FDI Screening in Poland

Legal basis

Act of 24 July 2015, on Control of Certain Investments (the "Act", OJ 2020, item 117) as amended by the so-called Anti- Crisis Shield Act 4.0 (OJ 2020, item 1086).

The Act provides for two separate sets of rules related to different investors, with other companies/sectors protected, different competent authorities, separate procedural rules and fines. Both sets of rules are presented below as "FDI 1" and "FDI 2".

Filing requirement

FDI 1:

The notification obligation is triggered if an investor (regardless of its nationality or place of registered seat) intends to carry out an investment (i.e. acquisition of an undertaking or its organisational part, acquisition of shares in an undertaking or acquisition of control over an undertaking) in an undertaking that is active in a sector affecting the public security and/or public order of Poland.

FDI 1 covers the acquisition of a "significant participation", which is defined as a shareholding conferring at least 20 %, 25 % or 33 % of the voting rights in the target entity.

FDI 2:

The notification obligation is triggered if a foreign investor (non-EU, non-EEA, non-OECD individual/entity) intends to carry out an investment (i.e. acquisition of an undertaking or its organisational part, acquisition of shares in an undertaking or acquisition of control over an undertaking) in an undertaking with its registered seat in Poland that achieved domestic revenues exceeding EUR 10m in any of last two years and is covered by FDI 2.

Under FDI 2 a minority shareholding that does not confer control can be subject to investment screening, though acquisitions of a shareholding below 20 % are exempted.

Relevant sectors

FDI 1:

The Act can be applied to companies operating in 15 strategic sectors of the Polish economy, for instance:

• power generation and distribution;
• gasoline and diesel production, transport and storage;
• production of chemicals and fertilisers;
• telecommunications;
• manufacture and trade of arms, ammunition and military technologies, etc.

A list of companies active in strategic sectors covered by the regulation is published by the Council of Ministers and currently includes nine companies.

FDI 2:

FDI 2 applies to targets which:

• are public (listed) companies; or
• own assets defined as critical infrastructure under Polish law; or
• develop or modify software for specific sensitive use, such as to control power plants or networks, to operate facilities or systems for the supply of utilities, to operate equipment or systems used for voice and data transmission or for storage and processing, to operate or manage facilities or systems used for cash supply, card payments, conventional transactions, securities settlement and derivative transactions, to provide insurance services, or to operate transport systems or facilities ;or
• operate in selected sensitive sectors, such as telecommunications, power generation and distribution, fuel production, transport and storage, production of chemicals, manufacturing of medicines or medical devices, processing of meat, milk, grains, fruits and vegetables, manufacturing and trade of arms and ammunition as well as technologies used for military purposes, etc.

Process and timetable

Competent authority: Ministry of State Treasury, Ministry of Defence or Ministry of Maritime Economy (depending on the sector in which the protected undertaking operates) for FDI 1 and the President of the Office for Competition and Consumer protection for FDI 2.

Mandatory filing requirement: Yes (for both FDI 1 and FDI 2) Filing deadline: A relevant agreement needs to be reported prior to the signing of a contract / publication of a public offer to the relevant authority (for both FDI 1 and FDI 2).

Responsibility for filing: The investor (as the acquirer) is responsible for obtaining the necessary approval. In certain cases the protected undertaking is obliged to submit the notification (e.g. if the acquisition of significant participation is a result of redemption of shares of the protected entity, demerger or amendments to the agreement or statutes of the protected entity with respect to the preference of shares) (for both FDI 1 and FDI 2).

Sanctions: Implementation ahead of local regulatory clearance is subject to criminal sanctions, i.e. a fine of up to PLN 100m (approx. EUR 24m) and/or imprisonment of six months to five years for FDI 1. For FDI 2 the respective sanctions are a fine of up to PLN 50m (approx. EUR 12m) or imprisonment of six months to five years.

Length of the proceedings: 90 days (FDI 1).

FDI 2:

Phase 1: 30 business days.

Phase 2: 120 calendar days.

FDI Screening in Czech Republic.

FDI Screening in Austria.

FDI Screening in Bosnia & Herzegovina.

FDI Screening in Croatia.

By Pawel Kulak, Attorney at Law, and Krzysztof Pawlak, Attorney at Law, Schoenherr