An overlooked key issue in the pre-transaction sale of shares is the need to obtain relevant consents to the transaction. We analyse examples of the most common solutions in this regard.
Companies & Partnerships Code, Articles of Association
The disposal of all or part of an entity’s shares may be subject to company consent or otherwise restricted. The co-owners may therefore delegate this power to another body, such as the general meeting or the supervisory board, if appointed.
If a shareholder decides to sell some or all of their shares to a third party that is not a shareholder, the articles of association may also contain provisions granting the other shareholders the preemptive right (Polish: prawo pierwokupu) to acquire these shares.
Change of control clause
One of the conditions precedent to the transaction, i.e. the fulfilment of which will make it impossible to conclude the final share transfer agreement, is the requirement to obtain written consents from the company’s key customers or counterparties to intended changes in its shareholding structure (change of control clause).
If such a key counterparty or customer is not informed of a planned change of control, there is a risk that the agreement may be terminated immediately, i.e. without any obligation to give notice.
KOWR’s preemptive right
The National Agricultural Support Centre (KOWR) has the pre-emptive right to purchase the shares sold if a single agricultural plot or the total area of agricultural land owned by the company is at least 5 hectares.
This right may be exercised within 2 months of the effective notification of an intended transaction. Any sale of shares that does not follow the above procedure is invalid.[1]
UOKiK President’s approval and regulated market
In the case of a transaction involving the acquisition of control over a third party (as defined in the Competition and Consumer Protection Act), the President of the Office of Competition and Consumer Protection (UOKiK) must also be notified of the intended concentration in order for the sale of shares to be valid. The UOKiK President’s approval is given in the form of a decision.[2]
Depending on the specifics of the transaction and the industry (banking or energy are good examples), it may be necessary to file an additional notification with the public administration authorities, e.g. the Polish Financial Supervision Authority (KNF), in order for the transaction to be valid.
To avoid any risks and, in the worst case scenario, to avoid the transaction being annulled, it is advisable to consult a lawyer and check whether the parties to the transaction have definitely obtained all the necessary consents.
Source: Rzeczpospolita
Date: 05.01.2024
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[1] Article 9 of the Agricultural System Formation Act;
[2] Article 13 of the Competition and Consumer Protection Act.
