Is it sufficient to rely solely on the National Court Register to check who owns the shares in a Polish limited company?

When performing due diligence on a potential business client, knowing who the shareholders are can be very important. It will help the buyer to understand the company structure, give them an idea of the resources they have access to and, most importantly, help the buyer to avoid in the future problems connected with the share ownership. Sometimes, despite signing the deed on the sale of shares and despite the fact that the company’s register of shareholders was updated to reflect the transfer of shares, the actual transfer is invalid because the legal requirements were not met.
 
So, what should be done to determine who owns the shares in a Polish limited company (spółka z ograniczoną odpowiedzialnością, sp. z o.o.)? Is it sufficient to rely solely on the National Court Register (KRS) which is the Polish equivalent of Companies House holding detailed information on every limited company in Poland?
 
No, unfortunately it is not sufficient to rely solely on the National Court Register (KRS). Here’s why:
 
What the National Court Register (KRS) provides:
 

• The KRS is a public register that contains basic information about companies in Poland, including their address, legal form, identification numbers, and sometimes the structure of share capital.
• For limited liability companies, the KRS entry may list the initial shareholders and the division of share capital at the time of registration or after major changes.
• However, the KRS does not always reflect the current, up-to-date list of shareholders, especially after subsequent share transfers. The register may only show shareholders with significant holdings or may not be updated immediately after every transaction.
• The register of shareholders is a separate, internal document maintained by the company’s management board which should contain up-to-date information on all shareholders, the number and nominal value of shares held by each, and records of any changes, including transfers, pledges, or other encumbrances.

 
Neither the KRS nor the register of shareholders is the definitive source for identifying current shareholders in a limited company. If you want to verify the current ownership of shares in a Polish limited company, you must request access to the company’s documents and review all previous share transfers to make sure that all transfers are valid and effective. The KRS can only be used to check basic company details, the initial share structure and sometimes major changes, but it is not sufficient for confirming the present list of shareholders.
 
In general, the rights to shares in a Polish limited company can only be transferred if the shares themselves have been properly acquired by the person transferring those rights. Ownership is a prerequisite for transferring any rights related to the shares. Therefore, in the context of a Polish limited company, it is crucial to verify whether there is an uninterrupted chain of share transfers which are valid and properly documented. Time does not cure defects in the chain of share transfers. If a previous transfer was invalid due to non-compliance with formal requirements, the defect cannot be remedied simply by the passage of time. The invalid transfer means the seller did not acquire valid title and thus cannot transfer valid title onward.
 
Key points regarding the transfer of shares in a Polish limited company:
 

• You cannot transfer rights to shares that you do not legally own.
• The transfer of shares requires a valid legal title, meaning the person transferring must first have acquired the shares.
• Under Polish law, shares in a sp. z o.o. are typically transferred by a written agreement (usually with the signatures confirmed by a notary).
• Any attempt to transfer rights to shares without ownership would be ineffective and not recognized legally.

 
Conclusion
 
Verifying legal title can be complex because it requires checking the entire history of share transfers for compliance with formalities and company consent. Defects in past transfers can invalidate current ownership claims. There must be an uninterrupted chain of valid share transfers to verify legal title and the process is not straightforward. It involves ensuring notarized agreements, company consent, proper notification and registration in the register of shareholders. Any defect in these steps can invalidate the transfer and complicate verification. The longer the company’s history, the more challenging it becomes to verify title and resolve potential defects.
 
Woźniak Legal possesses the expertise and experience necessary to effectively assist you. Our lawyers can assist you in determining who owns the shares in a company by analyzing the company's share structure and ownership records.
 
Please contact us on office@woznialegal.com.
You can also email me directly on grzegorz.wozniak@wozniaklegal.com.