Mandatory shares dematerialization
As of January 1, 2020, the amendment to the Commercial Companies Code entered into force in the scope of introducing mandatory dematerialization of shares in all joint-stock companies and limited joint-stock partnerships.
Effects of absence of dematerialization of shares by 1 January 2021
On January 1, 2021, all shares in documentary form shall be withdrawn from trading. On this day, the binding force of share documents issued by companies expires by law. The obligation of dematerialization applies to both private and public companies. Dematerialization will consist in registering shares in a special register kept by an authorized entity in the IT system.
Stages of shares dematerialization
All joint-stock companies and limited joint-stock partnerships are required to carry out the dematerialization process by the end of 2020, with a significant part of this process having to be carried out by June 30, 2020. The current provisions regarding the COVID-19 epidemic have not postponed these dates.
Shares dematerialization – obligations by 1 January 2020
First of all, it should be mentioned that by January 1, 2020, each company was required to create a website with a separate place for communication with stockholders, on which all announcements required by law and statute would be published.
Shares dematerialization – obligations by 30 June 2020
By June 30, 2020, the general meeting of stockholders is required to adopt a resolution regarding the choice of the form of keeping the register of stockholders and the entity maintaining this register. Within this period, companies should also conclude an agreement on keeping a register of stockholders and issue a first call to stockholders to submit stock documents in the company.
Shares dematerialization – obligations by 1 January 2021
Then, after June 30, 2020, companies are required to issue another 4 summons to stockholders, with an interval of from 2 weeks to 1 month. During this period, stock documents are accepted from stockholders and forwarded to the entity keeping the register. All stocks are subject to registration on January 1, 2021.
Forms of shares dematerialization
It should be remembered that shares of non-public companies may be registered:
a) in the register of shareholders kept by entities authorized from the Act of 29 July 2005 on trading in financial instruments, most often brokerage houses, or alternatively
b) in the securities deposit kept by the National Depository for Securities S.A.
The choice of one of the above forms of registration has far-reaching consequences for the further functioning of the company. In particular, registration of the stocks of a non-public company in the securities depository means that even the regulations on the organization of the general meeting of a public company shall apply to this company.
All shares of a given company may be registered simultaneously in only one register.
Shares dematerialization – penalties
Failure to perform the above-mentioned obligations within the deadlines set is a criminal offense punishable by a fine of up to PLN 20.000. Criminal liability applies to persons authorized to handle cases and represent a joint-stock company or a limited joint-stock partnership.
If you would like to take advantage of our help in the field of dematerialisation, please contact us by e-mail. We are able to provide you with full service for the whole process.