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M&A

Mergers of companies: How to simplify the process by arranging the capital structure
Usually, a merger of companies in Poland requires a number of legal steps and preparation of extensive documentation. This can make mergers complicated and costly, in particular if companies with different shareholding structures are involved. But in some cases the regulations allow the parties to simplify the procedure by excluding certain obligations—if certain conditions are met regarding the capital structure of the companies.
Mergers of companies: How to simplify the process by arranging the capital structure
Settlement of tax losses after a merger by takeover
Under current regulations in Poland, in post-merger accounting, tax losses of the acquired company cannot be recognised. However, it is possible to settle tax losses of the acquiring company, although this is not always the rule. In determining whether the acquiring company is entitled to settle tax losses, it is necessary to assess whether the company’s actual principal business after the takeover is wholly or partially different from that before the takeover. What, in essence, is covered by the notion of “actual principal business”? When should the principal business be considered to have changed “in part”?
Settlement of tax losses after a merger by takeover
Share exchange ratio in reverse mergers of companies
An element of any proposed merger of companies in Poland is determination of the ratio for exchange of shares of the companies participating in the merger and the amount of additional payments, if any, unless there is no exchange of shares. But sometimes the parties do not have to set a share exchange ratio in the merger process.
Share exchange ratio in reverse mergers of companies
Administrative permits and corporate transformations: How to ensure business continuity?
For companies participating in a reorganisation to continue pursuing their owners’ objectives, permits, licences or other administrative decisions necessary for operation must be secured. Proper preparation for this process requires not only knowledge of the regulations under which the administrative decisions are issued, but also the agencies’ procedural practice.
Administrative permits and corporate transformations: How to ensure business continuity?
Debt-to-equity conversions in practice
Converting a company’s liability into capital can be a way to “heal” its balance sheet. This can increase the company’s credibility with counterparties and reduce the risk of insolvency. Conversion can also generate tax benefits, for example by reducing interest expense to below the deductible limit.
Debt-to-equity conversions in practice
Cross-border corporate mergers: Practical aspects
The 15 September 2023 amendment to Poland’s Commercial Companies Code introduced a number of changes to the cross-border merger procedure. Such a merger has its peculiarities because it is subject to the laws of more than one EU member state. During a cross-border merger, a number of practical aspects can significantly affect the speed and efficiency of the procedure.
Cross-border corporate mergers: Practical aspects
New demerger by spin-off: The simplest of demergers and a practical alternative to the demerger by separation and in-kind contribution
On 15 September 2023, an amendment to the Commercial Companies Code entered into force, introducing into the Polish legal system a previously unknown method of demerging companies: the demerger by spin-off. The parliament was obliged to implement EU directives providing for the demerger by spin-off as well as additional methods for cross-border demerger.
New demerger by spin-off: The simplest of demergers and a practical alternative to the demerger by separation and in-kind contribution
What if the value or appraisal of assets changes during the course of a corporate reorganisation?
An appraisal of assets in the course of corporate reorganisations is a required element for determining their value when transferred from one company to another as a result of a merger or demerger. But the procedure for reorganising companies is often lengthy, and during the course of the procedure components of the transferred assets or liabilities may change due to ordinary or extraordinary circumstances. Or the appraisal itself may change. This raises a fundamental question of the extent to which the reorganisation documentation must be modified, including the draft terms of merger or demerger, and how these changes can be reflected in the accounting records without having to redo the entire reorganisation procedure.
What if the value or appraisal of assets changes during the course of a corporate reorganisation?
Conversion of a joint-stock company into a limited-liability company: Practical problems
Poland’s Commercial Companies Code allows for conversion of a joint-stock company (SA) into a limited-liability company (sp. z o.o.), but many formalities are required and not always clearly regulated. Mistakes at any stage of the process may result in the court refusing to register the conversion. In this article, we describe the stages of the process and selected practical issues that may arise.
Conversion of a joint-stock company into a limited-liability company: Practical problems
The impact of a conversion in corporate form on companies’ financial reporting
This issue continues to raise numerous doubts under Polish law. The doubts surround the number of financial statements required by law to be prepared in relation to the conversion, the reporting period covered by each financial statement, and the obligation for the financial statement to be examined by an auditor and approved by the competent body. Of particular importance is the correct determination of the period for which the first annual financial statement of the company post-transformation (the “new” company) must be prepared, which directly affects the method for distribution of profit from the company prior to transformation (the “old” company) and the limitations on distributions.
The impact of a conversion in corporate form on companies’ financial reporting
“Strict” warranty liability: A risky convention
In M&A practice, and elsewhere, share transfer agreements customarily provide for the seller’s warranty liability, for example, for breach of representations and warranties. This type of liability is grounded on principles of freedom of contract stemming from Art. 3531 of the Polish Civil Code. Although warranty liability is commonly referred to in Polish as “strict” (i.e. based on assumption of risk—na zasadzie ryzyka), strict liability is a completely different construction, expressly provided for by the Civil Code. Thus commercial practice is imprecise in this regard. In extreme cases, using this wording in contracts can generate problems, including interpretive disputes over the basis of liability under such agreements.
“Strict” warranty liability: A risky convention
Changes in the functioning of company authorities
The amendments to Poland’s Commercial Companies Code which entered into force on 13 October 2022 standardised the calculation of the terms of management board members, introduced new duties to take minutes of management board and supervisory board meetings in limited-liability companies, and expanded the catalogue of offences resulting in a ban on serving as a member of corporate bodies or as a receiver or commercial proxy. The question is whether the amendment will have a positive impact on the functioning of corporate authorities.
The amendments to Poland’s Commercial Companies Code which entered into force on 13 October 2022 standardised the calculation of the terms of management board members, introduced new duties to take minutes of management board and supervisory board meetings in limited-liability companies, and expanded the catalogue of offences resulting in a ban on serving as a member of corporate bodies or as a receiver or commercial proxy. The question is whether the amendment will have a positive impact on the functioning of corporate authorities.
Changes in the functioning of company authorities