Acquisition of shares by a foreigner in a Polish company in many cases requires a permit issued by the minister responsible for internal affairs. Although there are no formal obstacles to a foreigner becoming a majority shareholder in a Polish company, the Law on the Acquisition of Real Estate by Foreigners stipulates that a permit may be necessary even if the intention is to acquire only one share. The purchase of a company by a foreigner will therefore in many cases require the initiation of administrative proceedings, analogically to acquisition of real proeprty by foreigners.
This is because, according to Article 3e of the Act, the acquisition or taking up of shares in a commercial company with its registered office in the territory of the Republic of Poland by a foreigner, as well as any other legal action concerning the shares, requires obtaining a permit if, as a result of them, a company which is the owner or perpetual usufructuary of real estate in the territory of the Republic of Poland becomes a controlled company.
In turn, paragraph 2 of the said article stipulates that the acquisition or taking up of shares by a foreigner in a commercial company with its seat on the territory of the Republic of Poland, which is the owner or perpetual usufructuary of real estate on the territory of the Republic of Poland, requires a permit from the minister of internal affairs if the company is a controlled company and the shares are acquired or taken up by a foreigner who is not a shareholder in the company.
Permission to acquire shares by a foreigner in Poland – which entities are affected by the regulation?
According to the Law on Acquisition of Real Estate by Foreigners, a foreigner within the meaning of the law is:
- a natural person without Polish citizenship, such as a Swiss citizen,
- a legal entity based abroad, such as the equivalent of a limited liability company based in Canada,
- an unincorporated company of persons listed in item 1 or 2, established abroad, formed in accordance with the legislation of foreign countries, for example, the equivalent of a general partnership formed in India, established there, whose partners are Indian citizens,
- a legal person and an unincorporated commercial company established on the territory of the Republic of Poland, controlled directly or indirectly by persons or companies listed in items 1, 2 and 3, for example, a Polish limited liability company in which the majority of shares are held by a citizen of the United States.
A “controlled” entity should be understood as a company in which a foreigner or foreigners hold directly or indirectly more than 50% of the votes at the shareholders’ meeting or the general meeting, also as a pledgee, user or on the basis of agreements with other persons, or have a dominant position within the meaning of the provisions of Article 4 § 1(4)(b) or (c) or (e) of the Commercial Companies Code.
Since in practice the above statutory definitions may carry many doubts of interpretation, before deciding on the acquisition of shares by foreigners, it may be necessary in each case to conduct a legal analysis to determine whether to apply to the Ministry of Internal Affairs and Administration for a permit. Above all, it will be crucial to verify whether, after the transaction, the foreigner(s) will directly or indirectly hold more than 50% of the votes at the shareholders’ meeting or general meeting of the acquired company.
Acquisition of shares by a foreigner in Poland – who is not required to obtain a permit?
Article 8(2) of the Law on Acquisition of Real Estate by Foreigners provides an exemption from obtaining a permit for the acquisition of shares in a Polish company by foreigners who are citizens or entrepreneurs from states party to the Agreement on the European Economic Area or the Swiss Confederation.
Consequently, obtaining a permit will be necessary for foreigners based outside the European Union and Switzerland, for example, from the United States, the United Kingdom, India or Norway.
Acquisition of shares by a foreigner in Poland – what is the procedure before the MSWIA?
The procedure for obtaining approval for the acquisition of shares by a foreigner is complex. First of all, the applicant should correctly formulate and submit an acquisition application with a list of attachments, which, as a rule, can be divided into the following groups:
- documents and information related to the legal status of the foreigner, for example, it can be a copy of the commercial register “Companies House” in the case of British companies,
- documents and information specifying the legal status of the company whose shares or stocks are the subject of the application submitted to the MIA,
- documents and information specifying the legal status of the seller of shares,
- documents and information relating to the real estate owned (or perpetual usufructuary) by the company to which the application relates.
The Regulation of the Minister of Internal Affairs of June 20, 2012 on detailed information and types of documents that a foreigner applying for a permit to acquire real estate is obliged to present specifies what specific documents the applicant should submit.
One of the prerequisites for the issuance of a permit is also the demonstration that the foreigner has ties with Poland. For example, these occur if the foreigner:
- is of Polish origin,
- has entered into a marriage with a citizen/citizen of the Republic of Poland,
- has a residence permit,
- carries out business activities in Poland.
Although initially it may seem that obtaining and submitting the above-mentioned attachments is not complicated, our experience shows that in most cases the MSWIA verifies information and documents very meticulously, so the applicant should pay special attention to the comprehensive and detailed drafting of the application and accompanying documents. In our experience, a common mistake that can occur when formulating applications is to imprecisely indicate the method of disposal, the number of shares being disposed of, and to specify what number of votes at the meeting they correspond to. Applicants should also bear in mind that documents drawn up in a language other than Polish must be submitted with a sworn translation.
Once the application is submitted, in the next step the MSWIA verifies the submitted information and documents in terms of formality. If the submitted application is not complete, the authority calls on the applicant to supplement it. It should be borne in mind that each time a request for supplementation results in the need to complete the deficiencies, and consequently the lengthening of the administrative procedure.
A permit is usually issued if it is not established that there is a threat to the defense, security or public order of the state as a result of the acquisition of shares by foreigners, and if the foreigner proves the ties linking him to Poland.
Trading in shares and stocks in Poland – permission of the Ministry of the Interior – our services
- we will analyze the transaction in order to make a recommendation whether in your situation it is necessary to apply for a permit for the acquisition of shares by a foreigner,
- we will represent you in the course of the administrative proceedings, starting with the collection of relevant documents, preparation of the application for the acquisition of shares / stocks with accompanying documents, submission of the application and (if applicable) submission of further information and documents to the Ministry of Internal Affairs and Administration (MSWIA) in order to positively consider the application,
- if the decision issued by the Minister in the first instance is negative and you do not agree with it, remember that you have the right to file an application for reconsideration – we can file the application on your behalf; in most cases, the application should be supplemented with information and documents,
- if the request for reconsideration is also not positive for you, we can file a complaint with the Provincial Administrative Court and a cassation complaint with the Supreme Administrative Court on your behalf.
