Non-EU firms will face restrictions in purchasing more than 20% of shares in Polish firms

Foreign investors from non-EU countries could face restrictions in taking stakes of more than 20% in Polish businesses which provide critical infrastructure, goods or services if the new law is passed. Currently, there are few restrictions concerning the amount of foreign ownership in Poland but this is going to change soon as a result of anti-crisis measures adopted by the authorities. The Polish Parliament (Sejm) recently adopted an act on Anti-Crisis Shield 4.0 (the Act) aimed at counteracting the negative effects of the COVID-19 pandemic. The Act is now being reviewed by the upper chamber of the Polish Parliament (Senat).
 
In principle, the Act gives the country’s competition authority (UOKiK) the power to block non-EU companies from buying Polish businesses deemed to be providing critical infrastructure, goods or services. It follows the trend taken by the European Commission and other member states. The restrictions are to apply for 24 months from the date the Act enters into force.
 
What type of companies will require consent of the regulator?
 
The Act introduces a wide scope of investments in Polish companies which will be subject to the restrictions, provided that their annual turnover for each of the last two years exceeds Eur 10 million, which will include:

• • public listed companies,
  • companies owning strategic infrastructure,
  • companies developing crucial IT software, such as software for power plants, water plants, communication, payments, hospitals, transportation, food supplies etc.
  • companies operating in strategic sectors such as electricity, oil and gas, chemicals, defence telecommunication, medical, food etc.


• The screening procedure foreseen in the Act is modelled on the current procedure for anti-monopoly clearance. As a rule, UOKiK must be notified prior to an acquisition and give its consent otherwise the transaction is null and void.
  
  UOKIK may raise objections to the contemplated acquisition if it determines that the proposed transaction may cause potential danger to public order, safety or health (taking into account provisions of the Treaty on Functioning of the European Union).
   
  Why is this happening?
   
  Polish shares are particularly popular with investors from Asia. The Polish Government does not want Polish companies to be bought cheaply by funds, especially from outside the EU. Noteworthy is that many member states, as well as the European Commission, have emphasized the need for regulations which protect valuable core European assets from take-over at lowered prices in the wake of the COVID-19 epidemic.
   
  Who does it affect?
   
  The Act introduces certain restrictions in relation to investments contemplated by investors from outside the EU or the European Economic Area. The restrictions do not apply to companies based in the EU or the European Economic Area (which means Norway, Iceland and Lichtenstein in addition to member states).
   
  Top 5 takeaways
   
  • • Polish regulator (UOKiK) will have the power to block foreign takeovers of Polish companies if the investor is from outside the EU/EEA,
    • Restrictions refer to companies which operate in strategic sectors such as electricity, oil and gas, chemicals, defence telecommunication, IT, medical, food etc.
    • The threshold is annual turnover of the target company for the last two years; if its annual turnover is below Eur 10 million, the restrictions do not apply and the transaction can be carried out without consent of the regulator,
    • If the annual turnover of the target for each of the last two years exceeds Eur 10 million, the transaction will be allowed only after obtaining consent of the regulator,
    • UOKIK may raise objections to the contemplated acquisition if it determines that the proposed takeover may cause potential danger to public order, safety or health (taking into account provisions of the Treaty on Functioning of the European Union).