Over the past decade, Polish lawmakers have taken many efforts to adapt the functioning of businesses in legal transactions to the current technological realities. We have witnessed the launch of electronic registration of companies, as well as the transfer of much of the National Court Register’s activity to the web. More changes are planned for the coming years.
So far, to some extent, the measures taken have made it possible to streamline business operations. But the full digitalisation of legal obligations incumbent on companies has still not been implemented. Moreover, despite the efforts by Polish lawmakers, the functionality of the information and communication systems in the various EU member states has not been harmonised, which hinders the cross-border activities of businesses within the EU.
But in this regard, key changes are planned for the coming years.
On 15 November 2022, the President of Poland signed the Act Amending the National Court Register Act, the Civil Procedure Code and the Commercial Companies Code. The act partially implements Directive 2019/1151 of the European Parliament and the Council of 20 June 2019 aiming to integrate the operation of companies in legal transactions within the European Union. This is the aftermath of the Company Law Package, a set of comprehensive proposals to amend Directive 2017/1132 which the European Commission presented on 25 April 2018.
The measures taken by the European Parliament are intended to enable undertakings doing business in the EU to carry out all registration obligations imposed by law in a convenient manner befitting today’s technological capabilities.
The package of changes adopted by the Polish parliament in connection with implementation of EU regulations is effective 15 December 2022. But will the national law effectively improve the activities of companies operating in Poland?
The directive includes a number of provisions aimed at bringing companies online (by way of “online procedures”), including:
- Allowing the online formation of companies
- Settlement of electronic payments for online procedures
- Providing templates for online formation of companies
- Online registration of branches
- Online filing of documents and information by companies and branches.
It is worth recalling that the Polish parliament had already taken measures in this regard starting in 2012, including allowing limited-liability companies to be formed using a template provided in an ICT system, known as “s24.” In 2015–2021, the same opportunity arose for general partnerships, limited partnerships, and joint-stock companies. It has also become possible to carry out individual acts, e.g. amending the articles of association or partnership agreement, or selling shares, using a template provided in the ICT system.
And starting 1 July 2021, most National Court Register activities were transferred to the electronic Court Register Portal, which allows not only filing of applications, but also viewing companies’ registration files. Thus, Polish law already provided for a significant part of the measures required by Directive 2019/1151.
One of the important changes in Polish corporate law is certainly the provision of standard company articles of association available in at least one official EU language commonly understood by as many foreign-language users as possible, through the Public Information Bulletin or the Ministry of Justice website.
And information explaining provisions of national law such as the rules for registration, representation of companies, and citation of data disclosed in the register will also be translated into a language commonly used within the EU.
This information will also be posted on the EU’s e-Justice portal, serving as a European electronic access point. This will allow foreign-language businesspeople to refer to explanatory information placed in this system.
As framed by the Polish parliament, this amendment will serve to implement the principle of equal treatment of entities operating within the EU. Definitely it will make it easier for many foreign investors setting up subsidiaries in Poland to inquire about the basic rules of doing business in Poland.
Online payment for capital
Pursuant to Directive 2019/1151, it is necessary to allow for online payments for share capital. A corresponding change has just been introduced to the Commercial Companies Code in the new Art. 1611.
Under the new wording, a company in organisation will allow payment for shares using an online payment service, through an account maintained by a bank in the European Union or the European Economic Area, and presentation of proof of payment made using this connection.
The amendment to Polish law does not impose an obligation to open such a bank account. However, the reasoning of the Polish parliament aims to facilitate cooperation between a company in organisation and financial institutions, which sometimes require confirmation of the company’s registration with the National Court Register in order to open a bank account.
The banks’ practice to date has not been uniform. The requirements for a company in organisation to open an account vary, and the amendment does not comprehensively address the impediments in this regard. First of all, it does not make it easier for a company in organisation to obtain a REGON statistical number, which in practice banks require more often than an extract from the commercial register, obtained after the registration of a company in organisation. Therefore, a company in organisation must perform a number of additional steps to obtain a REGON number, submitting an application with attachments (primarily a copy of the articles of association and a document confirming title to an address). As a rule, the process of obtaining a REGON number is not complicated. Nevertheless, streamlining the procedures for obtaining it would greatly facilitate the cooperation between the company in organisation and financial institutions.
Integration of electronic company registers
The European Parliament seeks to harmonise the functionality of business registers operating under the laws of the member states, and thus improve the exchange of information between the registers of companies and the registers of their branches based in other EU member states, as well as the exchange of information on cross-border mergers (in this regard, broader changes are provided for by Directive 2019/2121, which was not included in the partial implementation described here).
Under the EU’s one-time rule, identical documents or information submitted to individual national registers should not be duplicated. Therefore, Directive 2019/1151 provides for the mandatory exchange between the company registers of individual member states of information relating primarily to:
- Registration of a branch
- Closure and deletion of a branch
- Changes in the foreign undertaking’s documents and information regarding name, registered office, registration number, legal form, financial documents, representative and supervisory bodies, and the method of representation.
For this purpose, at the European level, work is being undertaken to adjust technical possibilities for transferring this information between national registers. In contrast, expanding the functionality of ICT systems is at the discretion of individual member states.
The integration of electronic registers of foreign undertakings will also include expansion of the scope of information and documents to be made available for free through the registry integration system. In addition to the information already disclosed as part of the National Court Register, the catalogue of such data includes:
- EUID number, the unique European identifier already introduced in Directive 2012/17 (currently 2017/1132) as a technical identifier—the amendment provides for inclusion in the registry of data allowing for creation and sharing of this identifier for free
- Information on branches established by the company in another member state, including the EUID of the branch, the branch number in the register, and the member state where the branch was registered.
This change is aimed at ensuring the security of legal transactions in the EU and unburdening undertakings, which previously had to submit the same information to the various company registers operating in member states. Thus the actions of European lawmakers should be strongly endorsed, as they are likely to improve the operation of companies in practice.
Expiration of board member’s mandate vs. financial years
Under an amendment that came into force on 13 October 2022, Polish lawmakers adopted the prolongation method for counting the term of office of members of corporate bodies (understood as the period of holding office).
Under Art. 202 §2, 218 §2 and 369 §1 of the Commercial Companies Code, the term of office is counted in full financial years, unless the company’s articles of association provide otherwise.
Example 1. The company’s financial year coincides with the calendar year (1 January to 31 December). On 1 March 2023, a new management board member is appointed for a three-year term. The first full financial year of the member’s term of office will be 2024, the second 2025, and the third 2026. The management board member’s mandate will be effective from the date of appointment (1 March 2023), but will expire on the date of the shareholders’ meeting approving the financial statements for the third full financial year (2026), i.e. according to law, within six months from the end of the financial year, in this example by the end of June 2027.
Example 2. The company’s financial year runs from 1 February 1 to 31 January. A management board member is appointed on 1 March 2023 for a four-year term. The first full financial year of the member’s term of office will be Feb. 2024 – Jan. 2025, the second Feb. 2025 – Jan. 2026, the third Feb. 2026 – Jan. 2027, and the fourth Feb. 2027 – Jan. 2028. The management board member’s mandate will be effective from 1 March 2023, but will expire on the date of the shareholders’ meeting approving the financial statements for the fourth full financial year (2027/28), i.e. according to law, within six months from the end of the financial year, in this example by the end of July 2028.
The term of office calculated in years will also apply to members of corporate bodies who were in office on the date the amendment entered into force (i.e. 13 October 2022). Thus companies will have to take into consideration these longer terms, which may result in the need to amend their internal regulations.
Nonetheless, the mandate (authority to perform a given function) of a member of a corporate body will end upon the member’s resignation, dismissal or death.
Planned changes for ordinary partnerships
A bill to amend the Central Registration and Information on Economic Activity (CEIDG) Act has come up for consultation, which provides that from 1 October 2024, an ordinary partnership (spółka cywilna, governed by the Civil Code) will be subject to electronic documentation.
The main objectives of the bill include:
- Streamlining the registration of ordinary partnerships by submission of their partnership agreements and other registration documents to CEIDG, the tax office and the Social Insurance Institution electronically, with a single application
- Provision of a universal template for the partnership agreement of an ordinary partnership
- Disclosure of the details of an attorney-in-fact appointed to represent the ordinary partnership.
It will be possible to conclude an agreement by signing it with a trusted signature (ePUAP) or a qualified electronic signature. The partners participating in the ordinary partnership will be able to attach tax and labour forms to the agreement. The option to download printouts from CEIDG showing information about the ordinary partnership will also be improved.
In turn, attorneys-in-fact appointed to represent ordinary partnerships will be able to present information from CEIDG instead of showing their appointment document.
The anticipated changes will bring the form of registration in CEIDG for ordinary partnerships closer to the electronic National Court Register (eKRS), where commercial partnerships and companies (governed by the Commercial Companies Code) are registered.
Planned and called-for changes to the eKRS system
In addition to the changes discussed above, the Ministry of Justice is exploring the possibility of integrating the eKRS system with the personal ID number (PESEL) database. The main reason is that changes could be made automatically in the event of death of a management board member.
It has also been reported that one of the changes being called for is integration of eKRS with the National Criminal Register, which would improve verification of whether a person newly appointed to the management board, supervisory board or audit committee, or appointed as liquidator or commercial proxy, has been convicted of an offence under Art. 587–5872, 590 or 591 of the Commercial Companies Code or Art. 228–231 or Chapters 33–37 of the Criminal Code (pursuant to the obligation under Art. 18 §2 of the Commercial Companies Code).
A separate demand is to place a number for the Central Repository for Electronic Extracts of Notarial Deeds (CREWAN) on notarial deeds. Due to the introduction of eKRS, entities submitting notarial deeds along with applications or letters are required to provide the CREWAN number instead of attaching the full notarial deed. The system automatically downloads the content of the deed, which greatly improves the exchange of documents. However, in practice, people submitting applications or letters have to wait several hours or days to obtain a CREWAN number, which often leads to delays in registering amendments.
Businesses and their representatives also rightly point out other technical problems that need to be solved. One of them is the possibility to withdraw an application, which currently requires a separate request. Unfortunately, this often results in amendments being registered before the registrar receives the letter requesting withdrawal of the application. According to most practitioners, the simplest solution would be to introduce an “undo application” button.
Another problem is the inability of the person signing the application to edit the application. Currently, eKRS allows one person to prepare an application and make it available to another person for signature. The signatory can only read and sign the application, without making any changes to it. Allowing editing of the application by all persons preparing it would greatly facilitate the circulation of documents and the drafting of often voluminous and complicated applications for registration of amendments.
Apart from these technical issues, the Ministry of Justice carries out regular updates to the eKRS system, including in response to notifications reported by users (via the relevant form on the login page). The waiting time for repair of a reported malfunction depends on its nature and complexity, and may range from several hours to several days.
The proposed changes and periodic updates should be evaluated positively, with the proviso that they need to be implemented on an ongoing basis and in consultation with the users directly affected by the changes.
Łukasz Śliwiński, attorney-at-law, Daria Goliszewska, Oliwia Kruczyńska, M&A and Corporate practice, Wardyński & Partners