To start, I advise everyone to review the articles of association before selling shares to see what clauses pertain specifically to the sale of shares or the sale of shares in general. The clauses that are most frequently included in contracts are those requiring the company’s consent to the sale of shares, the shareholders’ meeting’s approval for the sale of shares, the pre-emptive right to purchase shares, or the introduction of a notary form requirement for the sale of shares, although K.S.H. also adds the requirement for a written form with notary-certified signatures. The selling of shares in a Polish company is the same transaction as the acquisition of shares, but it is approached from the standpoint of the seller.
What if there are no contractual provisions?
Whether or not there are any restrictions on the transferability of shares in the articles of association, you must remember the following legal requirements:
- Unless you sell the shares via S24, the sale agreement for shares must be in writing with notarized signatures.
- Following the signing of the share sale agreement and the transfer of ownership of the shares to a new person (new shareholder), the company (management board) should be notified of this change by attaching the share sale agreement.
- Change of an entry in the share register: After learning of a change in a shareholder, the management board is required to make the necessary entries in the share register.
- application to the National Court Register – The Management Board shall make an application to the National Court Register for entry.
- PCC tax: following the conclusion of the sale agreement, the buyer of shares has 14 days to send the PCC-3 declaration. He must also pay the tax on civil law transactions within this time frame, which is equal to 1% of the proceeds from the sale of shares.
- Income tax: The seller should ensure that, following the sale of the shares, he won’t be required to pay income tax.
- Update in the Central Register of Real Beneficiaries: The management board should ensure that the change does not necessitate revising the notification to the CRBR.
When is the sale of shares prohibited?
It is important to keep in mind that the following circumstances prevent firm shares from being exchanged at all. Before the limited liability company’s (or joint stock company’s) registration in the Polish Company Registry (KRS), share (stock) deals are not permitted. They are also not permitted for shares (stock) issued in the increased capital where the share capital has not yet been registered in the KRS.
Prior to the execution of a sale of shares agreement, due diligence is always recommended. During a corporate audit, the contents of a Polish company’s Articles of Association (AoA) should be examined to see if they contain provisions limiting share transactions. Such restrictions are frequently included in the AoA of smaller companies in Poland, as shareholders frequently want to protect themselves from uncontrolled changes in the shareholding structure.
Examples of restrictions that are frequently imposed by Articles of Association:
- an obligation to obtain prior written consent from the company’s corporate bodies,
- or a right of first refusal / preemptive right of the company’s other shareholders
Various provisions of Polish law impose certain restrictions on share sales (deals) in Poland, for example:
- the sale of a company that owns real estate in Poland to a foreign buyer (non-EU buyer) may be subject to a permit;
- the sale of a company whose turnover exceeds the thresholds defined in the Consumer Protection and Competition Act (e.g. turnover in Poland in the previous year exceeding 50 million EUR) – may necessitate merger clearance in Poland, i.e. the consent of the Polish merger authority.