O POSZUKIWANIU DOBRYCH ROZWIĄZAŃ DLA FIRM

Cross-border division - new possibilities for reorganization in EU

2023-04-25

Harmonization of EU law is progressing. The ECJ has long emphasized that the freedom of entrepreneurship should allow for various types of cross-border operations. The adopted draft law amending the Commercial Companies Code and certain other acts implements the EU directive on cross-border conversions, mergers and divisions. It seems that new solutions may find a significant group of interested parties in practice, especially with regard to divisions. Here are the basic principles of the adopted solution regarding cross-border division.

Najważniejsze informacje:

Harmonization under EU law

On 18 April, the government adopted a draft law amending the Commercial Companies Code and certain other acts and sent it to the Sejm. The regulation is another stage of implementing the so-called EU company law package, in particular Directive 2019/2121 of the European Parliament and of the Council of 27 November 2019 amending Directive (EU) 2017/1132 as regards cross-border conversions, mergers and divisions. This is also the implementation of changes resulting from the CJEU judgment of 25 October 2017 in case C-106/16 Polbud.

The planned changes aim to enable and harmonize cross-border operations in the EU market - cross-border divisions, conversions, and mergers.

Cross-border division

Cross-border division can be carried out by transferring the assets of the divided company to a newly established company or companies. There is therefore no possibility of dividing into an existing company. However, there are no restrictions on the type of division to a new company - it can also be a partial division or division by separation, which also allows the existing divided company to continue its operations.

As a rule, cross-border division is similar to the existing process of cross-border merger, already known under the Commercial Companies Code.

It consists of four main stages:

• Agreement on the division plan;

• Adoption of resolutions on cross-border division;

• Obtaining certificates of compliance with the law;

• Registration of the division.

The applicable law

Until the receipt of a certificate confirming the compliance of a cross-border division with the national law, the cross-border division is subject to the law of the state where the divided company is headquartered. Afterwards, it is subject to the law of the state where the newly-formed company, resulting from the division, is established.

The jurisdiction for matters related to the protection of shareholders in connection with cross-border divisions is separately determined: they are subject to the law and exclusive jurisdiction of the court competent according to the seat of the divided company.

Division plan

The cross-border division, in the first stage - the management stage, requires the preparation of a division plan.

The catalog of information that must be included in the cross-border division plan is much broader than for a internal division. According to the draft, the division plan must include at least:

1. the legal form, name, and registered office of the divided company, as well as the indication of its register and the company number in the register;

2. the proposed legal form, name, and registered office of the newly-formed company or companies;

3. the exchange ratio of shares or stocks or other securities and the amount of any cash supplement, unless no such exchange occurs;

4. in the case of division by separation, information on the number and value of shares or stocks in the newly-formed companies covered by the divided company;

5. the conditions for the allocation of shares or stocks or other securities in the newly-formed companies or in the divided company;

6. the proposed schedule of the cross-border division;

7. the likely effects of the cross-border division on employment;

8. the day from which the shares or stocks or other securities entitle to participate in the profit, as well as special conditions affecting this entitlement;

9. the day or days from which the actions of the divided company will be considered, for accounting purposes, as actions taken on behalf of the newly-formed company or companies, taking into account the provisions of the Accounting Act of September 29, 1994;

10. special benefits granted to members of the organs of the divided company;

11. other rights granted by the divided company or the newly-formed companies to the shareholders of the divided company or the holders of securities other than shares or stocks in the divided company;

12. a draft of the agreement or statute or founding act of the company, in accordance with the law applicable to the company resulting from the cross-border division, as well as a draft of the amendments to the agreement or statute of the divided company in the case of division by separation or demerger;

13. procedures by which the rules for employee participation in determining their rights to participate in the organs of the company or companies newly-formed will be determined in accordance with separate regulations;

14. A detailed description of the assets and liabilities, permits, concessions or benefits of the divided company, as well as a statement regarding the way in which they will be allocated among the new companies or retained by the divided company in the event of a spin-off or separation, including provisions regarding the qualification of unassigned assets or liabilities in the cross-border division plan, such as assets or liabilities unknown at the time of drafting the cross-border division plan;

15. Information on the valuation of assets and liabilities allocated to each participating company in the cross-border division;

16. The day of closing the accounting books of the divided company used to determine the terms of the cross-border division, taking into account the provisions of the Accounting Act of September 29, 1994;

17. The division of shares, stocks or other securities of the divided company among the shareholders or criteria for such division, unless it is not required;

18. The buyout price;

19. Proposed guarantees for creditors;

20. The terms of exercise of rights of creditors, employees, and shareholders, as well as the website address where information on these terms can be obtained free of charge.

Additional documents: Management report, expert opinion

Additionally, the management board of the divided company will have to prepare a report for shareholders and employees explaining the legal basis and justifying the economic aspects of the cross-border division, including explaining the effects of the division on employees and the future operations of the company (unless these are cases where such a report is not required).

The cross-border division plan will be reviewed by an expert, unless it concerns a single-member company or the shareholders agree to waive the review.

Both shareholders, creditors, and employees must be notified of the planned division and the opportunity to submit comments on the cross-border division plan, and this information (along with the plan) should be filed with the court. Only one month after mentioning this in the notice can a resolution on the division be adopted. Alternatively, the company may inform the court that it has made this information publicly available, for example, on its website.

After completing the formalities, the companies participating in the division will have to adopt resolutions on the cross-border division. The resolution on the cross-border division requires a majority of three-quarters of the votes representing at least half of the share capital, unless the agreement or the company's statute provides for stricter conditions for the required majority. Note: stricter conditions than 90% of the votes cannot be introduced. Such a reservation will be invalid.

Creditor protection

It is important to always remember that a creditor of the divided company may, within one month of the disclosure or provision of the cross-border division plan, demand that their claims, which were not yet due at the time of the disclosure or provision of the plan, be secured if they can demonstrate that their satisfaction is jeopardized by the division. Such a request does not suspend the issuance of the certificate, but it may lead to a dispute, which will be decided by the court, and the effectiveness of the cross-border division will depend on the execution of the security.

"In the event of a dispute, the court competent according to the registered office of the divided company shall decide on the granting of security for the creditor's claims that arose before the disclosure or provision of the cross-border division plan, at the request of the creditor, filed within three months from the date of disclosure or provision of this plan."

Moreover, Recital 23 of Directive 2019/2121 further specifies that when assessing security, the competent authority should take into account whether the creditor's claim against the company has at least equivalent value and at least proportionate creditworthiness as before the cross-border operation, and whether the claims can be enforced in the same jurisdiction.

Solidarity liability

If a creditor's claim against a divided company is not satisfied by the company to which the obligation is attributed in the cross-border division plan, the remaining companies to which assets have been transferred, and in the case of division by spin-off or carve-out, the divided company, shall be jointly liable with the company to which the obligation is attributed. This liability is limited to the value of net assets allocated to each participating company on the day of the spin-off/division.

For obligations of the divided company that are not attributed in the cross-border division plan to the newly formed companies, these companies, and in the case of division by spin-off or carve-out, also the divided company, shall be jointly liable.

Tax succession

If the assets taken over constitute a tax unity, the companies resulting from the division shall succeed to all the rights and obligations of the divided company in connection with the assets allocated to them in the division plan, as provided for by tax law.

If the assets do not constitute a tax unity, the newly formed companies shall be jointly liable for the tax liabilities (arising before the spin-off) of the divided company with all their assets, limited to the net value of the acquired assets.

Certificate of compliance with Polish law for cross-border division

As was the case in cross-border mergers, the management board of the company submits an application to the commercial court for a certificate of compliance with Polish law for the cross-border division procedure subject to that law. Such an application must include a number of documents, including the cross-border division resolution itself.

An important new feature is that, together with the application for the certificate, a request must be submitted to the competent tax authority for an opinion in accordance with the provisions of the Tax Ordinance.

>>> READ MORE ABOUT OBTANING THE CERTIFICATE <<<

Filing for registration of division

After receiving the certificates, the management of the newly established company files the division with the registry court. The court accepts the certificate of compliance with the law for cross-border division issued by the competent authority as final confirmation of the proper completion of procedures and formalities in the scope of the procedure subject to the law applicable to the divided company.

Transitional provisions

If the plan for merger, cross-border merger, division, or transformation has been filed with the registry court before the entry into force of the act, the previous provisions apply to merger, division or transformation proceedings. Therefore, especially with regard to cross-border mergers, which are possible based on the previous regulations, it is worth expediting the actions - otherwise, the proceedings will have to be carried out in accordance with the new regulations, which may result in additional difficulties and costs.

Podejmuj przemyślane decyzje!
🦉

===========================

Wpis ma charakter informacyjny lub edukacyjny i nie jest usługą doradztwa prawnego lub podatkowego. Podjęcie decyzji mających skutki podatkowe lub prawne powinno być poprzedzone analizą i rekomendacjami profesjonalistów na podstawie przedstawionych informacji i dokumentów w indywidualnej sprawie danego podmiotu. Autor nie ponosi odpowiedzialności za szkody wynikające z oparcia się na informacjach przedstawionych na niniejszej stronie.
Inne wpisy, które mogą Cię zainteresować
Inne podobne tematy
Polityka prywatności i cookies
Zapoznaj się
wróć na górę