Subsidiary in Poland: New holding regulation to come into force soon

Any company that is part of a holding acts in the interests of the holding and not in the interests of the company itself. This change in the rules governing holdings in Poland will have a massive impact on the activities and cooperation of all capital groups with subsidiaries. For example, parent companies will be able to issue legally binding instructions to subsidiaries in the future. The law will come into force on 13 October 2022.

The new law introduces new measures to the Polish legal system and every group of companies operating in Poland should take the new regulations into account (including groups with parent companies registered outside of Poland).

The revolutionary approach that each company within a holding acts in the interests of the holding and not in its own interests runs contrary to the traditional approach whereby a company always acts in the best interests of itself and its shareholders.

Which rules must companies within a holding observe in the future?

One of the new measures allows parent companies to issue legally binding instructions to subsidiaries if the subsidiary decides to participate in a group of companies.

We can advise you on the measures that you should take for your group of companies as a result of the new holding regulation.

Piotr Pruś, Attorney-at-law, Partner, ECOVIS LEGAL POLAND Multan, Pruś and Partners Law and Tax Firm, Warszawa, Poland

The binding instructions must meet criteria set out precisely in the relevant regulations. The same applies to a situation where the subsidiary refuses to carry out the binding instructions. These formalities exist to make the process transparent, as managers of the subsidiary are not generally liable for actions resulting from binding instructions, explain the Ecovis experts.

In addition, every company that is part of a holding is obliged to prepare a report on contractual connections with the parent company, which is then subject to approval by the shareholders’ meeting.

Pay attention to the impact of the new holding regulation

The holding regulation will materially impact the operations of all capital groups with subsidiaries in Poland. It is now time to decide whether or not a group of companies will create a holding under Polish law. It will also be interesting to see how these regulations influence other aspects of the operations of groups of companies, such as intragroup transactions under the tax regulations.

For further information please contact:

Piotr Pruś, Attorney-at-law, Partner, ECOVIS LEGAL POLAND Multan, Pruś and Partners Law and Tax Firm, Warszawa, Poland
Email: piotr.prus@ecovis.pl