Amendment to the Code of Commercial Companies – cross-border divisions and conversions

However, the amendment addresses corporate reorganisation more broadly than cross-border processes.

 

The amendment has changed the list of division processes, among other things. The amended Article 529 of the Code of Commercial Companies provides for the following types of division:  

This last type of division will be a novelty in the Code of Commercial Companies. In the case of a division by spin-out – part of the assets of the company being divided is transferred to an existing or a newly formed company, while the shares in the acquiring or newly formed company are taken by the company being divided (and not by the shareholders in the company being divided, as in the case of a carve-out). 

A new chapter will also be added to the Code of Commercial Companies to address the cross-border division of limited liability companies and partnerships limited by shares, to which the general rules on the division of companies will apply accordingly. 

In addition, the amendment introduces new solutions for the cross-border conversion of limited liability companies and partnerships limited by shares into one of the companies under the laws of another Member State, including the transfer of the registered office of the converted company to that Member State. Thus, the transfer of a company to another Member State will not necessarily involve liquidation. 

The Code of Commercial Companies will include new measures to protect creditors and shareholders. 

Creditors who meet certain conditions will be able to claim security for their claims. Shareholders, creditors and employee representatives will also be entitled to submit their comments to the companies on, for example, a merger or division plan. On the other hand, shareholders will be entitled to repurchase their shares in certain situations. 

The Code of Commercial Companies will have a new Article 5151 CCC, which will allow merging companies in a less formalised manner, without granting shares in the acquiring company. This will be possible in the following cases:

The amendment also addresses certificates of compatibility of a cross-border merger, division or conversion with Polish law. Such certificates will be issued by the registry court. Only once the certificate has been issued will the company (or companies) be subject to the new applicable law according to the registered office of the companies following the merger, division or conversion. 

The bill has been referred to the President and the Senate, so further changes are possible. 

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