Guide to share dematerialisation – practical problems, part 1

Public companies and a resolution of the General Meeting authorising the conclusion of a share registration agreement 

The guide to the dematerialisation of shares of 19 February 2020, available at www.kpr.pl, informs about the necessity to for the General Meeting of Shareholders (GMS) to adopt, by 30 June 2020, a resolution authorising the company to select an entity to keep the Register of Shareholders (RS).

Should public companies also select a system of share registration for shares that were so far not dematerialised, and the entity operating such a system?

The provisions of the Act of 30 August 2019 amending the Commercial Companies Code (CCC) do not indicate this explicitly.

The provisions of the Act on amending the CCC impose such an obligation directly only on not public companies.

What is important, the amended provisions of the CCC introduce a uniform system of registration of dematerialised shares, which means that public companies will register the so far not dematerialised shares only in the securities depository maintained by the Central Securities Depository of Poland (KDPW), as dematerialised shares are already registered there. On the other hand, companies which are not public companies will register dematerialised shares either in KDPW or RS maintained by an entity authorised to maintain securities register (e.g. brokerage houses), depending on the first choice of an entity made by the General Meeting of such a company.

However, the system analysis of all provisions, i.e. the Act on amending the CCC, the Act on Trading in Financial Instruments, the Act on Public Offering and Conditions of Introducing Financial Instruments to the Organised Trading System and on Public Companies, both those already in force and those which will come into force on 1 January 2021, indicates that public companies are not obliged to convene a GMS in order to grant an authorisation to enter into an agreement for registration of shares in the depository of securities.

In terms of share dematerialisation, the Act on Trading in Financial Instruments continues to apply to public companies.

Therefore, dematerialisation of shares in a public company can only be carried out by registering its previously undematerialised shares in the securities depository, maintained by the KDPW.

In conclusion, public companies do not have to convene general meetings in order to adopt a resolution on the choice of the system of registration of their so far not dematerialised shares and the entity maintaining the register. Public companies are legally obliged to register all shares in the securities depository maintained by the KDPW.

The company’s obligation to convene a general meeting in order to adopt a resolution on the choice of the system for the registration of its shares and the entity maintaining the register applies only to non-public companies.

The Law Firm Żyglicka i Wspólnicy will keep you posted about the reported problems concerning the dematerialisation of shares. The GUIDE TO SHARE DEMATERIALISATION will be available at www.kpr.pl in the section: “News.”

Leszek Paterek, attorney-at-law

Revised: 23 March 2020