The Polish legislator has introduced changes to the Polish Commercial Companies Code through a bill enacted on 9th February 2022 that will take effect on 13th October 2022. The purpose of the bill is, among other things, designated to regulate the formation of holdings (Pol. “grupa spółek”) and legal relationships between a holding company and its subsidiaries taking into account the rights of their creditors, members of governing bodies and minor shareholders . According to the new law, a holding will be created to peruse a joint business strategy and aim and to enable the holding company to exercise uniform, steady and transparent control over its associated companies, however the new law does not contain any information about the structure of a holding company to be met to constitute this entity.
Formation of a holding requires the following steps: (1) passing a resolution of shareholders of a subsidiary company indicating the holding company as a kind of trust and defining a joint purpose of the companies belonging to the holding, however the resolution must be adopted by 75% of the votes of the shareholders meeting of an associated company. (2) registration of the holding consisting of the holding company and its subsidiary (subsidiaries ) within the appropriate court registry (KRS) and if the holding company has its seat abroad, it would be sufficient to enter the holding within the registry of its subsidiary .(3) undertaking any formal measures to point at the affiliation of a subsidiary to the holding (e. g. through letterheads, logos etc. )
According to the new law, a holding is entitled to issue binding instructions to its controlled members subject to the kind of conducting of their business affairs and the manner in which the instruction must be obeyed while justifying the instruction through a specific holding’ interest. However, under some circumstances, the subsidiaries have the right to reject the execution of the instruction in a particular case if this could cause the subsidiary’s insolvency or would be contrary to the interests of the holding. In addition, the holding has further means to control its subsidiaries by using the right to information, undertaking permanent supervision of subsidiaries and to squeeze out minor shareholders.
The shareholders of a holding company may be held liable for damages caused to its subsidiaries related to the execution of binding instructions given by the holding company, for a decrease of values of stock shares of a shareholder or of a subsidiary or for damages caused to creditors of a subsidiary unless they are not at fault.
The holding can give some benefits to their members making their shares more valuable which could attract more buyers. Through a holding, the holding company will be able to better coordinate the cooperation between several companies through the system of different instructions. Risk management can be enhanced by dividing assets across many companies allowing liability to be limited to a single subsidiary and products/services can also be offered and sold or transferred easily and confidentially without revealing trade secrets. Hopefully the new holding regulation will not lead to a reduction of competition and the creation of a monopoly on the market. Time will tell.
