Share Sale in Poland
- M&A in Poland
- Merger control in Poland
- Due Diligence
- Taxation of share (stock) transactions
- Share Purchase in Poland
- Share Sale in Poland
Sale of shares in Polish company
The sale of shares in Polish company is exactly the same transaction as share purchase but approached for the seller perspective. Motivation and concerns of the seller and buyer of the shares are different and conflicting. The seller is most usually concerned about:
- security of price payment,
- limitation of its liability,
- transaction effectivness.
Restrictions on sale of shares in Poland
As share sale is a mirror of share purchase you may read more about typical share sale restrictions in relevant sections:
- Corporate and formal restrictions regarding shares purchase in Polish Limited Liability Company.
- Corporate and formal restrictions regarding shares purchase in Polish Joint Stock Company.
How to secure price payment in shares sale transaction in Poland ?
The seller of the shares would be most usually interested in securing the price payment. Available price security measures depend on jurisdiction of the buyer. If the buyer is a foreign (non-Polish) entity, then the securities shall be established in jurisdiction relevant for the buyer. Nonetheless, there are certain securities that can be established in share deals regardless of buyer’s jurisdiction:
- contractual clause linking of transfer of title (shares ownership) with full price payment,
- registered pledge on the shares that are subject to sale,
- mortgage or registered pledge on assets of the company that is subject to sale.
If the buyer is a Polish entity, the seller has a wide variety of security measures offered by Polish Law, e.g.:
- bill of exchange,
- submission to enforcement act,
- banking guarantee,
- insurance guarantee,
- pledge and registered pledge on shares or other assets,
- mortgages on immovable properties.
Selection of security measures shall be always adapted to particular features and risks of each share sale transaction.
When sale of shares in not permissible ?
It is worth remembering that in accordance with Polish Company Law company shares cannot be traded at all, in the following events:
- share (stock) deals are not permissible prior to registration of the limited liability company (or joint stock company) in Polish Company Registry (KRS) and
- share (stock) deals are not permissible for shares (stock) issued in the increased capital, where the share capital is not yet registered in Polish Company Registry (KRS).
Share sale restrictions in Poland
Due Diligence is always recommended prior to execution of the sale of shares agreement. Within corporate audit it is recommended to examine the contents of Polish company’s articles of association, if they contain provisions limiting share deals. Such restrictions are often introduced in the articles of association of smaller companies in Poland, since shareholders often wish to protect themselves from uncontrolled changes to the composition of the shareholding structure.
Exemplary restrictions which are often introduced by Articles of Association:
- an obligation to obtain a prior written consent of the company’s corporate bodies, or
- right of first refusal / preemptive right of other shareholders of the company.
Certain restrictions on share sale (deals) in Poland are imposed by various provisions of Polish Law, e.g.:
- sale of the company that owns real estate located at the territory of Poland to the foreign buyer (non-EU buyer) – may be subject to permit issued by minster of internal affairs,
- sale of company whose turnover exceeds thresholds defined in the act of protection of consumers and competition (e.g. turnover in Poland in the preceding year exceeding 50 million euro) – may require merger clearance in Poland, i.e. consent of the Polish merger authority (the President of Office for Protection of Consumers and Competition).
Legal form of sale of shares in LLC
When selling limited liability company shares in Poland it is important to preserve an appropriate, required by law, legal form of of the agreement – a share sale agreement shall be concluded in a written form with signatures certified by a notary. More about legal from requirements can be read in section related to share purchase agreement in LLC.
Legal form of sale of stock in JSC
Sale of stock (shares) in joint stock company requires the sale contract and registration of the sale in the stockholders (shareholders) registry run by the brokerage house. Form requirements shall always be check prior to the transaction with the brokerage house, as they differ from entity to entity. More can be read in section related to stock purchase agreement in JSC.
After signing an agreement on the base of which a share deal is conducted, a seller or a purchaser shall inform the company about a change of a shareholder. After receiving information on a change of a shareholder, the management board shall update the share register and file the new list of shareholders including the number and nominal value of their respective shares with the Polish Company Registry. It is worth adding that the purchaser must, within 14 days, file a share sale tax (civil tax) return declaration and pay 1% tax calculated on the basis of the value of the shares purchased.
Contact our share sales specialized lawyers
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