EU integration weighed most heavily on 1998 legal changes
Not one to make light of a grand tradition, I invite you to sit back and join me in reviewing some of the more important legal developments of 1998.
In terms of legislative changes, 1998 witnessed further developments aimed at enhancing Poland's prospects for accession to the European Union (EU). Of course, not all branches of law are easy to change quickly. The changes in law in 1998 reflect the current dynamics of economic development, with some of the most extensive legal changes being made in the relatively new branches of the law that regulate the "sensitive" sectors of the economy. These are the sectors that were created or gained new importance as a result of the economic reforms conducted in the 1990s and from the very beginning were subject to specific regulation. This, in particular, applies to capital market services, financial services and banking.
In 1998 we welcomed several new pieces of legislation, most of which came into force at the beginning of the year. For example, Poland has a new banking law, new legislation regarding the National Bank of Poland (NBP), new laws on public trading in securities and a new law on waste products.
On Jan. 4, 1998 a new act - the Law on Public Trading in Securities - came into force. In comparison with the previous act, the new act explained the regulated subject matter in a clearer way, providing key definitions and a more lucid description of the scope of activities of market institutions. In addition to clarifying what securities are and the roles of players in the market, this legislation brought several innovations to the Polish securities market, including the de-materialization of securities and specific regulations on the de-listing of publicly-traded shares.
Other important changes affecting the financial services sector and, to some extent, public finance, are found in the new Acts on the National Bank of Poland and the Banking Law, with the Law on Letters of Charge and Mortgage Banks being seen as a supplement to these laws.
All of these acts came into force on Jan. 1, 1998. The reform of the functioning of the central bank implemented by the first piece of legislation was aimed at eliminating conflicts taking place between the legislator and the authority charged with implementing the law - the relationship between them has been defined precisely in the new act. At the same time, these laws strengthened the independence of the NBP. Beyond the milestones in the theory of Polish banking law that these laws represent, as a practical matter, they also redefine the relationship between a bank and you, the account holder, as they expand the rights of account holders vis-a-vis banks.
The Law on Letters of Charge and Mortgage Banks introduces a further positive development for consumers. It restored the institution of long-term mortgage credit. Thus, it creates the opportunity to establish a common system of inexpensive building credits granted by specialized financial institutions.
The coming into force at the beginning of 1998 of the law on registered pledges was undoubtedly a legal breakthrough. Prior to the enactment of this law, any movable property pledged to secure a debt (other than a bank credit) had to be physically transferred to the pledgee for the pledge to be effective. For example, if your business took out a loan from investors to purchase equipment and the equipment to be purchased was security for the loan, you had to hand over the equipment to the investors. Kind of defeated the purpose, right? The most important result of this law is that the owner of movable property that is subject to a registered pledge may now retain possession of the property. The other advantage in this new law is that the register in which pledges are recorded is public, while previously the only registers were those kept privately by banks. The new registers are kept by the courts, which prevents anyone from claiming that they were not aware of an existing pledge.
Another important innovation in Polish legislation in the passing year was related to the right of perpetual usufruct. Perpetual usufruct can be thought of as a right in real property that is somewhere between ownership and limited rights in property under Polish law, including lease and right of use. In response to criticism that perpetual usufruct is a poor substitute for ownership, Poland has made it possible for certain individual holders of perpetual usufruct rights to become owners. The scope of the law is limited, and, most importantly, the law does not modify the position of business entities that are perpetual usufructors. However, the law represents another step in solving the problems related to real estate in Poland. In the coming years, as part of Poland's efforts to join the European Union, we can assume that the Polish authorities will also try to resolve some of the uncertainties of land holding in Poland for business and other entities. This new law also came into force on Jan. 1, 1998 and was slightly amended recently.
As of Jan. 1, 1998 the government gained a new tool for environmental protection with the coming into force of the Act of June 27, 1997, on Waste Products. The act is the first Polish law to deal exclusively with the issue of waste products. The enactment of this type of legislation was a requirement of the European Union with respect to the harmonization of Polish law with that of the EU. As a reminder, businesses have one year following the day on which the act became effective, or until Jan. 1, 1999, to file a request for making an arrangement with municipal authorities or an application for the granting of a permit by a voivod, whenever it was required by the act. Failure to make a filing, and breach of the terms of any administrative approval issued, can result in substantial penalties.
This article was prepared by Lejb Fogelman, managing partner of Hunton & Williams Poland, with the assistance of Malgorzata Baranska, an associate attorney.
In terms of legislative changes, 1998 witnessed further developments aimed at enhancing Poland's prospects for accession to the European Union (EU). Of course, not all branches of law are easy to change quickly. The changes in law in 1998 reflect the current dynamics of economic development, with some of the most extensive legal changes being made in the relatively new branches of the law that regulate the "sensitive" sectors of the economy. These are the sectors that were created or gained new importance as a result of the economic reforms conducted in the 1990s and from the very beginning were subject to specific regulation. This, in particular, applies to capital market services, financial services and banking.
In 1998 we welcomed several new pieces of legislation, most of which came into force at the beginning of the year. For example, Poland has a new banking law, new legislation regarding the National Bank of Poland (NBP), new laws on public trading in securities and a new law on waste products.
On Jan. 4, 1998 a new act - the Law on Public Trading in Securities - came into force. In comparison with the previous act, the new act explained the regulated subject matter in a clearer way, providing key definitions and a more lucid description of the scope of activities of market institutions. In addition to clarifying what securities are and the roles of players in the market, this legislation brought several innovations to the Polish securities market, including the de-materialization of securities and specific regulations on the de-listing of publicly-traded shares.
Other important changes affecting the financial services sector and, to some extent, public finance, are found in the new Acts on the National Bank of Poland and the Banking Law, with the Law on Letters of Charge and Mortgage Banks being seen as a supplement to these laws.
All of these acts came into force on Jan. 1, 1998. The reform of the functioning of the central bank implemented by the first piece of legislation was aimed at eliminating conflicts taking place between the legislator and the authority charged with implementing the law - the relationship between them has been defined precisely in the new act. At the same time, these laws strengthened the independence of the NBP. Beyond the milestones in the theory of Polish banking law that these laws represent, as a practical matter, they also redefine the relationship between a bank and you, the account holder, as they expand the rights of account holders vis-a-vis banks.
The Law on Letters of Charge and Mortgage Banks introduces a further positive development for consumers. It restored the institution of long-term mortgage credit. Thus, it creates the opportunity to establish a common system of inexpensive building credits granted by specialized financial institutions.
The coming into force at the beginning of 1998 of the law on registered pledges was undoubtedly a legal breakthrough. Prior to the enactment of this law, any movable property pledged to secure a debt (other than a bank credit) had to be physically transferred to the pledgee for the pledge to be effective. For example, if your business took out a loan from investors to purchase equipment and the equipment to be purchased was security for the loan, you had to hand over the equipment to the investors. Kind of defeated the purpose, right? The most important result of this law is that the owner of movable property that is subject to a registered pledge may now retain possession of the property. The other advantage in this new law is that the register in which pledges are recorded is public, while previously the only registers were those kept privately by banks. The new registers are kept by the courts, which prevents anyone from claiming that they were not aware of an existing pledge.
Another important innovation in Polish legislation in the passing year was related to the right of perpetual usufruct. Perpetual usufruct can be thought of as a right in real property that is somewhere between ownership and limited rights in property under Polish law, including lease and right of use. In response to criticism that perpetual usufruct is a poor substitute for ownership, Poland has made it possible for certain individual holders of perpetual usufruct rights to become owners. The scope of the law is limited, and, most importantly, the law does not modify the position of business entities that are perpetual usufructors. However, the law represents another step in solving the problems related to real estate in Poland. In the coming years, as part of Poland's efforts to join the European Union, we can assume that the Polish authorities will also try to resolve some of the uncertainties of land holding in Poland for business and other entities. This new law also came into force on Jan. 1, 1998 and was slightly amended recently.
As of Jan. 1, 1998 the government gained a new tool for environmental protection with the coming into force of the Act of June 27, 1997, on Waste Products. The act is the first Polish law to deal exclusively with the issue of waste products. The enactment of this type of legislation was a requirement of the European Union with respect to the harmonization of Polish law with that of the EU. As a reminder, businesses have one year following the day on which the act became effective, or until Jan. 1, 1999, to file a request for making an arrangement with municipal authorities or an application for the granting of a permit by a voivod, whenever it was required by the act. Failure to make a filing, and breach of the terms of any administrative approval issued, can result in substantial penalties.
This article was prepared by Lejb Fogelman, managing partner of Hunton & Williams Poland, with the assistance of Malgorzata Baranska, an associate attorney.
