Western-style regulations a comforting start to 2001
As is becoming for the start of a new century, Jan. 1 witnessed the initiation of many new laws, some of which will have a dramatic impact on how we do business in Poland.
As I discussed in several articles last year (and undoubtedly will do so yet again this year), the new Code of Commercial Cos. represents one of the most significant changes awaiting us this year. Building upon the old Commercial Code, the new code has introduced some new concepts and corporate entities, such as limited-liability joint stock companies and professional limited partnerships.
The differences in the new code are not limited to merely adding new concepts. It also introduces some fundamental changes to basic tenets of corporate law. Among other changes, it provides for new procedures for the merger, spin-off and transformation of companies. The minimum share capital of both limited liability companies and joint-stock companies has been increased considerably. With respect to joint stock companies, a new form of non-voting shares in stock has been introduced and the long-awaited concept of authorized capital has seen the light of day.
After more than two years of work, the National Court Register was officially created on Jan. 1, 2001. The National Court Register replaces the old commercial register and register of economic activity with three new registers:
Register of Entrepreneurs (including corporations and partnerships, cooperatives, state-owned enterprises, foreign companies and branch offices, and sole proprietorships)
Register of Associations (other social and professional organizations, foundations and public medical care centers)
Register of Insolvent Debtors
The National Court Register will be kept in electronic form by 26 business courts located within district courts. The National Court Register, along with the files of each registered entity, is open to public inspection upon paying a processing fee.
The Register of Entrepreneurs will include basic information about a company including: its name, address, shareholders (with some limitations), amount of share capital, names and authority levels of company representatives, as well as tax, custom and Social Security Office (ZUS) arrears subject to enforcement if not paid within 60 days following judgement.
A brand new concept in Polish law, the Register of Insolvent Debtors, will contain information on four groups of debtors:
natural persons either declared to be insolvent or not declared insolvent due to a lack of funds to cover insolvency proceedings
shareholders with unlimited liability for the obligations of an insolvent company
debtors required to reveal their assets/property during the course of collection proceedings
persons who in connection with collection proceedings were stopped from engaging in an economic activity or acting as a representative or an attorney-in-fact
Individuals currently registered as doing business in Poland will need to record their activities in the National Court Register by the end of 2001. Companies already recorded in the Commercial Register will have up to three years to file a new application for registration in the National Court Register.
The Law on Commercial Activity replaces the 1988 Act on Economic Activity. This law significantly reduces the list of economic activities that require a license; some of the previously licensed activities now only require a permit. The advantage of a permit is that the relevant government authority may not refuse to issue the applicant a permit if it satisfies the requirements stated by law, while the issuance of a license is discretionary. Licenses or permits issued under the previous law remain valid for the period stated.
Jan. 1 also ushered in a new Stamp Duty Act and Act on Taxing Civil Law Transactions. Both acts essentially carry forward the regulations in the old Stamp Duty Act, but some amendments were introduced to reduce the amount of tax, including amounts levied for a company's articles of association.
Beyond what has already come into effect, a number of new laws are likely to be introduced this year. Parliament is currently working on almost 300 draft bills. The draft legislation includes proposed acts on the disposal of waste, public procurement process, water use, unfair competition and consumer protection law and that bugaboo of EU integration negotiations, acquisition of real estate by foreigners.
The June 30, 2000 Act on Intellectual Property should come into force sometime in 2001. However, as the Constitutional Tribunal is still scheduled to review this act, a prediction of when would be difficult. The proposed act will govern the protection of inventions, applied and industrial designs, rationalizing projects, trademarks, geographical names and semiconductor chips. It will replace a number of current related acts.
We also expect the introduction of a new law regarding the concept of a real estate debt. The draft legislation is based on the German concept, according to which property collateral secures capital without restrictions on the purpose of this capital. Real estate debt will not replace the mortgage, but will be a practical alternative to the mortgage, which requires the capital to be used exclusively for a predetermined purpose. This is the crucial difference between a regular mortgage and real estate debt.
Finally, I am still not making any bets on whether the Parliament will adopt the Act on Reprivatization in the coming year. After more than 10 years of debate, the controversy remains.
No article could hope to even mention all the changes that we may experience in the world of business in the coming year, but I wanted to signal some of the more significant. Above all, I wish you a happy and prosperous 2001.
This article was prepared by Lejb Fogelman, the managing partner of Hunton & Williams' Warsaw office, with the assistance of Malgorzata Fido, an associate attorney.
