The amendment of the Commercial Companies Code (CCC) is related to the obligation of implementing Directive (EU) 2019/2121 of the European Parliament and of the Council of 27 November 2019 amending Directive (EU) 2017/1132 with respect to cross-border conversions, mergers, and divisions of companies, and Directive (EU) 2019/1151 of the European Parliament and of the Council of 20 June 2019 amending Directive 2017/1132 with regard to the use of digital tools and processes in company law.
Currently, under the Commercial Companies Code, only cross-border mergers involving capital companies and limited partnerships with shares are possible (with the exception that a limited partnership with shares cannot be the acquiring company or a newly established company).
The amendment introduces new types of cross-border and domestic reorganizations or aligns the status of a limited partnership with shares with that of capital companies for the purposes of reorganization. It also provides new safeguards for employees, creditors, and shareholders.
The amendment introduces the following into Polish law:
- Cross-border transformation: This allows a company to change its registered office to another EU country, enabling companies to transfer their operations to or from Poland. Transferring the registered office abroad will always be associated with transforming the company into a legal form appropriate for the new country’s laws, and the process is subject to numerous formal requirements to protect entities associated with the company.
- Cross-border division based on the existing three methods of division, including division by establishing new companies, division by acquisition and establishing a new company, and division by segregation. Additionally, a new method of division called division by isolation is introduced. It involves transferring part of the assets of the dividing company to an existing or newly established company, which then acquires shares or stocks of the dividing company. Division by isolation, particularly due to universal succession, can be an interesting alternative to the sale of a business or organized part of a business. Division by isolation can also have a cross-border character.
- Consolidation merger: This type of merger does not require the establishment of new shares or issuance of new stocks if one person indirectly or directly holds all the shares in the merging companies or if the shareholders of the merging companies hold shares or stocks in the same proportions in all the merging companies. This new type of merger can be used, among other things, to consolidate assets and liabilities of companies within a holding structure.
The effective date for the implementation of the amendment is August 1, 2023. It is currently challenging to predict whether this deadline will be met. However, it is aligned with the obligation to implement Directive (EU) 2019/1151, which also expires on August 1, 2023. For accuracy, the deadline for implementing Directive (EU) 2019/2121 was January 31, 2023.
The implementation of these changes into the Commercial Companies Code will undoubtedly have a positive impact on the harmonization of legal regulations within the national frameworks of the European Union.
The incorporation of these changes into the Polish legal system, resulting from the EU acts, will positively contribute to the efficient conduct of company transformation and division processes.