Table of contents:
- How is agricultural real estate classified?
- Do I need to obtain approval when merging a company with agricultural real estate?
- When does the Agricultural Property Agency’s (KOWR) right to acquire agricultural real estate update?
- What are the consequences of not notifying the Agricultural Property Agency (KOWR)?
Before proceeding with the merger of companies, it is essential to determine whether the companies involved in the process, both the acquiring and acquired companies, as well as the companies participating in the merger through incorporation, are owners or perpetual users of agricultural real estate.
For the sake of precision, such information should also be included in the merger plan.
How is agricultural real estate classified?
The Agricultural System Formation Act refers to the definition of agricultural real estate as formulated in the Civil Code: agricultural real estate includes properties that are or can be used for agricultural production purposes, including crop and livestock production, horticulture, fruit growing, and fisheries.
Properties are not classified as agricultural real estate if they are located in areas designated in spatial development plans for purposes other than agricultural or where the area of agricultural land is less than 0.3 hectares.
Often, the status of real estate requires a deeper analysis.
Do I need to obtain approval when merging a company with agricultural real estate?
As a rule, no – there is no requirement to obtain prior approval from the Agricultural Property Agency (KOWR) for the acquisition of agricultural real estate in connection with a merger.
However, if the real estate was acquired within 5 years before the merger, and none of the exceptions provided in the regulations apply, it may be necessary to obtain approval from the Director-General of the Agricultural Property Agency for the sale of this real estate in connection with the merger process. Such approval is granted in cases justified by the important interest of the purchaser of agricultural real estate or the public interest.
When does the Agricultural Property Agency’s right to acquire agricultural real estate update?
The Agricultural Property Agency’s rights in connection with the merger are updated after the merger is entered into the National Court Register (KRS). If the acquired company is the owner or perpetual user of agricultural real estate, the Agricultural Property Agency has the right to acquire such real estate in connection with the merger.
After the merger is registered in the National Court Register, the acquiring company is obliged to notify the Agricultural Property Agency of this fact without delay.
Within a month of receiving the notification, the Agricultural Property Agency is entitled to submit a declaration of the acquisition of this agricultural real estate for payment of the price of the property.
Does the Agricultural Property Agency have the right to acquire shares/capital increase in the acquiring company? YES.
If the acquiring company is the owner or perpetual user of agricultural real estate with a total area of at least 5 hectares, the Agricultural Property Agency has the right to acquire shares or stocks in the increased share capital of this company.
Verification is required not only of the acquiring company’s ownership of agricultural real estate but also to check whether the acquiring company holds shares or stocks in other companies that are owners or perpetual users of such agricultural real estate and whether there is a relationship of dependency/domination between the acquiring company and these companies.
The pre-emption right also applies to the Agricultural Property Agency in the case of the acquisition of shares or stocks in companies that are dominant over companies holding at least 5 hectares of agricultural real estate, provided that the dominant company holds shares or stocks in a company with agricultural real estate.
In such a situation, the Agricultural Property Agency should be notified of the merger being entered into the National Court Register.
What are the consequences of not notifying the Agricultural Property Agency?
This is a very severe consequence as it results in the invalidity of the transaction, which formed the basis for the transfer of ownership or perpetual usufruct of real estate. There is no clear answer as to whether this applies only to the transfer of real estate or undermines the entire merger process.
Therefore, it is necessary to determine the status of real estate owned by the companies involved in the merger beforehand.