Divisions and mergers of companies according to new rules – amendments to the Polish Companies Code
The amendment to the Polish Code of Commercial Companies concerns mainly domestic and cross-border merger, division and transformation processes and constitutes the next stage of implementation of the so-called company law package, i.e .:
1) Directive 2019/2121 of the European Parliament and of the Council of 27 November 2019 amending Directive (EU) 2017/1132 as regards cross-border conversions, mergers and divisions of companies (OJ L 321, 12.12.2019, p. 1) -44);
2) Directive 2019/1151 of the European Parliament and of the Council of 20 June 2019 amending Directive 2017/1132 as regards the use of digital tools and processes in company law (Journal of Laws UE L 186/80 of 11.07.2019, p. 80-104).
The existing law provisions regulate the issues of transformation processes partially, covering only cross-border mergers of limited liability companies as well as domestic divisions and mergers of joint-stock companies.
On the other hand, when it comes to domestic transformations, in many cases the regulations exclude the possibility of participation in these processes of limited joint-stock partnerships (S.K.A.), and the division of companies may only be performed by acquisition, establishing new companies, spinning off and combining the first two methods.
Due to the lack of a common legal framework regarding transformation processes for all EU and EEA Member States, these countries created their own, often contradictory regulations.
The amendment provides for the following changes in particular:
- A new type of division of the company will appear – separation. This division consists in transferring part of the assets and liabilities of the divided company to one or more acquiring companies in return for the issue of shares or stocks in the newly formed company to the company being divided,
- There will be new, more detailed protective rules for cross-border mergers than those provided for in the current Directive, such as for example the conditions for issuing a certificate of legality for a cross-border operation. The beneficiaries of these protective measures are creditors, including public creditors, minority shareholders and employees,
- The new regulations also provide for a new simplified type of merger of companies. It comes into play when one partner owns, directly or indirectly, all shares or stocks of the merging companies or partners of the merging companies hold shares or stocks in the same proportion in all the merging companies. If these conditions are met, the merger could be completed without granting shares or stocks of the acquiring company.
- In the field of cross-border transformation processes of companies, new types of operations will appear:
- cross-border divisions by formation of new companies, by acquisition and formation of a new company and by spin-off,
- cross-border conversions involving limited liability companies and limited joint-stock partnerships into a company governed by the law of an EU or EEA Member State.
Date of entry into force
The new regulations must come into force at the latest on January 31, 2023.
Our lawyers specializing in corporate law and M&A will advise you on cross-border and domestic transformation processes.
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