The merger of companies does not violate the prohibition on sale of real estate

In its resolution of July 25, 2019 (reference number III CZP 19/19), the Supreme Court raised the important issue of applying the restriction on the sale of real estate or the right of perpetual usufruct, issued in proceedings before the so-called Commission for Reprivatisation of Warsaw Real Property („Reprivatisation Commission”) in the event of a merger of capital companies. The Supreme Court ruled that such a prohibition does not apply to the case of the transfer of real property or perpetual usufruct right by universal succession to another capital company as a result of a merger by acquisition, pursuant to the provisions of art. 492 § 1 point 1 of the Commercial Companies Code.

The justification of the adopted resolution has not been published so far, hence the motives of the Supreme Court are unknown for now. It is possible, however, that the Supreme Court found that the change of the owner of a property as a result of a merger of companies by the acquisition of property through universal succession does not deprive the effectiveness of the restriction on selling real estate. The merger of the companies means that the acquiring company, in accordance with the provisions of art. 494 § 1 of the Commercial Companies Code, enters on the date of merger with all rights and obligations of the company being acquired. This also applies to the legal and procedural sphere, as the acquiring company becomes a party to court and administrative proceedings before the merger with the acquired company.

In connection with the above, the transfer of ownership or perpetual usufruct right to real property subject to proceedings before the Reprivatisation Committee to the acquiring company by merger of limited companies results in the acquiring company joining the proceedings by the Reprivatisation Committee. Therefore, it seems that in such a situation it would be pointless to apply the sanction of nullity to the transfer of ownership of real estate or the right of perpetual usufruct in violation of the issued prohibition, since the takeover of the property by way of merger does not prevent further proceedings with the acquiring company.

It should be emphasized that the position expressed in the above resolution, due to the same legal argumentation, should also apply to the prohibition on sale or encumbering of real estate adjudicated in court proceedings pursuant to provisions on securing non-monetary claims.

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