Before a Public Takeover Bid | Poland | Global Public M&A Guide

3. Before a Public Takeover Bid

[Last updated: 1 January 2025, unless otherwise noted]

3.1 Shareholding rights and powers

The table below provides an overview of the different rights and powers that are attached to different shareholding levels within a listed Polish corporation:

Shareholding	Rights
One share	The right to attend and vote at general shareholders' meetings. The right to obtain a copy of the documentation submitted to general shareholders' meetings. The right to submit questions to the directors and statutory auditors at general shareholders' meetings (either orally at the meeting or in writing prior to the meeting). The right to request the nullity of decisions of general shareholders' meetings for irregularities as to form, process, or other reasons. The right to file a liability claim against directors or to request the nullity of a transaction on behalf of the company if such claim is not filed by the company. The right (under certain conditions) to request that a shareholder holding at least 95% of the total number of votes in the company buys out shares held by the minority shareholder/s (sell-out).
5%	The right to put additional items on the agenda of a general shareholders' meeting and to table draft resolutions for items on the agenda. The right to request the management board to convene a general shareholders' meeting. The right to ask, subject to certain conditions, the general meeting of shareholders or, if the general meeting fails to do so, the registration court, to appoint an expert (rewident do spraw szczególnych) to check the company's books, financial records and the actions of the company's corporate bodies.
More than 10%	The ability at a general shareholders’ meeting to block resolutions on delisting the company.
20%	The right to appoint a representative to the supervisory board.
More than 20% (at a general shareholders’ meeting)	The ability at a general shareholders' meeting to block the disapplication (limitation or cancellation) of the preferential subscription right of existing shareholders in the event of share issues; this also applies to issues of convertible bonds or warrants and other similar securities.
More than 25% (at a general shareholders’ meeting)	The ability at a general shareholders' meeting to block: issues of new shares with pre-emptive rights for existing shareholders; any other changes to the articles of association, mergers, de-mergers, spin-offs, capital increases, capital reductions, and dissolution of the company; the authorization to the board of directors to increase the company's share capital without further shareholder approval ("authorized capital"), and issues of convertible bonds or warrants.
More than 33% (quorum)	The adoption by a general meeting of a resolution to increase share capital that provides for new shares to be taken up through private placement or open subscription by a designated addressee requires the presence of shareholders representing at least 33% of the share capital. A resolution of the general meeting on amendments to the statutes authorizing the management board to increase the share capital within the limits of the authorized capital and conditional share capital requires the presence of shareholders representing at least 33% of the share capital.
More than 50% (at a general shareholders’ meeting)	The ability at a general shareholders' meeting to: approve the payment of dividends; appoint and dismiss members of the supervisory board and to approve their remuneration and, if applicable, severance packages; appoint and dismiss statutory auditors and to approve their remuneration; approve the annual financial statements; grant discharge from liability to the directors and statutory auditors for the performance of their mandate; and take any other decisions for which no special majority is required.
66% (at a shareholders' meeting)	The possibility to adopt resolutions on: the merger of the company (for public companies); the split of the company (for public companies); the adjournment of the general meeting; the financing by the company of the acquisition/subscription of its own shares (however, in case of a 50% share capital quorum, an absolute majority of votes is sufficient) (financial assistance); and a significant change in the company's scope of business.
75% (at a shareholders' meeting)	The possibility to adopt resolutions on: the issuance of convertible bonds and bonds with pre-emptive rights to acquire shares; the amendment of the articles of association; the redemption of shares; the reduction of share capital; the increase of share capital (including conditional capital and the creation of authorized capital); the disposal of an enterprise or an organized part of it; the dissolution of the company; participation in a formal holding structure (grupa spółek); and a merger/split of the company (for non-public companies).
80% (at a shareholders' meeting)	The possibility to adopt a resolution on the exclusion of shareholders' pre-emptive rights.
90% (at a shareholders' meeting)	The possibility to adopt a resolution on the delisting of the company from the stock exchange (with a 50% quorum).
95%	The possibility to force all other shareholders in a private company to sell their shares ("squeeze-out").

3.2 Selected aspects of the pre-acquisition phase

Polish law contains a number of rules that already apply before a public takeover bid is announced. These rules impose restrictions on, among other things, prior stake building by a bidder, the publication of the intention to announce a takeover bid by a bidder or a target company, and prior due diligence by a potential bidder. The main restrictions have been summarized below. Some careful planning is therefore necessary if a potential bidder or target company intends to start a process that is to lead to a public takeover bid.

Collateral
The bidder is required to establish collateral in favor of the broker in an amount corresponding to no less than 100% of the value of the shares to be acquired during the takeover bid. The collateral can take the form of: (i) a bank guarantee/suretyship; (ii) insurance cover; (iii) the blocking of cash funds on a bank account; or (iv) the blocking of shares or bonds. It should be possible to realize the collateral immediately after the expiry of the term for the purchase of the shares subscribed for in the takeover bid. The bank or other financial institution providing or acting as an intermediary in providing the collateral is required to issue a document confirming the establishment of the collateral (filed with the PFSA together with the takeover circular).
Insider dealing and market abuse
Before, during and after a takeover bid, the general rules regarding insider dealing and market abuse remain applicable. For further information on the rules on insider dealing and market abuse, see 6.3 below. The rules prohibit the manipulation of a target's stock price by creating misleading rumors, for example. In addition, the rules on the prohibition of insider trading prevent a bidder that has inside information on a target company (other than in relation to the actual takeover bid itself) from purchasing any shares in a takeover bid.
Stake building and disclosure of shareholdings
A bidder may have various reasons for building a stake in a target company before launching a bid. However, hidden stake building is limited due to the obligation to disclose major shareholdings in listed companies and their potential impact on price-setting in takeover bids.

The rules regarding the disclosure of shareholdings and transparency apply before, during and after a public takeover bid. Under these rules, if a potential bidder starts building up a stake in a target company, it will be obliged to disclose its stake if the voting rights attached to its stake exceed a particular disclosure threshold. The relevant disclosure thresholds in Poland are 5% and then 10%, 15%, 20%, 25%, 33%, 33 1/3%, 50%, 75% and 90%. In addition, a shareholder who holds over 10% must report any change of shareholding (either up or down) of at least 2% (in a public company whose shares are admitted to trading on the official listing market, i.e. the WSE main market (rynek podstawowy)) or 5% (in a public company whose shares are admitted to trading on another regulated market), and a shareholder who holds over 33% must report any change of shareholding (either up or down) of at least 1%. The bidder is obliged to inform the PFSA and the target of the abovementioned changes no later than six trading days after the transaction date or four working days (in the case of OTC transactions). The target should promptly provide this information to the public at the same time (by way of a current report), the PFSA and the WSE.

When determining whether or not a threshold has been passed, a potential bidder must also take into account the voting securities held by the parties with whom it acts in concert or may be deemed to act in concert (see 3.9 below). These circumstances include affiliates and indirect acquisitions (the purchase of shares in an entity that is dominant in relation to the target). Such parties can also include existing shareholders of the target company with whom the potential bidder has entered into specific arrangements, e.g., relating to voting at the target company's shareholders' meeting.

In addition to complying with the disclosure rules, a bidder also needs to comply with pricing rules. As will be set out further below (see 4), the acquisition price during the 12-month period before the offer is relevant when determining the minimum price to be offered in the bid.
Contacting the target company and disclosures by the target company
The bidder does not need to formally notify the target company that a takeover bid has been launched. However, if the bidder is interested in pursuing a public takeover and wishes to, for example, secure the support of the target's board, the bidder's first step could be to approach the board of the target. If both the bidder and the target are interested in evaluating the takeover bid, they usually enter into a confidentiality agreement, which is sometimes combined with a standstill clause in agreements with the target. In the confidentiality agreement, the target company and the bidder agree to maintain confidentiality about the transaction, the negotiations and all information disclosed to any party during the negotiations.

The target company must also continue to comply with the general rules regarding disclosure and transparency. These rules include the requirement that a company must immediately announce all inside (price-sensitive) information. For further information on inside information, see 6.1 below. The facts surrounding the preparation of a public takeover bid may constitute inside information. Therefore, if the target company receives information about a contemplated public takeover bid or if there are rumors or leaks that a (potential) bidder intends to launch a public takeover bid (and the target company has confirmed that the information or rumors are correct), the target company may be obliged to announce this in accordance with the applicable disclosure obligations.

However, the board of the target company can delay the announcement if all the applicable requirements under the Market Abuse Regulation are met, especially if it believes that a disclosure would not be in the legitimate interest of the company or if there is a non-disclosure agreement between the bidder and the target company. For instance, this could be the case if the target's board believes that early disclosure would prejudice the negotiations regarding a bid. However, the delaying of an announcement is only permitted if non-disclosure does not entail the risk of the public being misled, and if the company can keep the relevant information confidential.
Due diligence
The Polish public takeover bid rules do not contain specific rules regarding the question of whether any prior due diligence can be performed, or how such due diligence is to be organized. However, the concept of a prior due diligence or a pre-acquisition review by a bidder is generally accepted on the market and by the PFSA. Appropriate mechanisms have been developed in practice for organizing due diligence or pre-acquisition reviews and to cope with potential market abuse and early disclosure concerns. These include the use of strict confidentiality procedures and data rooms. In order to simplify access to information during a due diligence process, the investor and the target company can enter into an investment agreement in order to agree on the terms and conditions of future cooperation. However, it is quite common for a takeover bid to proceed without prior due diligence of the target or with due diligence based solely on public disclosures made by the target company.
Transaction agreement
If the bidder intends to acquire a large stake in the target company from specific shareholders, it is possible for the bidder and the relevant shareholders to enter into a transaction agreement (typically referred to as a takeover bid subscription agreement or a share purchase agreement). The transaction agreement is signed immediately prior to the launch of the public takeover. The transaction agreement is usually preceded by a confidentiality agreement (including standstill provisions).

The following items are typically covered by a transaction agreement:
- Structure of the transaction (including price, offer conditions and timetable) and content of the takeover documents;
- Obligation of the bidder to announce the takeover bid and of the shareholder(s) to subscribe for the shares in response to the takeover bid;
- Influence of the shareholder(s) towards the target company during the takeover, including the target's business and trading in shares and financial instruments of the target;
- Obligations and restrictions relating to takeover bids for the target company's shares potentially announced by competing bidders;
- Support regarding regulatory filings and registration in the shareholders’ register post-acquisition; and
- Confidentiality and communication strategy.
Parties entering into a transaction agreement in connection with the bid may qualify as persons acting in concert with respect to the bid, which should be analyzed on a case-by-case basis.

3.3 Acting in concert

For the purposes of Polish takeover bid rules, persons "act in concert":

if they collaborate with the bidder or with any affiliate of the bidder on the basis of an explicit or implicit, oral or written, agreement aimed at acquiring shares in the target company, coordinated voting at general shareholders' meetings of the target company, or maintaining a common policy in relation to the target company;
if they hold or acquire shares in the target on behalf of or for the account of the bidder;
if they are proxies of the bidder with discretionary voting powers at the general shareholders' meetings of the target company; or
if they are affiliates of the bidder.

In view of the above rules and criteria, the target company could be one of the entities with which a shareholder acts in concert or is deemed to act in concert. For example, this is the case when a target company is already controlled by a shareholder. This may be significant if the target company has some treasury shares, in which case it may be required to include them together with a stake held by the relevant controlling shareholder.

The concept of persons acting in concert is very broad and, in practice, many issues can arise to determine whether or not persons act in concert. This is especially relevant in relation to mandatory takeover bids. If one or more persons in a group of persons acting in concert acquire voting securities as a result of which the group in the aggregate would exceed the 50% threshold, the members of the group will have a joint obligation to carry out a mandatory takeover bid, even though the individual group members do not exceed the 50% threshold.

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