects of the COVID-19 virus spread, the legislator, contrary to the expectations of the business environment, decided not to postpone the deadlines or to introduce any facilitation in the field of dematerialization of stocks. It may be that in the event of a prolongation of the current crisis, the business facilitations adopted by the parliament so far as part of the „Anti-Crisis Shield” package will be supplemented with these issues.