Public Companies' Reporting Obligation Clarified

After several recent administrative court decisions, one important discrepancy in the Law on the Public Trading of Securities has finally been clarified. The cases concerned public companies that acquired more than 10% of their own shares. In keeping with the relevant provisions, they gave due notification of the number of shares they acquired (not the percentage of votes attached thereto), as Polish Securities Law stipulates that any entity must supply the number of shares and the voting percentage when it acquires shares reaching or exceeding 5 or 10% of votes at a public company's general shareholders' meeting. Now, however, public companies do not have to report the percentage of votes because, according to new interpretations, the Securities Law only concerns shares whose voting rights can be exercised, and the Commercial Companies Code does not allow a company to exercise any voting rights attached to shares that it owns. Nevertheless, the Polish Securities and Exchange Commission (SEC) took the opposite view, namely that the number of shares owned by a company, irrespective of whether they can be voted, impacts on other shareholders' voting power; therefore, investors should be provided with percentage information. Although the SEC tried to fine the companies involved, the court disagreed, stating that the SEC's interpretation was too broad and went against the exact wording of the Securities Law. For further information please contact Lejb Fogelman or Jarosław Grzesiak at Dewey Ballantine. Tel +48 22 690 6100; fax +48 22 690 6222; www.deweyballantine.com