3 billion PLN to invest in companies in the arms industry!

The Capital Investment Fund (hereafter ‘the Fund’) is a national special-purpose fund, which became famous in the autumn of 2024, when the Council of Ministers adopted a law providing the basis for transferring 3 billion PLN to the Fund for investment in companies in the arms industry. The transfer of funds is intended to increase the production capacity of munitions in our country.

About the Fund

The Fund was established in 2019 as a result of an amendment to the Act on Principles of State Property Management. It was established to provide a permanent source of financing for the acquisition or purhasing of stocks or shares in companies by the State Treasury. The financing of such investments from the state budget was hampered by the difficulty of determining expenditure a year in advance. Currently, the Minister of State Assets administers the resources of the Fund.

Revenues and tasks of the Fund

The revenues of the Fund are in particular:

1. payments from profits of single-person companies of the State Treasury and companies in which all stocks (shares) are owned by the State Treasury;
2. funds in the amount of 30% of each dividend paid out, as well as advance payments on account of dividends paid out, from stocks owned by the State Treasury;
3. funds on account of repayment of state aid or support which is not state aid, granted to entrepreneurs from the Entrepreneurs’ Restructuring Fund, together with with incidental receivables;
4. targeted subsidies from the state budget.

These funds may be used for the Fund’s main task, namely the acquisition or purhasing of stocks or shares by the State Treasury. During such transactions, the Treasury is represented by the Minister of State Assets. In addition, the aforementioned revenues are used to cover the costs of acquiring or purhasing stocks or shares, including services provided by advisers and costs associated with the Fund’s banking services.

Significance of the Capital Investment Fund for the economy

The Fund is an important investment instrument of the State Treasury. The functioning of the Fund allows the strengthening of strategic sectors of the economy such as energy, defence, transport or telecommunications. As an example, the defence sector was strengthened in 2024, when the Council of Ministers decided to adopt an Act on financing activities aimed at increasing munitions production capacity. The Act provides the basis for transferring 3 billion PLN for investment in munitions production capacity to the Capital Investment Fund. With these funds, the Fund will be able to invest in companies in the arms industry, which in the long term will translate into an increase in the number of munitions factories and the development of the arms industry. The Fund’s activities provide an opportunity for the rapid recapitalisation of companies of key importance for the state, which is important from the perspective of the country’s stability and security.

However, when analysing the significance of the Fund for the economy, one cannot overlook the fact that its functioning is associated with numerous controversies and risks. In the first place, attention should be paid to the political risk, as the Fund’s resources may be used by those in power to achieve particular political goals. Furthermore, the issue of transparency of the investment made is crucial. The transparency and integrity of the spending of the Fund’s funds should be of paramount importance here.

Summary

The Capital Investment Fund was established to streamline the process of acquisition and purhasing of stocks and shares by the State Treasury. Previously, such investments were covered mainly from state budget. The Act Principles of Sate Property Management provides the Fund with numerous sources of revenues. The most important are payments from profits of companies owned by the State Treasury and part of the dividends from stocks owned by the State Treasury. The main purpose of investments made within the Fund is to support the development of key sectors of the economy and to protect strategic enterprises from hostile takeovers.

Authors:

Karolina Odrobina

Jarosław Rudy