According to the Polish Act, a foreigner is:
- a natural person who does not hold Polish citizenship (i.e. for example, an Indian citizen),
- a legal person with its registered office abroad (i.e. for example, the equivalent of a Polish limited liability company with its registered office in Canada),
- a partnership of the persons referred to in points 1 or 2, without legal personality, having its registered office abroad, established in accordance with the laws of foreign countries (i.e. for example, the equivalent of a general partnership established in the USA, having its registered office there, whose partners are US citizens),
- a legal person and a commercial partnership without legal personality having its registered office within the territory of the Republic of Poland, controlled directly or indirectly by the persons or companies listed in points 1, 2 and 3, for example a Polish limited liability company in which a US citizen holds the majority of shares.
Naturally, the regulations apply exclusively to companies with their registered office in Poland which remain the owner or perpetual usufructuary of real estate situated in Poland.
What is a controlled entity within the meaning of the Polish Act?
A ‘controlled entity’ is to be understood as a company in which a foreigner or foreigners hold, directly or indirectly, more than 50% of the votes at a shareholders’ meeting or general meeting, including as a pledgee, user or on the basis of agreements with other persons, or hold a dominant position within the meaning of Article 4 § 1(4)(b), (c) or (e) of the Commercial Companies Code.
The above statutory definition may give rise to a number of practical interpretative issues. Consequently, before deciding to initiate a transaction involving the acquisition of shares by foreign nationals in Poland, a legal analysis must first be carried out in each case to determine whether an application for a permit should in fact be submitted to the Ministry of the Interior and Administration.
When carrying out this analysis, the key factor will be to verify whether, following the transaction, the foreigner will hold, directly or indirectly, more than 50% of the voting rights at the shareholders’ meeting or general meeting of the company being acquired.
Article 8(2) of the Polish Act on the Acquisition of Real Estate by Foreigners provides for an exemption from the requirement to obtain consent for the acquisition of shares in a Polish company by foreign nationals who are citizens or entrepreneurs from states party to the Agreement on the European Economic Area or from the Swiss Confederation.
Consequently, obtaining a permit will be necessary for foreigners based outside the European Union and Switzerland, for example from Ukraine, Belarus, the United States, the United Kingdom, India or Norway.
The procedure for obtaining consent for a foreign national to acquire shares is complex. First and foremost, the applicant must correctly draft and submit an application for acquisition, together with a list of supporting documents.
These attachments can be divided into the following groups:
- documents and information relating to the foreign national’s legal status; for example, this may be an extract from the Companies House register in the case of British companies, or equivalent registration documents specific to the country in question,
- documents and information specifying the legal status of the company whose shares or equity interests are the subject of the application submitted to the Polish Ministry,
- documents and information specifying the legal status of the seller of the shares,
- documents and information concerning the identification of real estate owned by or held in perpetual usufruct by the company whose shares are to be acquired, and real estate owned by or held in perpetual usufruct by its subsidiaries which, as a result of any of these transactions, will come under the control of the foreign national.
The applicant is also, of course, required to specify the method of acquisition or subscription of shares owned or held in perpetual usufruct by its subsidiaries, which, as a result of any of these transactions, will come under the control of a foreign national.
The Regulation of the Minister of the Interior of 20 June 2012 on the specific information and types of documents that a foreign national applying for a permit to purchase real estate is required to submit specifies exactly which documents the applicant must provide.
Once the application has been submitted, the Ministry of the Interior and Administration (MSWIA) verifies the submitted information and documents for compliance with formal requirements. If the application is incomplete, the authority will request the applicant to provide the missing information. It should be noted that each request to provide missing information necessitates the provision of such information, and consequently prolongs the administrative proceedings.
A permit is issued where no threat to the country’s defence, security or public order is found to exist as a result of the acquisition of shares by a foreign national.
In practice, the obligation to obtain a permit must be analysed in parallel with the structure of the share sale transaction itself. A detailed discussion of the process of acquiring shares or selling a company with foreign participation, including practical transactional aspects, is presented in a separate guide on acquiring shares in a limited liability company in Poland, which also covers practical transactional aspects.
How long does it take to obtain a permit from the Ministry of the Interior and Administration?
Generally speaking, the procedure for obtaining a permit from the Polish Minister of the Interior and Administration takes around 2–3 months from the date a complete application is submitted. In practice, however, this timeframe is often extended if the application contains formal deficiencies or the relevant documents have not been attached. Any request to supplement the documents results in the proceedings being suspended until the required information is provided, which effectively prolongs the entire process. It is therefore essential that the application is prepared carefully and in accordance with the requirements of the Polish Act and the Regulation.
Article 6 of the Polish Act on the Acquisition of Real Estate by Foreigners introduces a very severe civil law sanction. The acquisition or subscription of shares in a commercial company without obtaining the consent of the Ministry of the Interior and Administration means that the transaction is void ab initio, and therefore does not produce the intended legal effects from the moment it is entered into, and it is not necessary to make any further declarations or obtain a declaratory court ruling on its invalidity.
The invalidity is definitive in nature, meaning that the contract affected by invalidity does not produce legal effects and cannot be ‘cured’. To achieve the intended legal result, it is necessary to repeat the transaction in accordance with the provisions of the Polish Act on the Acquisition of Real Estate by Foreigners, and therefore to obtain consent from the Ministry of the Interior and Administration.
No, there is not. A foreign national applying for a permit should draw up an application and attach the necessary documents, in accordance with the Polish Act on the Acquisition of Real Estate by Foreign Nationals and the Regulation of the Minister of the Interior on the detailed information and types of documents that a foreign national applying for a permit to acquire real estate is required to submit.
In its judgment of 1 June 2017, the Supreme Court ruled that an acquisition resulting from a merger of companies, whereby the acquiring company comes to hold real estate in its assets, requires the permit provided for by the Polish Act to have been obtained by the date of the merger (case no. I CSK 585/16).
No. The provisions of the Polish Act do not apply to the acquisition of shares in companies having their registered office outside the territory of the Republic of Poland, even where such companies are the owners or perpetual usufructuaries of real estate situated in Poland.
No. The obligation to obtain authorisation to acquire shares does not apply if the company owns, for example, only a detached residential property, provided that the property is not situated in a border zone.
