Starting a new business or establishing relations with other businesses always carries with a certain degree of risk. Thus an extensive legal background check of a prospective business partner will usually be advisable. The question is what is the reasonable scope of such a check and what sort of information may be obtained from public sources.
National Court Register
The most important source of information on companies (not sole traders or simple partnerships, discussed later) is the National Court Register (Krajowy Rejestr Sądowy—KRS). KRS is a public register maintaining substantial information on legal entities registered in Poland. It comprises:
- the commercial register
- the register of associations, other social and professional organisations, foundations and independent public establishments.
KRS provides online access to corporate records such as the registered office, shareholders, corporate bodies, share capital, authorised representatives, the subject of the company’s business, commercial proxies, liquidation proceedings, and so on. Anyone may download and print out an official excerpt with basic corporate information free of charge at the KRS section of the Ministry of Justice website. KRS does not provide records on minority shareholders on the official website, but only on the sole shareholder of a joint-stock company or shareholders of a limited-liability company holding at least 10% of the shares.
In addition to information available in the form of excerpts from the register, certain corporate documents (including any materials on which records entered in the register are based) can also be reviewed by the public, particularly the articles of association, financial statements and business reports, certain resolutions of corporate bodies, and all corporate submissions. While anyone can print out an official extract from the KRS website, source documents may only be reviewed physically at the registry court that maintains the company’s corporate file.
Any company in the National Court Register can be searched by its registration number (KRS), tax number (NIP), statistical number (REGON), or business name. All KRS entries are subject to publication in the online judicial and commercial gazette Monitor Sądowy i Gospodarczy (MSiG), which is also publicly available. KRS records are generally presumed to be correct. From the date of publication in MSiG, no one can plead ignorance of published records. In case of discrepancies between a register entry and its publication in MSiG, the record in the National Court Register shall control. A company required to apply for entry of data in the National Court Register cannot invoke data against third parties acting in good faith when the data were not entered in KRS or were deleted from KRS. Polish law imposes liability on a registered company (or a partnership jointly and severally with persons who are liable with all their assets for the partnership’s obligations) for any loss caused by submission of false information, when the information was subject to entry in the register, or for failure to submit required information.
Central Registration and Information on Business
Individual businesses (sole traders) and simple partnerships are not registered in KRS but instead are entered in the Central Registration and Information on Business (Centralna Ewidencja i Informacja o Działalności Gospodarczej—CEIDG), an online database functioning like a public registry. CEIDG contains public information on individual businesses registered in Poland, and anyone can download and print out an official excerpt. CEIDG provides online access to public records such as the full name of the business owner(s), registered office, scope of business, licences and permits, contact data, commercial proxies, and the status of any winding-up and liquidation proceedings. The source documents that are the basis for CEIDG entries are not publicly available.
Land and mortgage register
Land and mortgage registers (księgi wieczyste) are maintained for real property by the district courts. Online access to land and mortgage registers is public and centralised through the Land and Mortgage Register Information Centre (Centralna Informacja Ksiąg Wieczystych) (thus all registers are available in one place). However, records can only be searched by the registry number of the property, which in practice significantly limits review of records. When reviewing an online land and mortgage register, everyone has access to the four sections of the register:
- Identification of the property
- Ownership and perpetual usufruct
- Limited property rights other than mortgages
The source documents that constitute the legal basis for entries may be reviewed at the district court only by a person with a legal interest therein or by a notary public. Copies of source documents may be provided at the request of persons with a legal interest therein or a court, prosecutor, notary, government administrative body, or local government. A legal interest is deemed to be held by the owner or perpetual usufructuary of the property, a mortgage creditor, holders of limited property rights, or a person for whom a right or personal claim is entered. This restriction on disclosure of source documents stems from the need to protect confidential information included in these documents.
The pledge register (rejestr zastawów) is maintained by district courts, providing a centralised online database on registered pledges. A registered pledge under Polish law may be established on specified movable property, receivables, intangibles, securities, and other financial instruments. The pledge register and the supporting documents submitted to the register are public. Copies of records and certificates from the pledge register are issued to anyone upon request. The entries in the register are presumed to be correct and to provide public notice of their contents. No one can plead ignorance of entries in the pledge register unless it can be shown that the information could not be obtained despite due diligence.
In principle, all of these registries are public and the information is available to everyone. Thus an initial legal background check of a business partner in online registries is a good starting point. But in more complex matters, legal professionals may be required to analyse the source documents.
Jerzy Kapitańczuk, M&A and Corporate practice, Wardyński & Partners