Acquiring shares of a bank, insurance company, investment fund or brokerage

 
 

The Banking Law of 29 August 1997, the Insurance Activity Act of 22 May 2003, the Investment Funds Act of 27 May 2004, and the Act on Trading in Financial Instruments of 29July 2005 require notification of the PFSA of an investor’s intention to acquire shares in a financial institution-a bank, insurance company, investment fund company or brokerage house.

Notification of PFSA of intention to acquire shares

A duty to notify the PFSA arises when the intended acquisition, direct or indirect, will result in obtaining or exceeding 10%, 20%, one-third or 50%, respectively, of the total votes at the shareholders’ meeting of a financial institution, or the equivalent percentage of the share capital.

If the party intending to acquire the shares files the notification with the PFSA with all the required documentation and does not receive any response from the PFSA within 60 business days, the PFSA is deemed to consent to the acquisition.

The notification requirement also applies to:

  • situations in which the entity intends to obtain control over a financial institution, directly or indirectly, in some way other than acquiring or taking up shares or rights to shares giving it a majority of the total votes,
  • a pledgee or usufructuary entitled to vote the shares,
  • situations in which an entity obtains voting rights at a given threshold as a result of events other than acquiring or taking up shares or rights to shares, particularly as a result of amendment of the statute or as a result of extinguishment of voting privileges or restrictions,
  • situations where two or more entities act in concert to exercise voting rights.

The PFSA will declare its objection to acquisition or taking up of shares or rights to shares or obtaining control over a financial institution, in the form of a decision, if justified by the need for cautious and stable management of the given institution, in light of the influence that the notifying party might exert over the institution, or in light of the assessment of the financial condition of the notifying party (or if there are formal defects in the notice).

When issuing a decision objecting to the acquisition, the PFSA may set a deadline for the acquisition or obtaining control. The deadline may be extended by the PFSA at its own initiative or upon application of the notifying party.

Prohibition of exercise of voting rights to acquired shares

Shares acquired in violation of the notification requirements may not be voted. The PFSA may lift the ban on voting the shares if required by the interests of:

  • customers of a Polish bank,
  • insureds or others holding rights under insurance policies,
  • participants in an investment fund or a collective portfolio of securities, or customers to whom an investment company provides investment advice or management of a securities portfolio,
  • a brokerage house or the customers of a brokerage house.

The PFSA may, by a decision, prohibit a given entity from voting shares it holds or exercising control:

  • if justified by the need for cautious and stable management of the financial institution.
  • in light of the assessment of the financial condition of an entity that has directly or indirectly obtained voting rights (exceeding thresholds) or control.
  • in light of the possible influence the entity may exert over a given financial institution.

In such case the PFSA may, by decision, order divestment of the shares within a designated time.

Notification of intent to sell shares

A duty to notify the PFSA also arises if an entity intends to dispose of shares of a financial institution authorising it to exercise over 10% of the total votes at the shareholders’ meeting, or if the disposal would result in holding a stake of shares authorised to exercise less than 10%, 20%, one-third, or 50% of the total votes at the shareholders’ meeting. This obligation also applies to an intention to sell bonds convertible into shares, depository receipts or other securities providing a right or obligation to acquire shares in a financial institution.

Notification of financial institution of number of shares held

An entity that has directly or indirectly acquired or taken up shares or rights to shares in a Polish bank which represent or together with shares already held represent a block of shares reaching or exceeding the threshold of 5%, 10%, 20%, 25%, one-third, 50%, 66% or 75% of the total shares at the shareholders’ meeting, or has obtained control over a Polish bank, is required in each instance to notify the bank promptly, and the bank in turn will forward this information to the PFSA.

An obligation to inform the financial institution arises in the case of acquisition, taking up or disposing of shares in a brokerage, insurance company, or investment fund company.

If the financial institution is a public company, listed on the stock exchange, the reporting requirements arising under the Act on Public Offerings will also apply.