Poland

• 15/10/2020
• Jurisdictions

Poland’s FDI screening mechanism is set out in the Act on Control of Certain Investments (the Polish Act). It is applicable to certain investments in companies operating in strategic sectors of Poland’s economy by both domestic and foreign investors and provides for ex ante screening. The responsible authorities are the Ministry of State Assets, the Ministry of National Defence and the Ministry of Marine Economy and Inland Navigation.

Scope

The mechanism controls transactions that result in the acquisition of or a significant participation in or a dominant position over a company which is classified as a protected entity. Protected entities are companies which operate in specific sectors of the Polish economy, including power generation and distribution; fuel production; transport and storage; production of chemicals and fertilizers; manufacture and trade of arms; ammunition and military technologies; production of rhenium; the extraction and processing of metal ores used in the manufacture of explosives; weapons and ammunition; and telecommunications. The Polish Council of Ministers (Council) annually issues a list of entities designated as protected entities.

Review criteria

The control authorities can oppose an acquisition on public order and public safety grounds to (i) safeguard territorial independence and integrity, protect human rights, guarantee citizens security, and protect the environment; (ii) safeguard Poland’s participation and fulfilment of its NATO obligations; (iii) prevent acts or social and political phenomena that could interfere with foreign relations; or (iv) safeguard public policy or national security and protect public health and life.

Application procedure

The acquiring entity must notify the relevant control authority prior to implementation of the transaction. This also includes acquisitions of significant participation or dominant position resulting from foreign mergers or acquisitions involving a foreign company holding a dominant position in a protected entity. The notification must be in Polish (or accompanied by official translation) and must disclose sufficient information including business or statutory activities, the details of the group the notifying entity is part of and future business and investment plans.

Implementation and government practice

The initiation of the control proceedings is normally triggered by a notification. In certain circumstances, however, the control proceedings can be initiated ex officio. Prior to a decision, the relevant control authority seeks non-binding recommendations of the intra-ministerial Consultative Committee, which is an advisory body composed of representatives of various ministries. opposing a notified transaction. The control authority may decide (i) not to initiate control proceedings or (ii) oppose the notified transaction. In 2017, the Ministry of Energy opposed the division of electricity distributor PKP Energetyka S.A and sale of its electricity distribution business on public order and energy security grounds. The decision was upheld by the Administrative Court of Warsaw.

Due process

The decision of the control authority must specify the legal grounds, the factual basis, and legal justifications. The decision opposing a notified transaction is subject to a request for reconsideration and may also be challenged before an administrative court.

Time limits

The control authority must issue a decision within 90 days of notification or initiation of ex officio proceedings unless extended due to requests for additional information. If the control authority does not issue an opposition decision within specified timeframe, the notifying entity is free to proceed with the transaction.

Confidentiality

The decision is served upon the parties to the proceedings but is not published. There are no specific confidentiality requirements, the proceedings are subject to the Code of Administrative Procedure that governs access to files and protection of confidential information.

Sanctions

Transactions without prior notification or decision of opposition from the control authority are null and void. A fine of up to PLN 100 million (approximately EUR 25 million) and/or six months to five years imprisonment may be imposed.

Legislative developments

The Polish Parliament is finalising an amendments to the Polish Act as part of measures taken in response to the COVID-19 crisis. The proposed amendments would introduce an additional control mechanism similar to that already provided for in the Polish Act but applicable specifically to investments by non-EU/EEA entities. The new mechanism would not be limited to specific companies but would apply to any entity meeting the specified criteria. The responsible control authority for this new control mechanism would be the President of the Office of Competition and Consumer Protection. The current draft foresees a two-step process; an initial screening; and in-depth control proceedings. The initial screening should be completed within 30 days and would result either in a decision on the absence of objections or a decision to initiate in-depth control proceedings.

 

The above information is a summary that does not constitute legal advice. For exhaustive information, advice, and assistance please get in touch with our lawyers.