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Holding Laws in Poland: Update, Applicability & Business Concerns

In this article, we will be learning about the numerous change that are been made in the new Holding laws in Poland. So, without any further delay let’s get started.

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Holding Laws in Poland: 2022-23 Update

The new holding law is a response to the demands of the marketplace by introducing processes in the Polish legal system that reflect the real working of capital groups. The new rules formalize on other hand, the exercising of dominant positions by parent firms. 

holding laws in poland

On another hand, they restrict the liability of directors and the directors of subsidiary firms for any damages that result from the implementation of instructions of the parent firm.

In this article, we will be learning about the numerous change that are been made in the new Holding laws in Poland. So, without any further delay let’s get started.

What are the New Holding Laws in Poland?

New laws on holdings in Poland will come into effect on the 13th of October, 2022. The regulations governing holds will become part of the Code of Commercial Companies (CCC).

Holding laws provide an opportunity for corporate organizations to increase the value of their entire organization and also to alter the operations of subsidiaries to meet that goal. 

This is possible due to the following rules of the holding law:

  • The holding company could issue binding instructions to affiliates of the group on how they should conduct their business;
  • The holding company can look over the subsidiary’s books or documents at any time;
  • The board of supervisory (or managing) board has a permanent view of the subsidiary’s efforts to protect the group’s interests.
  • The creation of a group of corporations requires the passing of a formal resolution. All subsidiary companies must approve the resolution to join a group. Afterward, the holding company as well as the subsidiary must be able to report membership in an organization for the National Court Register;
  • Profit transfer agreements that were signed between a holding company and a subsidiary before the 13th of October, 2022 will need to be amended as the old Article 7 of the CCC regarding profit transfer agreements was deleted;
  • The liability of members of the management board who act in the corporation group’s interests is not a problem when a resolution directing the execution of an obligation is passed.
  • The holding company can buy shares from minor shareholders in subsidiaries.
  • new obligations for management board members concerning board meeting resolutions approved in the direction board have to be recorded, and the minutes have to be signed at least by one of the board members;
  • Supervisory boards have been granted new powers. They can designate a standing or an appointed committee to accomplish specific supervisory duties and designate an advisor of the supervisory board to look into an issue specific to the assets of the company or the company.

For Whom the New Holding Laws in Poland will be Applicable

The new Holding laws in Poland will specifically permit corporations to use the same economic strategy to protect the interests of the corporate group provided that it does not cause harm to minor partners or creditors that are part of the subsidiary. 

It is evident from the reasoning behind the amendment proposal – the parent companies will be able to exercise uniform control over their subsidiaries.

The rules in the law on holding introduced by the legislator won’t apply to all businesses that operate in the market. These regulations will only affect, i.e. (limited liability joint-stock companies, joint-stock companies, and simple joint-stock companies, and vice versa) that are part of a group of businesses.

In this case, it is important to clarify what a group of corporations or a corporate group is. Based on the definitions introduced in the amended Act the definition of a corporate group comprises a parent corporation and subsidiary capital company or companies. 

The companies that are part of a corporate group, following an agreement on joining a corporate group, implement the same strategy to attain an interest shared by all. This provides the basis for the corporate parent to take uniform control over the subsidiary or the subsidiaries. 

The above definition explicitly demonstrates that the use of the holding law in an organization is not a requirement. It is the parent firm and all its affiliates that can only be subject to the newly established corporate law institutions when their shareholders’ meetings approve the resolution to join and corporate group.

When will the New Holding Laws Come into effect?

Following the Holding laws in Poland, those holdings will be able to be used to establish the group. 

To form a group of companies there must be:

  • The adoption by the assembly shareholders (general assembly) of an affiliate resolution a resolution relating to participation in an organized group.
    and
  • The disclosure of participation in an organization on the National Court Register. When the company’s parent is based overseas, the membership in the corporate group has to be declared in the register of subsidiary companies.
  • When both conditions are met, businesses can refer to the regulations governing the so-called “groups of companies.

Another requirement for benefiting from the new regulations is the registration of the participation of a group in the entrepreneurs’ register of the National Court Registry held for both the parent company as well as the subsidiary. 

Unlikely parent companies’ or subsidiary’s inability to comply with these steps will stop them from benefitting from the new rules.

Should Companies be Worrying of New Holding Laws change?

While the new rules aren’t yet in effect, their substance has already sparked several debates and concerns. 

There are concerns that the new rules will allow an environment that allows for conduct that could negatively impact not just the business relationships of the entities and subsidiaries, but also the protection of the business secrets of their subsidiaries. The issues discussed above are only a portion of the changes made in the Code of Commercial Partnerships and Companies. 

These changes will certainly have an enormous impact on the operational functioning of corporate groups, as well as holding groups that have the involvement of foreign companies – particularly if they choose to create the corporate group formally.

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Conclusion

The new holding law is a response to the demands of the marketplace by introducing processes in the Polish legal system that reflect the real working of capital groups. On another hand, they restrict the liability of directors and of subsidiary companies for any damages that result from the implementation of instructions of the parent company.

Odint Consultancy can help you in getting a better understanding of the changes in Holding laws in Poland. Contact us to know more about it.

FAQ’s

Civil procedure refers to the court’s decision on a legal issue. A lot of times, the term “holding” is a term used to describe a decision on an issue of such importance that will decide the whole matter.

A way to state the ruling is to summarize all of the relevant facts. Then, write down the decision that the court arrived at upon those facts and a decision that is narrowly tied to particular facts of the case won’t necessarily be a valuable study aid.

A holding company is an entity that has several subsidiaries. Therefore the definition of ‘subsidiary company’ as defined in paragraph (87) (2) of the section must be used to refer to

The ruling is more specific, it is based on the parties and facts of the case. The concept of holding can be more abstract since it can apply to situations that have various details, however, it is it has a similar ‘fact profile’

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