Buying a Polish company - the required approvals you need to keep in mind
Internal approvals in the company
When selling shares or stocks in a company, the need to obtain corporate approvals must be taken into account. Most often, the sale of the above rights must be preceded by the approval of the company's bodies or other shareholders. This is very important, because a sale without proper approval can even lead to the invalidity of the entire transaction.
In the case of the sale of shares of a limited liability company, a share sale agreement entered into without the required approval constitutes an ineffective act, and this is true both pertaining to the company whose shares are sold and as between the purchaser and the seller of the shares. Such an agreement can become effective only when the appropriate authorization is granted by the company. The approval of the sale of shares can be given both before the sale and after the agreement.
It is worth mentioning that in a situation where the board of directors does not consent to the sale of shares, or does not pass a resolution on the subject at all, a shareholder who intends to carry out such an action may apply to the registry court for permission to sell shares, provided there are so-called “important reasons” for doing so. The concept of important reasons has not been defined by the legislator, so each time it is necessary to consider whether there are legitimate, compelling arguments in a given situation that would support the disposal of shares.
Spouse's approval to sell company
When there is a sale of a business that is part of the spouses' joint property, spousal approval is required. Thus, if the entrepreneur wishes to sell the company without this approval, their counterparty has the right to set a deadline for the entrepreneur's spouse to confirm such an agreement. In the absence of their approval, the sale of the company is invalid.
The disposal of shares in a limited liability company is different. If the contribution made to the limited liability company is part of the joint property, the share in the company taken by the shareholder is also part of this property. The regulations do not impose an obligation to obtain the spouse's consent for the disposal of shares. However, the spouse has the right to object to such a transaction before it even takes place. If, despite the objection raised earlier, the agreement was concluded, it is absolutely invalid. It is therefore worth ensuring that the spouse is aware of the planned divestiture of the company.
Approval of the President of the Office of Competition and Consumer Protection to sell the company
When the sale of a company involves large entities, you should also analyze the potential obligation to obtain approval from the President of the Office of Competition and Consumer Protection for the conclusion of a sale agreement, leading to a so-called concentration. Conducting a transaction without proper approval can lead to financial and even criminal liability for the parties to the transaction. Obtaining the approval of the President of the Office of Competition and Consumer Protection is preceded by a thorough examination of the details of the transaction, so it is worth applying for such approval well in advance.
Approvals of banks and other financial institutions for the sale of the company
In the course of doing business, it is not uncommon for companies to choose to finance investments with funds obtained from loans. The obligation to obtain consent usually stems from the wording of the loan agreement or the general terms and conditions of the loan agreement. If this is the case, you will most often need to apply to a bank or other financing institution for approval of the sale agreement before selling your business. This is important because, in some cases, the sale of a business without proper approval can result in the termination of the loan agreement and the obligation to immediately return the funds to the bank.
Real estate approvals
Additional administrative responsibilities also arise when the company being sold owns agricultural property. The sale of shares or all rights and obligations in a company owning such real estate, or the sale of the entire enterprise of such a company, may trigger an obligation to notify the National Support Center for Agriculture of such a transaction, or even grant the National Support Center for Agriculture a right of pre-emption to such real estate or the shares or stocks sold.
Approvals of grant or subsidy awarding institutions
The sale of a company that benefits from subsidies or grants (including from EU funds), or the sale of its shares, stocks or all of its rights and obligations, will most often involve the approval of the company's sale by the relevant institution granting the subsidy or grants. The detailed rules and procedure related to the approval of the sale of the company are derived from the grant agreement. Failure to comply with the formalities of the subsidy agreement and related to the transaction of selling the company may lead to the need to return the subsidy, for which not only the company and its buyer, but also the previous owner may be liable.
Sale of shares - summary
The purchase of a company is one of the most serious business decisions, which gives rise to many obligations incumbent on the parties to the transaction. Therefore, when preparing to buy a company, it is worthwhile to take the help of a lawyer who will indicate what approvals should be obtained for a particular transaction. This will certainly make the whole process easier and save both time and money.
You can read about how to prepare well for a company sale in our article 10 steps of a well-planned company sale transaction.