Regulated business activity in the Constitution for Business
From 30 April 2018 the main guidelines concerning regulated business activity can be found in the new Business Act. The number of regulatory provisions affecting business activity in Poland will not decrease, but they will be spread more widely across industry-specific regulations. There are also changes favourable to business.
The existing situation
The Business Freedom Act laid down the boundaries for regulated business activity in chapter 4, “Concessions and regulated business activity”. Even the drafters of the act acknowledged in the statement of reasons for the act that the differences between a permit and a concession are blurred and mainly depend on the administrative powers of the regulating authority at the point when they are granted. Despite this, the act contains a finite list of activities requiring a concession. It also specifies concession authorities and their powers and obligations, and the procedure for obtaining and criteria for losing a concession. Similarly, with respect to business activity requiring a permit (in some cases referred to as permission or a licence), the act lists industry-specific acts under which the relevant permits are required. Due to the rate of regulatory change in industry-specific acts, this list was repeatedly updated. The scale of the problem is demonstrated by around a hundred instances of amendments over the almost 14 years of existence of the Business Freedom Act. Even in 2018, the act was amended three times. On 30 April 2018 it will be repealed to make room for the Constitution for Business.
Concessions, permits, entry in regulated activity registers
Under the Business Act, these will be the three principal forms of regulation of business activity. Generally, they are forms known from the Business Freedom Act but still undefined. In practice, depending on administrative and legal requirements imposed by the relevant regulatory authorities, the following definitions have been adopted for the types of business activity listed in the Business Act:
- Business activity requiring a concession. This is the activity most strictly controlled by regulatory authorities as it relates to strategically important areas of the economy (e.g. trade in fuels, or extraction of fossil fuels) and there are usually fewer concessions available than the number of applicants seeking them. Sometimes concessions are awarded in tenders under the procedure provided for in the Public Procurement Law.
- Business activity requiring a permit. In principle any entity that fulfils the criteria for a permit for a particular type of business activity (for example production and trading in medicinal products, or production and trading in dual-purpose products) will be issued a permit. In some cases the criteria are unclear, giving the authority granting the permit greater discretion.
- Activity requiring registration. The requirement for entry in the relevant regulated activity register means that notification has to be given of the intention to take up the activity prior to commencing the activity. In principle, the regulatory requirements for activity subject to this obligation (for example ensuring a product safety monitoring system) are fulfilled by declarations made by the business and/or documents submitted by the business. The notified authority does not verify them.
In industry-specific provisions there are derogations from this rule. For example, prior to entry in the register of producers of foodstuffs an official inspection of the establishment is often carried out.
Public registers of entities that conduct particular types of activity are above all supposed to enable regulatory authorities to monitor entities active on particular markets. They cannot be considered to be official confirmation that an entity does in fact fulfil the relevant regulatory requirements.
Registration is being required more and more broadly. It is likely that the cosmetics sector will soon be subject to this requirement.
- Free activity. Contrary to the name, this does not mean that businesses conducting activity of this kind do not encounter regulatory provisions. Requirements of a specific nature may apply to these businesses, concerning for example safety and quality of the products and services on offer, especially if they are intended for consumers.
Not a chance without industry provisions
The Business Act does not give a list of activities requiring concessions and does not list separate acts covering activities requiring permits or registration. Instead of provisions on particular types of regulated activity, information can be obtained at the Business Information Desk operated by the minister for economy.
There are so many industry regulations that businesses commencing or conducting business activity in Poland have to observe that by itself the list of names of regulations amended by the act implementing the Business Act takes up three pages. The amendments concern for example the Road Traffic Act, the Tourism Services Act, and instance the Act on Production of Ethyl Alcohol and Manufacture of Tobacco Products (they do not necessarily deregulate these sectors).
Businesses given the benefit of the doubt
The Business Act states explicitly:
- Businesses can take up any activity not prohibited by law
- Businesses have obligations solely provided for in explicit provisions
- Authorities should assume that a business operates in compliance with the law
- Any cases of doubt are settled in the business’s favour.
When these principles are considered in the context of regulated activity, concessions, permits, and registration of regulated business activity are exceptions, and as such should not be interpreted expansively. Even if a business proves not to be in compliance with a particular regulatory requirement during an inspection, the authority should first consider a caution and making post-inspection recommendations, instead of imposing penalties, especially penalties that could severely hinder the business. These are probably the most important changes favouring business.
Joanna Krakowiak, legal adviser, Magdalena Moczulska, legal adviser, M&A and Corporate Practice, Wardyński & Partners