Financial market – changes, changes, and more changes


Only a month ago we posted an article on plans to change the way the capital market is regulated and market investors are protected. The act has now been passed and signed into law, and will come into force on 1 January 2019.

Originally, the act provided among other things for transformation of the Financial Supervisory Authority (KNF) into a state-owned legal person and expansion of the Authority to include representatives of the prime minister, the Bank Guarantee Fund, the president of the Office of Competition and Consumer Protection, and the minister responsible for coordinating the secret services, compulsory dematerialisation of bonds, certificates, and letters of pledge, and creation of a Financial Education Fund. The act was expanded significantly to include provisions on taking over banks.

In November, a government proposal was published for amendment to the Act on the Public Offer and other acts, containing major changes with respect to offering securities and financial instruments. The planned amendment is mainly due to the enactment of EU Regulation 2017/1129, which in general will apply as of July 2019.

Examples of the proposed changes that will have a major effect on issuers and investors are given below.

Redefining a public offer

The term ‘public offer’ has been redefined in accordance with Regulation 2017/1129, and is now ‘a communication to persons in any form and by any means, presenting sufficient information on the terms of the offer and the securities to be offered, so as to enable an investor to decide to purchase or subscribe for those securities. This definition also applies to the placing of securities through financial intermediaries’.

Offers made to less than 150 persons will therefore be a public offer, unlike at the moment, but will not be subject to the prospectus obligation. For any public offer made in the same calendar year to 149 specified or unspecified addressees where no prospectus is required, an information memorandum approved by the KNF will have to be published. This provision is intended to prevent multiple issues being addressed to less than 150 people without a prospectus in the course of a year. This option was employed by some issuers to date to the detriment of investors’ interests.

Remuneration policy made public

Under the proposal, the Commercial Companies Code will provide for an obligation for the general meeting of shareholders in a public company to adopt a remuneration policy for members of the management and supervisory board. This will contain details of the fixed and variable elements of the remuneration package, including bonuses and other cash and in-kind benefits, and pension schemes. There will also be an obligation for the company to publish a remuneration report drawn up by the supervisory board. This report is subject to an opinion given by the general meeting. Under the proposal, a chapter would also be inserted into the Commercial Companies Code on transactions with affiliates exceeding certain values specified according to the public company’s revenue in the year in question. The public company will have to obtain the consent of the supervisory board and release information about conducting a major transaction with an affiliate on its website.

Shareholder register

There will also be an amendment to the Trading in Financial Instruments Act in the form of a chapter on a shareholder register, disclosure of information to shareholders, and measures to help them exercise their rights. Public company shareholder registers will be maintained by the National Securities Depository and based on information submitted by investment firms and banks that operate securities accounts. The register will be available to a company to help it to identify and contact shareholders.

Danuta Pajewska, attorney-at-law, M&A and Corporate practice, Wardyński & Partners