Adam Strzelecki | In Principle

The Three Seas Initiative (“3SI”) is a regional cooperation initiative lunched in 2015 by presidents of Poland and Croatia. Currently, its members are the 13 member states situated between the Adriatic, Baltic, and Black Seas. In 2019, the Three Seas Initiative Investment Fund (“3SIIF”) was launched. It will invest in projects related to energy, transportation, and digital infrastructure to strengthen economic ties and reduce development disparities within the region. Fund members committed to invest at least EUR 913 million.

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.

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.

In previous articles, we have outlined the advantages of establishing a family foundation, the scope of business activities permitted for foundations, and tax issues. Now we turn to the rights and obligations of persons involved in the operation of a family foundation. The foundation operates through its bodies (management board, supervisory board, and assembly of beneficiaries), but it cannot be established and function without the founder and beneficiaries. The Family Foundations Act regulates the tasks and powers of all of these entities, giving the founder relatively wide latitude to set the rules for the foundation’s bodies in the statute. This allows these policies to be tailored flexibly to suit the foundation’s operations and purposes.

Like any other legal form, a family foundation may also involve the risk that the management of assets will be delegated to incompetent persons, the foundation will act in a manner contrary to its stated purpose or the interests of its beneficiaries, or it will conduct business activity in areas not permitted for a family foundation. However, in the Family Foundations Act, the Polish parliament has provided certain tools to prevent such situations.

The Family Foundations Act, entering into force on 22 May 2023, introduces the family foundation into Polish law as a new legal entity designed for collecting property and managing assets in accordance with the founder’s will and paying benefits to beneficiaries. Therefore, the objectives of a family foundation are different from those of existing foundations, which are non-governmental organisations operating for public benefit and not for profit.

It is no secret that Polish family-owned businesses struggle with the issue of succession. This has prompted the parliament to introduce a new institution, the family foundation. It is intended to allow for multi-generational succession and protect against the fragmentation of assets, while securing the means to support family members and others close to the founder.

The Commercial Companies Code contains rules facilitating mergers of companies where there are few owners and little risk of harm to stakeholders, and thus the law allows certain provisions to be waived. But it is essential to apply the regulations properly so that the merger is carried out effectively and can be entered in the National Court Register.

One of the ways to reduce business costs in a corporate group may be to combine multiple entities into a single entity—a merger. Although all types of companies and partnerships can take part in a merger, the regulations regarding mergers involving partnerships are sometimes unclear, and mistakes during the merger process can result in the court’s refusal to register the merger.

The act amending the Commercial Companies Code which will come into force on 13 October 2022 not only establishes rules for the operation of formalised corporate groups, but also modifies some rules for the functioning of corporate bodies of companies, including supervisory boards. The question is whether the change will have a positive impact on the work of supervisory bodies.