REIT – requirements for members of Management Board
Amendments to the bill – the requirement of experience in the field of so-called asset management
On October 17th, 2018, Public Finance Committee of Sejm considered the bill on companies investing in real estate (REIT). During the meeting, among discussed matter was the understanding of the provision of art. 13 section 3 point 2 of the act implementing a requirement, jointly for the Chairman and member of the Management Board of REIT, to possess at least five years of experience in management of real estates. According to the bill, this requirement is significant as its non-fulfillment preclude from obtaining status of REIT or a subsidiary company of REIT and, consequently, preclude from benefiting the tax privileges provided by the bill The Sejm deputies and representatives of the Ministry of Finance present at the meeting of the Public Finance Committee expressed their doubts as to whether the mentioned provision covers broadly understood experience in the field of so-called property management, i.e. the day-to-day administration of leased real estate on behalf of its owner for a specific fee, including renovation, investment implementation, searching for and maintaining tenants, settlement of payments, or so-called asset management, that is, strategic and operational management of funds affecting the risk and rate of return on real estates (management of real estates as assets). According to the statement of the Ministry of Finance, the requirement to experience a member of the Management Board in the field of management of real estates shall relate to experience in the so-called asset management. Probably the above issue will be clarified as per intention of the Ministry of Finance as part of the second reading of the bill in the Sejm. The proposed amendment may significantly limit the circle of persons holding qualifications to perform the function of a member of Management Board in the company.
Other requirements for REIT board members
The bill on companies investing in real estate (REIT) also implements other specific requirements for the Management Boards of REITs and their subsidiary companies. Each company should have its registered office and Management Board on the territory of the Republic of Poland. It is worth pointing out that the bill provides that subsidiary company of REIT may be a joint-stock company, limited liability company or limited joint-stock partnership. In the case of subsidiary company of REIT being in the form of a limited joint-stock partnership, the requirement of having a registered office in the Republic of Poland also applies to the general partners of this company (pol. ‘Komplementariusz’ – partners responsible for the company’s obligations without limitation), because in accordance with the provisions of the Commercial Companies Code does not provide Management Board for the limited joint-stock partnership.
Management Board of REIT and its subsidiary companies should consist of at least three members. A member of the board of directors may be a person without criminal record related to economic crimes specified in the provisions of the Commercial Companies Code and is not entered in the register of insolvent debtors of the National Court Register. In addition, the Chairman of the Management Board and one of the board members, in addition to the above mentioned asset management’s experience, should be person with higher education.
Our Law Firm monitors the legislative process of the Act on REIT. We will inform you about any significant changes in the bill in following updates.