Amendment of the Commercial Companies Code: protecting shareholders and strengthening judicial supervision

The Ministry of Justice is working on a draft amendment to the Commercial Companies Code. The proposed modifications mainly include provisions on the issue of trading and registration of company shares. The most important of these are:

1. increasing the information obligations of companies.
2. Strengthening judicial supervision over share registration.
3. broadening the scope of information in the shareholder register.
4. Harmonising the classification of shares.

Increasing the information obligations

The draft law assumes that companies will be obliged to disclose to the National Court Register (KRS) information on entities maintaining a shareholder register or registering shares in a depository of securities. Thanks to this, the data of such an entity will be available to shareholders and other market participants, which will contribute to the increase the security of share trading.

In order to ensure the continuity and correctness of share registration, the proponent postulates the introduction of an obligation to notify the KRS of the conclusion and expiry of a shareholder register agreement. The entity obliged to report the conclusion of such an agreement to the registration court will be the management board. On the other hand, in the case of its expiry, the notification will be made by the entity keeping the shareholder register (e.g. a brokerage house). The draft stipulates that such notification should be made within seven days of the expiry of the agreement. Such a short deadline will allow the registry courts to update the data on an ongoing basis.

Strengthening judicial supervision of share registration

The current mechanisms for supervision of the implementation of registration obligations are insufficient. The lack of effective supervision results in many companies fail to comply with these obligations. Linking the obligation to register shares with the obligation to enter them in the KRS will enable the registration courts to take supervisory action. The courts will be able to initiate so-called coercive procedure. The premise of such a procedure is the swift enforcement of registration obligations. In order to facilitate effective action in this respect, in coercive procedure the registration courts will be able to impose heavy fines on entities that fail to make a timely registration.

Broading the scope of information in the shareholder register

The draft broadens the scope of information in the register – to facilitate the identification of shareholders, PESEL number and date of birth of the shareholder will be added to the catalogue of data to be disclosed. Including such detailed identification data in the register will reduce the risk of purchasing shares from unauthorised people.

Harmonisation the classification of shares

A consequence of the mandatory dematerialisation of shares implemented in 2019 was the introduction of the concept of a registered share into polish company law. At the same time, the division of shares was maintained into nominative shares and bearer shares. This division has lost its meaning, as each share – regardless of whether it is a bearer share or a nominative share – has the status of a registered share, allowing the identification also of the shareholder entitled to the rights from bearer shares. The drafter recognises this pointlessness, which is why the draft proposes to abolish the current classification of shares into nominative and bearer shares.

Summary

The main idea of the draft law is to strengthen the protection of shareholders and other market participants. Greater protection of these groups is to be ensured, among others, by increasing information obligations and introducing effective supervision over the registration of shares. In addition, by eliminating the distinction between nominative and bearer shares, the draft adapts polish regulations to changes resulting from the mandatory dematerialisation of shares.

The project was expected to be approved by the Council of Ministers in the first quarter of 2025.

Authors:

Karolina Odrobina

Leszek Paterek