New legislation that affects investments in Polish entities by investors from outside the EEA and OECD will enter into force on 24 July 2020. The Act on Control of Certain Investments (the "Act"), recently amended by the so-called Anti-Crisis Shield Act, empowers the President of the Office for Competition and Consumer Protection (the "OCCP") to review foreign investments on the grounds of public security, order and health. The new screening mechanism will apply over the next two years.
Scope of the Act
The new legislation covers direct and indirect investments by non-EEA and non-OECD investors if they result in the acquisition of control or significant participation (the latter defined as acquiring at least 20 % or 40 % of shares in votes, capital or profits or purchasing/leasing of the undertaking or its organised part in case of asset deals).
The screening extends to investments in companies that have their seat in Poland, have achieved domestic revenues from the sale of goods or services exceeding EUR 10m in at least one of the last two years, and
- are public (listed) companies; or
- own assets defined as critical infrastructure under Polish law; or
- develop software for enumerated strategic sectors; or
- operate in specified "critical" sectors such as (among others) telecommunications, power generation and distribution, fuel production, transport and storage, production of chemicals, manufacturing of medicines or medical devices, processing of meat, milk, grains, fruits and vegetables, manufacturing and trade of arms and ammunition as well as technologies used for military purposes, etc.
The Act also contains anti-circumvention clauses aimed at counteracting artificial structures created for the purposes to escape the screening under the Act.
Investments captured by the Act will require prior notification to the OCCP. According to the Act, the notification must be filed before the conclusion of an agreement giving rise to an obligation to acquire a significant participation or control or before the invitation to subscribe for sale/exchange of shares in a public company.
The OCCP has to review notified investments within 30 business days, while in more complex cases the authority can launch an in-depth review which can last for an additional 120 calendar days.
The Act provides for a standstill obligation as well as a stop-the-clock mechanism in case of an information request.
The OCCP is empowered to object to the acquisition if:
- it poses at least a potential threat to public order, security or health in Poland;
- the notifying party did not provide required information or documents;
- it is not possible to determine if buyer is EEA or OECD undertaking; or
- the transaction may negatively affect projects and programmes that are of EU interest.
The implementation of a relevant investment despite objections or without notification is null and void (and the decisions of the corporate bodies of the protected entities may be challenged as null and void).
In addition, the Act envisages sanctions for breaches of the proposed rules: a fine of up to PLN 50m (approx. EUR 12m) or imprisonment of six months to five years may be imposed on persons who were obliged to notify or, in certain instances, representatives of the protected entities.
By Volker Weiss, Partner, Pawel Kulak, Attorney at Law, and Krzysztof Pawlak, Counsel, Schoenherr