Legal Eye: Going public

The main index of the Warsaw Stock Exchange (WSE) has risen more than 19 percent since the beginning of the year. Moreover, the number of companies listed on the WSE has grown by almost 10 percent in the same time period, totaling nearly 300 as of June 1st. Of this total, nearly five percent of the companies listed on the WSE are foreign.

What is the WSE?

Formally, the WSE is a non-profit joint-stock company originally created by the State Treasury, now having 38 shareholders, including banks, brokerage firms and the State Treasury. The State Treasury is by far the largest shareholder, retaining an almost 99-percent ownership interest in the WSE. The other thirty-some shareholders share the remaining one percent. The WSE itself is a shareholder in other European stock exchanges as well, including the Paris, London and Frankfurt exchanges. The function of the WSE, in its simplest form, is to facilitate and execute the orderly purchase and sale of securities.

Who may list on the WSE?

Any joint-stock company established in Poland, the EU and the European Economic Area may list on the WSE. A foreign firm wishing to list on the WSE is subject to the same requirements as a domestic company. Moreover, a foreign firm or individual wishing to purchase a controlling stake in a company listed on the WSE is free to do so on the same terms as a domestic investor. Exceptions exist of course - however, any restrictions imposed on a foreign investor's right to list or purchase shares on the WSE must be limited to clearly defined public policy, health or security concerns.

Listing requirements

In order to list a company's shares on the WSE, several steps must first be satisfied, beginning with transformation of the company, if already existing in another legal form (such as a limited liability company) into a joint-stock company, followed by adoption of a shareholders resolution in support of the company's intention to "go public". Depending on the internal organization of the company, it may be necessary to restructure the company in order to satisfy requirements of the WSE. Next, a brokerage firm will need to be retained, in addition to other outside advisors, including legal and accounting professionals, to assist in the preparation of the company's prospectus. The prospectus, which represents a snapshot of the financial, factual and legal status of the company, will then need to be reviewed and approved by the appropriate market regulator for the country in which the company is based. If the company is a Polish entity, the regulator is the office of the Polish Financial Supervisory Authority. Once the prospectus has been approved, the shares to be listed on the WSE will need to be recorded in the National Depository for Securities, following which shares in the company may then be listed on the WSE.

Information resources

Information on brokerage firms may be downloaded from www.idm.com.pl. Individual investors seeking information and advice may want to check out the website for the Polish Individual Investors Association at www.sii.org.pl/english. Companies interested in going public can obtain useful information from the Polish Association of Brokers and Investment Advisors at www.zmid.org.pl. General information can be downloaded from the WSE's website at www.gpw.pl.

Paul Fogo is a senior attorney with Miller, Canfield, W Babicki & Partners