Amendments to the Investment Funds Act
Work on the amendment of the Investment Funds Act is coming to an end. The changes include extending the range of fees in connection with distribution of participation units in Poland and introducing uniform rules for advertising information provided by funds and detailed rules for protection of investors in the event of cessation of marketing of participation units in foreign funds in Poland.
Dematerialisation of shares: Change in deadlines and the perspective of the Personal Data Protection Office
The mandatory dematerialisation of shares of stock, introduced by the 30 August 2019 amendment of the Commercial Companies Code, was intended to bring about a situation as of 1 January 2021 where the shares of all joint-stock companies and joint-stock limited partnerships in Poland would take the form of an electronic record, and share documents would lose their legal force from that date. But the coronavirus epidemic has made it difficult for commercial entities to make this organisational change, and the parliament has extended the deadlines for complying with certain obligations related to dematerialisation of shares. The Polish Personal Data Protection Office has also issued an opinion on dematerialisation.
Paperless securities
The end of 2019 was a kind of a caesura in the legislative process of abandoning the physical document as a carrier of securities used to raise finance on capital markets. Bonds, investment certificates, mortgage bonds, shares and subscription warrants have either bid farewell, or will soon do so to the physical document as a carrier.
How to establish collateral on investment certificates of closed-end investment funds?
In 2019, legal regulations came into force providing for a mandatory dematerialisation of investment certificates issued by closed-end investment funds, including those which are not a part of a public offering and have not been admitted to an organised trading market. Newly issued certificates will no longer be able to be issued as a document, or function as an entry in the record of investment certificates kept by an investment fund company. They will have to be registered in the depository of securities kept by the Krajowy Depozyt Papierów Wartościowych (National Depository for Securities, KDPW). These regulations were then supplemented by rules for how an issuing agent must operate a register of investment certificates before their registration in KDPW. This fundamental change entails a number of practical and formal consequences that are significant in establishing and enforcing collateral on investment certificates.
Public companies must adopt a compensation policy
On 5 November 2019, the President of Poland signed into law an amendment to the Act on Public Offerings and Conditions for Introduction of Financial Instruments into an Organised Trading System and on Public Companies. Most of the new regulations enter into force 14 days after publication of the amending act. It is intended to adjust Polish law to reflect the entry into force of the EU’s Prospectus Regulation (2017/1129) (which generally should have been done by July).
Registration of beneficial owners
Under the Polish Anti Money Laundering and Countering Financing of Terrorism Act of 1 March 2018, newly established companies and partnerships are required to submit information about their beneficial owners to the Central Register of Beneficial Owners from 13 October 2019, and existing entities must do the same from 13 April 2020. The register is public and accessible free of charge.
Acquisition of banks under KNF supervision
The act of 9 November 2018 amending a number of laws, including the Banking Law, in order to reinforce oversight of the financial market entered into force at the beginning of this year. A new chapter was consequently added to the Banking Law concerning forced acquisition of banks coordinated by the Polish Financial Supervision Authority (KNF). The act has now been in force for several months, and it is a good occasion to examine in more detail the new powers vested in KNF.
If it comes to a “no-deal” Brexit, UK financial market firms will be given transition periods
On 5 March 2019, a legislative proposal was submitted to the Sejm to regulate business activity conducted from the United Kingdom of Great Britain and Northern Ireland and Gibraltar following Brexit. Similar laws are now being drawn up in a number of other EU countries. The bill is intended to protect Polish customers who have agreements with institutions of that kind. It is also intended to enable the firms to bring their business activities and relationships with customers to a close in an orderly fashion, or take the appropriate measures to remain on the Polish market according to rules that apply to third countries.
Financial market – changes, changes, and more changes
Only a month ago we posted an article on plans to change the way the capital market is regulated and market investors are protected. The act has now been passed and signed into law, and will come into force on 1 January 2019.
Strengthening financial market supervision
Recent difficult investor experiences have led to proposals for further regulatory changes aimed at increasing security and strengthening supervision of the financial market. Currently in a Sejm committee, a government bill is being read for the first time which would amend several acts, redefine the Polish Financial Supervision Authority, and impose an obligation to dematerialise some financial instruments.
Reverse solicitation
In July 2017 the Government Legislative Centre published a proposal to amend the Trading in Financial Instruments Act and certain other acts, to bring the Polish legal system into compliance with the EU laws governing the capital market, in particular MiFID II (Directive 2014/65/EU) and MiFIR (Regulation 600/2014). The amendment would significantly change the wording of a number of existing acts and require capital market entities to comply with the new regulations. One notable feature is the introduction of the notion of reverse solicitation, not previously regulated in Polish law.
Could brokers also use mediation?
Mediation is becoming a more widely appreciated and applied alternative dispute resolution method. But there are categories of cases where it could be used more often. One of them is disputes between capital market participants, and in particular between brokerages and their clients.