Operations on shares or shares in capital companies sometimes require the approval of entities other than the company itself. It may happen that the transaction will not take place in its original form, but will ultimately result in its becoming a shareholder of a non-partner entity, whose accession was not anticipated in the transaction.
This is the scenario laid down in the Act of 11 April 2003 on the development of the agricultural system, hereinafter referred to as ‘UKUR’.
The purpose of UKUR, as its preamble points out, is to strengthen the protection and development of family farms, which, according to the Constitution of the Republic of Poland, form the basis for the agricultural system of the Republic of Poland, to ensure proper development of agricultural land in the Republic of Poland, in order to ensure the food security of citizens and to promote sustainable agriculture conducted in accordance with the requirements of environmental protection and conducive rural development.
What is the relationship between UKUR and the provisions of the Commercial Companies Code?
The UKUR rules will apply in the case of companies which own or use perpetual agricultural properties of at least the area 5 ha or agricultural property with a total area of at least 5 ha, and in addition, companies which remain dominant towards them (Article 3a(1) UKUR).
As long as the company meets the requirements resulting from this provision, it will be necessary to undertake certain information activities towards the National Centre for Agricultural Support (hereinafter the ‘CoR’).
As indicated by the recipe Article 3a(1) UKUR, in the event that the company meets the conditions set out above, the KOWR acting in favour of the State Treasury shall have the right to acquire shares or shares.
This right was supplemented by the law by the right to acquire shares (shares) in a commercial company in which the property contains agricultural property with a total area of at least 5 ha, and shares in its parent company.
Take a closer look Article 4 UKUR. According to Article 4(1) UKUR, where the acquisition of agricultural property follows:
- the conclusion of an agreement other than a sale contract, or
- unilateral legal action, or
- the decision of the court, public administration or the judgment of the court or enforcement authority given under the law on enforcement, or
any other legal act or other legal event, in particular:
- the holding of agricultural property, the inheritance and the recovery record of the agricultural property or farm,
- the division or merger of commercial companies,
Transforming a trader or a civil partnership into a commercial company under the provisions of the Act of 15 September 2000 - Commercial Companies Code
- The National Treasury Centre may make a declaration of acquisition of the property at the price of the property.
In turn according to Article 4(6) UKUR, Recipes section 1-3, section 4 point 2 point (b-g), Article 3(10)(11) and Article 3a(3-6) apply mutatis mutandis to the acquisition of shares and shares in:
a capital company within the meaning of Article 4(1)(2) Act of 15 September 2000 - Code of commercial companies which is the owner or perpetual user of agricultural property with an area of at least 5 ha, or agricultural property with a total area of at least 5 ha,
a parent company within the meaning of Article 4(1)(4) Act of 15 September 2000 - Code of commercial companies which holds shares in the company referred to in point 1
- except where the purchaser of the shares or shares is the Treasury.
However, according to Article 4(7) UKUR, In case of acquisition of shares in:
a capital company within the meaning of Article 4(1)(2) Act of 15 September 2000 - Code of commercial companies which is the owner or perpetual user of agricultural property with an area of at least 5 ha, or agricultural property with a total area of at least 5 ha,
a parent company within the meaning of Article 4(1)(4) Act of 15 September 2000 - Code of commercial companies which holds shares in the company referred to in point 1
- following an increase in share capital, the notification referred to in section 5, is made by the company after this increase has been entered in the register of economic operators kept under the provisions on the National Court Register.
It is therefore clear that the UKUR rules may give rise to difficulties in interpreting the individual activities carried out by the capital company (or activities involving it).
On the one hand, to the Act indicate the possibility for KOWR to exercise the right to acquire shares or shares of the company (Article 3a(1) UKUR) with second refers to the right to acquire the property at the price (Article 4(1) UKUR), and Article 4(6) UKUR clearly indicates the acquisition of shares or shares of such a company (Article 4(6) in fine UKUR).
How, then, will KOWR’s powers be developed for individual operations on equity shares/shares?
In the case of an agreement to sell shares or shares of a company meeting the statutory requirements, it is necessary to include in first the order of the conditional contract.
The shareholder shall therefore enter into an agreement with the acquirer of the shares or shares provided that the KOWR fails to exercise its right of pre-emption against them and then refers to the company whose shares are the subject of a transaction to have the company make an appropriate notification to KOWR of the contract concluded.
Therefore, the agreement does not have the effect of transferring the rights of shares until the NCA has made a declaration of non-execution of the right to pre-emption or of the expiry of the statutory period for making such a declaration.
The KOWR's notification of the possibility of exercising the right of preemption is therefore made by the company submitting the documents required by the Act (Article 3a(4) UKUR). Notice made without the annexes required by the Act shall render such notification ineffective.
Importantly, the right to acquire shares (shares) applies only in the event of the secondary acquisition of those rights under the sale contract.
Otherwise, the situation is shifted in the context of KOWR's right to acquire shares or shares in a capital company. The right to acquire shares or shares – unlike in the case of a pre-emptive right – will be dealt with both in the case of secondary acquisitions and in the case of the original acquisition.
The acquisition of the original shares or shares will only be dealt with in one situation – the increase in the share capital of the company.
However, it should be remembered that the increase in share capital occurs by increasing the nominal value of shares or shares already in existence or by establishing new shares or issuing new shares (Article 257(2), Article 431(2) KSH).
UKUR rules indicate in this respect the acquisition of shares or shares as a result of an increase in share capital (Article 4(7) UKUR).
In the event of an increase in share capital by establishing new shares or issuing new shares, it is no doubt that the procedure for notifying the NAWR of the right to acquire shares or shares will apply. The answer is no longer so obvious as to increase the share capital by increasing the nominal value of the equity rights.
In such a situation, they are not taken over by existing shareholders – they only increase the nominal value of the shares/shares already in existence, and the composition of the shareholders is unchanged.
In my view, the literal and purposeful interpretation of the UKUR rules indicates that only an increase in share capital by establishing new shares or shares will require the NCA to be informed of the possibility of exercising the right to acquire them.
UKUR provisions through included in Article 4(6) UKUR appropriate reference to legislation section 1 indicate that the right to acquire shares or shares of a capital company applies also to:
- the conclusion of an agreement other than a sale contract, or
- unilateral legal action, or
- the decision of the court, public administration or the judgment of the court or enforcement authority given under the law on enforcement, or
any other legal act or other legal event, in particular:
- the holding of agricultural property, the inheritance and the recovery record of the agricultural property or farm,
- the division or merger of commercial companies,
Transforming a trader or a civil partnership into a commercial company under the provisions of the Act of 15 September 2000 - Commercial Companies Code
In the context of the above conditions, which make it necessary to notify KOWR of its right to acquire shares or shares, the most doubts arise point 1 Article 4(1) UKUR, which speaks of a contract other than a sales agreement. In this respect, first of all, it is necessary to indicate the share/share donation agreement, the swap, the life sentence, the release of the shares in order to exempt themselves from the obligation — date in solutum, the write-off, the transfer of the shares/shares in the form of the return of the undue benefit or the often encountered transfer of the shares or shares of the capital company by way of aport (in-kind contribution) to another capital company.
However, the legislator does not explicitly point to an entity obliged to notify the NCA in cases identified in Article 4(1) UKUR. Some commentators suggest the need to fill in the "legal gap" through appropriate application Article 4(5) UKUR.
The adoption of such a position would lead to the conclusion that the category of legal event underlying the acquisition of shares depends on which entity is required to notify the NAWR. one from the dominant positions is the concept that the buyer of shares or shares is obliged to notify.
At times, however, due to the over-prudential approach of the entities involved in the transaction, KOWR receives notifications from each of them. However, the above concepts seem completely unfounded to me.
It should be indicated that the legislator in Article 4(6) UKUR to acquire shares and shares requires the proper application of, among other things, the regulations contained in Article 3a(3-6) UKUR.
Subject to Article 3a(4) (which, in fact, refers to the right to pre-emption of shares/shares), the time limit for making a declaration of exercise of the right to pre-emption shall be 2 months, starting from the date of the receipt to the National Centre of the notification made by the Company.
This provision therefore corresponds functionally to the most clear provision of the entity required for notification, i.e. Article 4(7) UKUR. This provision indicates that the notification of KOWR of the possibility to exercise the right to acquire shares or shares as a result of the increase in share capital is made by the Company.
Importantly, in the event of an increase in share capital, the notice should be made after the court has registered its increase, which is due to the constitutional nature of such an alert.
In my view, it is appropriate to adopt a general conclusion that in the case of all operations at the shares of the KOWR notification should be carried out by the Company.
Failure to notify the NCA to the legal act may result in far-reaching consequences. According to Article 9 UKUR acquisition of shares in companies indicated in Article 3a(1) UKUR performed on the basis of a legal act contrary to the provisions of the Act is invalid. At that time, the NCA has the right to declare the action invalid (except for other persons having a legal interest).
In conclusion, before any legal action involving a capital company is carried out, it is worth first the order to determine whether the company has (and to what extent) the right to property, to participate in the joint ownership of agricultural property or to have the right to perpetual use in respect of such immovable property.