New holding law in Poland

Poland: Interests and relationships in a holding company, i.e. in a group of companies within the meaning of the new legislation, are to be given a legal framework.

For several months now, work has been going on in Poland to introduce into the Polish system provisions on holding law, i.e. the law on groups of companies (conglomerate law), which regulates the private-law relations between the parent company and its subsidiaries, so as to take into account the interests of creditors, members of corporate bodies and small shareholders of a subsidiary.

Currently there is actually only one provision in the Commercial Companies Code relating to the relationship between parent companies and subsidiaries. The legislator wants to expand the regulations, though in a rather limited scope consisting in regulating „only those issues from the scope of functioning of factual holdings, the legal regulation of which is really necessary„.

The key concept of the new regulations will be the „interest of a group of companies“ and a „group of companies“ comprising a parent company and its subsidiary(ies), guided – in accordance with the articles of association or statutes of each subsidiary – by a common economic strategy (the interest of a group of companies), enabling the parent company to exercise uniform management over the subsidiary(ies).

The draft of the new amendments introduces an extensive – as much as three-step – regulation of the influence of the parent company on a subsidiary and the liability of the parent company dependent on the degree of involvement of the parent company in its subsidiaries. The protection threshold for subsidiaries, their shareholders and creditors is also lowered in comparison to solutions adopted in foreign legal systems, as well as in comparison to results that could be achieved using general rules of contractual and tort liability (with development of the concept of liability for indirect damage).

The solutions of the draft have been criticized, and it is even argued that the liability of a parent company for damage caused by carrying out binding instructions given by the parent company to its subsidiary creates possibilities for legal drainage of assets of subsidiaries without the possibility for them or other injured parties to obtain due compensation, not to mention broader compensation for the negative effects of such actions.

On the occasion of the aforementioned amendment, it is planned to introduce to the Commercial Companies Code new regulations increasing the effectiveness of supervisory boards of companies and ordering and adjusting the regulations concerning capital companies.


Source: Draft Act on amendments to the Commercial Companies Code and certain other acts of 05/08/2020 as amended; legislative work stage: arrangements at the Government Legislation Centre

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