Closing date of an M&A transaction and the right to participate in the general meeting of a non-public joint-stock company
The Commercial Companies Code regulates in detail the rules for shareholders’ participation in the general meeting of a joint-stock company. The resulting legal conditions should be taken into account when planning the timeframe for M&A transactions to adequately secure the rights of the buyer of shares, and in particular, the possibility for the buyer to participate in the general meeting of a non-public joint-stock company after the closing of the transaction.
According to the applicable regulations, in order to transfer the ownership of shares, it is necessary to have a tangible element in the form of transfer of possession of registered shares or delivery of bearer shares. The transfer of ownership of registered shares additionally requires the conclusion of an agreement between the seller and the buyer (either on the share document itself or in a separate document), while the transfer of bearer shares may take place even without the conclusion of a formal agreement, through the mere delivery of the shares. Considering the significant legal consequences of delivering a bearer instrument, it is necessary to consider how to understand the term “delivery of shares”.
Representations and warranties are a common feature in M&A transactions and derive from common law systems. The fundamental aim of representations and warranties is to properly divide risk between the seller and the buyer. In countries with an Anglo-Saxon legal system, statements made regarding the object of sale are in fact explicitly an element of ex delicto liability, as misrepresentation, and contractual liability as breach of warranty. The significance of statements of this kind in contracts governed by Polish law is not entirely clear and has been widely discussed in case law and legal literature. The conclusions reached are summarised below.
A guarantee agreement is the most widely accepted and common basis for a number of solutions used in M&A transactions. Therefore, its correct application is of fundamental importance for this practice. Meanwhile, judgments issued in recent years by the Supreme Court of Poland on the nature and normative sources of such obligations have caused doctrinal controversies and uncertainty among trade participants. It is therefore worth briefly summarising where the case law stands and the conclusions that can be drawn from it.
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