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Cross-Border Mergers: Experiences from Poland

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Cross-Border Mergers

Part of the book series: Studies in European Economic Law and Regulation ((SEELR,volume 17))

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Abstract

The article provides theoretical and empirical study of cross-border mergers under the legal framework available in Poland following the implementation of the 2005 European Directive on Cross-Border mergers (CBMD). We begin with assessment of how the CBMD has been implemented into Polish company law and how it fits into general framework for domestic mergers. We then turn to presenting empirical data cross-border merger activity involving companies incorporated in Poland. The dataset embraces 126 transactions, whereby generally the publication of draft mergers terms counted as relevant for the inclusion into the cohort. Thus, what distinguishes this analysis is a focus not only on quantitative aspects but foremost on qualitative analysis of merger transactions. The results show a sharp increase in the number of cross-border mergers in the last 3 years. There is also an absolute prevalence of intra-group transactions. As regards the migration’s direction the study reveals a balanced ratio of inbound vs outbound mergers. When it comes to foreign jurisdictions involved, we demonstrate that Polish companies merge with entities incorporated in Cyprus or Luxembourg in more than half of the total number of transactions, which suggests a fiscal nature of the considerations underlying the operation. The article argues that there is a need to amend Polish rules on cross-border mergers in order to adjust them to the market expectations and demands.

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Notes

  1. 1.

    See Articles 118–134 of the Directive (EU) 2017/1132 of the European Parliament and of the Council of 14 June 2017 relating to certain aspects of company law, O.J. 2017, L 169/1. Former, the European Parliament and Council Directive 2005/56/EC of 26 October 2005 on cross-border mergers of limited liability companies, O.J. 2015, L 310/1.

  2. 2.

    Polish company or any other nationality refers to company established and being governed by the rules of such state.

  3. 3.

    See Art. 8 of Regulation (EC) No. 2157/2001 on the Statute for a European Company (SE), O.J. 2001, L 294/1. Worthy noting is that 5 cross-border transfers of the SE’s seat (inbound and outbound) were carried out in Poland and one is now in progress (inbound).

  4. 4.

    For an overview of the legislation on cross-border seat transfers in the European Union, see Biermeyer (2015) and Gerner-Beuerle et al. (2017).

  5. 5.

    Judgment of the Court (Grand Chamber) of 25 October 2017, ECLI:EU:C:2017:804. See Mucha and Oplustil (2018).

  6. 6.

    The time of the execution of that transaction was 7 days after the complete application was filed by the Italian company to Polish register court in Szczecin. Meanwhile, however, the register Court in Kraków dismissed application for the conversion of Polish company into Czech company reasoning that such operation is inadmissible under Polish law.

  7. 7.

    Kodeks spółek handlowych of Sep 15th, 2000, consolidated version Journal of Laws of the Republic of Poland of 2017, item 1577. The CCC is a comprehensive regulation of companies and partnerships, as well as their mergers, divisions and transformations.

  8. 8.

    Instead of many see Romanowski and Opalski (2009).

  9. 9.

    Provisions on the cross-border merger by setting up a new company has been a dead letter since the implementation of them into Polish law. Practically, none of the transactions examined by the authors took place in that mode.

  10. 10.

    Obviously, this can be achieved also by execution of exit right by the minority, described below.

  11. 11.

    For a very detailed description of the Polish law on cross-border mergers see: Wroniak et al. (2012), Ch. 14.

  12. 12.

    See general on corporate governance models: Weimer and Pape (2008).

  13. 13.

    See Andersen and Sørensen (2013), pp. 250–251.

  14. 14.

    See Article 126b(3a) of the Proposal for a Directive of the European Parliament and of the Council amending Directive (EU) 2017/1132 as regards cross-border conversions, mergers and divisions, COM(2018) 241.

  15. 15.

    It was once ruled as unconstitutional by the Polish Constitutional Tribunal in case SK 23/03 of March 8th, 2004 in relation to general requirement of holding more than 1% of votes during shareholders meeting in order to be entitled to challenge any resolution.

  16. 16.

    This provision is vastly based on § 16 sec. 3(1) and (3) German Transformation Act (Umwandlungsgesetz).

  17. 17.

    See in context of cross-border restructurings: Lombardo (2009), p. 647.

  18. 18.

    Basically, company merges into a company set up in another Member State (‘shell’ company) in order to change its ‘legal clothes’ (downstream merger, also known as reverse vertical merger. See Siems (2008), pp. 179–180.

  19. 19.

    Rodzynkiewicz (2016), pp. 408–409.

  20. 20.

    Oplustil (2015), p. 1258.

  21. 21.

    Radwan (2016), pp. 92–93.

  22. 22.

    Rodzynkiewicz (2016), pp. 152–154.

  23. 23.

    Szumański (2009), p. 304; Oplustil (2015), p. 1149.

  24. 24.

    Cf. Biermeyer and Meyer (2018), pp. 3–4.

  25. 25.

    Cf. ibid., p. 6.

  26. 26.

    See art. 24a of Act of February 15, 1992 on legal person’s income tax, consolidated text: Polish OJ of 2018, item 1036.

  27. 27.

    One reservation needs to be done here: in case of an exit transaction, in which Polish companies were merging into foreign company, the date of completing merger was the moment of deleting Polish company from the commercial register. The main reason for this is scarcity of data from foreign registers.

  28. 28.

    Proposal for a Directive of the European Parliament and of the Council amending Directive (EU) 2017/1132 as regards cross-border conversions, mergers and divisions (Text with EEA relevance), COM(2018) 241 final, 2018/0114(COD) (25.4.2018).

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Acknowledgements

Ariel Mucha wishes to thank for financial assistance of the Alexander von Humboldt Foundation on the research stay at the Julius Maximilian University of Würzburg (Germany). Arkadiusz Radwan would like to thank Thomas Papadopoulos for the invitation to speak at the conference “Cross-border Mergers Directive: EU perspectives and national experiences” (University of Cyprus, Oct. 7th, 2017) and conference participants for discussion and valuable comparative insights. The author also acknowledges that the credit for the empirical analysis should solely go to his co-author Ariel Mucha.

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Authors and Affiliations

  1. Jagiellonian University, Law and Administration Faculty, Kraków, Poland

    Ariel Mucha

  2. Polish Academy of Sciences - Scientific Centre in Vienna, Vienna, Austria

    Arkadiusz Radwan

  3. Vytautas Magnus University, Kaunas, Lithuania

    Arkadiusz Radwan

  4. Allerhand Institute, Kraków, Poland

    Ariel Mucha & Arkadiusz Radwan

  5. University of Social Sciences, Łódź, Poland

    Arkadiusz Radwan

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  1. Ariel Mucha
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  2. Arkadiusz Radwan
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Correspondence to Arkadiusz Radwan .

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Editors and Affiliations

  1. Department of Law, University of Cyprus, Nicosia, Cyprus

    Thomas Papadopoulos

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Mucha, A., Radwan, A. (2019). Cross-Border Mergers: Experiences from Poland. In: Papadopoulos, T. (eds) Cross-Border Mergers. Studies in European Economic Law and Regulation, vol 17. Springer, Cham. https://doi.org/10.1007/978-3-030-22753-1_21

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  • DOI: https://doi.org/10.1007/978-3-030-22753-1_21

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