The Act of 30 August 2019 amending the Act – the Commercial Companies Code and certain other Acts (“the Amendment”) has introduced some important changes regarding joint stock companies (spółki akcyjne) and partnerships limited by shares (spółki komandytowo-akcyjne).
From 1 January 2021, all issued share certificates will no longer have effect, and instead entries in the shareholder register (rejestr akcjonariuszy) will start to take effect, with the shareholder register replacing the former book of shares (księga akcyjna), which means that dematerialisation of shares will occur. This will include both registered shares and bearer shares, so the latter will no longer be anonymous. This is precisely the objective of the changes introduced by the Amendment – to ensure transparency and increase security of trading.
In 2020, management boards of joint stock companies and their shareholders will have to take actions provided for in the Amendment, described below, which will prepare the companies for dematerialisation. To avoid the requirement to take such actions, some companies are considering a potential transformation into a limited liability company (spółka z ograniczoną odpowiedzialnością). The same actions and decisions will have to be taken by members of partnerships limited by shares.
Below we present and discuss the timetable for actions preparing a joint stock company for dematerialisation of shares.
By 30 June 2020, the shareholders meeting of a non-public joint stock company should choose an entity that will keep the shareholder register. This may only be an entity that in accordance with the Financial Instruments Trading Act is licensed to maintain securities accounts, that is, in particular a brokerage house or a bank conducting brokerage activity, a custodian bank, a foreign investment firm or foreign legal person conducting brokerage activity in the Republic of Poland as a branch. Alternatively, the shareholders meeting may pass a resolution on registration of the shares in the National Depositary for Securities (Krajowy Depozyt Papierów Wartościowych, “KDPW”).
By the same date, i.e. by 30 June 2020, the management boards should:
- enter into agreements for keeping the shareholder register with the entity chosen by the shareholders meeting (or agreements for registration of the shares in the KDPW if the shareholders meeting passes a resolution on registration of the shares in the KDPW), and
- call on the shareholders for the first time to surrender their shares to the company – the call is made in the way applicable to convocation of the company’s shareholders meeting and, in addition, information about the call should be placed on the company’s website in the section dedicated to communication with shareholders for a period of time not shorter than three years after the first call.
Subsequent calls to surrender the shares should be made at intervals not longer than a month and not shorter than two weeks, and they should be made in the same way as the first call. All in all, the management board is required to call five times on the shareholders to surrender their shares to the company.
Surrender of share certificates will be confirmed by the company by means of a written receipt issued to the shareholder. From the moment of surrender of the bearer shares, any exercise or transfer of rights attached to such shares will be governed by the principles applicable to registered shares.
All shares should be surrendered to the company by the end of 2020 because from 1 January 2021 share certificates will no longer have effect. Until 31 December 2026, share certificates will retain an evidentiary effect where a shareholder seeks to demonstrate to the company that he holds equity rights. It should be remembered, though, that only those shareholders who have been entered in the shareholder register will be able to exercise their voting rights and receive dividends.
If a joint stock company decides to transform into a limited liability company, the transformed company should be effectively registered in the Business Register before 30 June 2020 so that the management board is not accused of breach of duty in respect of the first call to surrender the shares to the company and execution of the agreement for keeping the shareholder register.
According to the Amendment, failure of the management board to call on shareholders within the time limits set out in the Amendment and failure to enter into the agreement for keeping the shareholder register is subject to a fine of up to PLN 20,000.
We will be happy to answer any questions you may have in connection with dematerialisation of shares and transformation.
Please contact Agnieszka Piasecka directly: http://rslegal.pl/en/our-team/agnieszka-piasecka/