Autore: Lisa Fortmüller

Personal data protection amid #coronavirus

Posted on by Lisa Fortmüller


The response to the COVID-19 outbreak has infiltrated nearly every aspect of daily life. Polish laws have not been immune to the epidemic’s impact either, with the government recently announcing a draft of the so-called Anti-Crisis Shield designed to amend a number of acts in order to support businesses. Amid the fight against the coronavirus, in the statement of 12 March, the President of the Personal Data Protection Office (UODO) declared that the personal data protection regulations must not stand in the way of the coronavirus response. Read the article below to learn more about the protection of personal data in the face of the coronavirus epidemic.

GDPR still applie

There is no doubt that data protection should be no barrier to managing the coronavirus spread, however, one must bear in mind that all personal data protection regulations, including GDPR (and administrative fines), still apply, regardless of how difficult and unprecedented the current situation is. The statement issued by UODO’s President was meant as guidance only and it does not change the fact that personal data requirements must still be complied with.

However, there are still no specific regulations for business who worry about the legal processing of personal data in managing issues concerned with the coronavirus.

Are employers allowed to take a worker’s temperature?

There has been growing concern over whether employers are allowed to take the temperature of a worker or a person not employed thereby and, if so, what rules should they follow.

Body temperature data represent data concerning health – one of special categories of person data the processing of which is prohibited, in accordance with Article 9(1) of GDPR. Data concerning health may be processed only in cases specified in Article 9(2) of GDPR.

Without going into theoretical detail, we believe that personal data may be processed in connection with body temperature measurement in the case of both employees and other persons so long as the below rules are followed.

Taking an employee’s temperature

We believe that the legal basis for the measurement of a worker’s temperature is Article 9(2)(b) of GDPR, stating that the processing of the personal data is necessary for the purposes of carrying out the obligations and exercising specific rights of the controller or of the data subject in the field of employment and social security and social protection law in so far as it is authorized by Union or Member State law or a collective agreement pursuant to Member State law providing for appropriate safeguards for the fundamental rights and the interests of the data subject. The relevant obligation of the employer in the field of employment law is provided for in Article 207 of the Labor Code.

It should also be noted that the draft bill on amending the act on emergency solutions designed to prevent, counteract and combat COVID-19, other infectious diseases and emergency situations caused thereby, and amending selected other acts, dated March 13, 2020, includes Articles 3a, which provides that:
“in order to counter the spread of COVID-19, the employer has the right to:
1) request an employee to confirm whether or not he/she has recently been to a region affected by COVID-19;
2) request an employee to undergo the necessary medical examinations where there is a reasonable belief that he/she is infected with COVID-19 or has recently been to a region affected by COVID-19; medical examinations represent health care services as defined in Article 9;
3) screen an employee for symptoms of COVID-19 before allowing him/her to work, especially through body temperature measurement;
4) introduce additional workplace sanitary regulations or occupational health and safety regulations;
5) request an employee to go to a regional affected by COVID-19 only when necessary and with the employee’s consent, in accordance with Article 3a.”

The above-quoted provision would be a valuable addition to the Polish labor law as it would settle all the doubts surrounding temperature measurement by employers.

Taking a non-employee’s temperature

In our opinion, employers are allowed to measure the temperature of a person not employed by them on the basis of such person’s explicit and freely-given consent, in accordance with Article 9(2)(a) of GDPR. Written form of the consent is not required.

As far as body temperature measurement is concerned, we see a growing popularity of thermal imaging cameras, which may be used without the need to process personal data.

Whatever the method of processing, you should remember about fulfilling the obligations in the field of personal data processing resulting from GDPR, especially the obligation to provide relevant information to the person whose data are processed.

In case you have any questions, do not hesitate to contact us.

Poland’s shopping malls to close?

Posted on by Lisa Fortmüller

A draft amendment to the COVID-19 Act has been published on the Polish parliament’s website today. The full version of the document is available here.

Based on this draft, article 15ze of the Act, which provides for a 90% rent discount for entities whose operations in large retail centers have been restricted, is supposed to be replaced with a new provision, according to which the obligations of parties to lease agreements or other similar agreements (under which retail space is let for use) will expire for the period of restrictions applicable to malls with a sales area of over 2,000 sqm. Additionally, this provision entitles tenants to submit a proposal for extension of the lease term by six months; in case such proposal is not delivered, it will be assumed that there has been no temporary expiration.

As specified in the statement of reasons to the draft amendment, “it is now forbidden or substantially less profitable (due to a drop in the number of customers) to conduct operations in large shopping centers. Hence, lease agreements should expire temporarily, so that lessors and tenants are not obliged to perform their contractual duties which generate costs for the parties while restrictions are in force“.

Both the provision itself and the statement of reasons indicate that the lawmaker’s goal is for all lease agreements in large retail malls across Poland to “expire temporarily.”

It is unclear if parties that want to continue their operations in shopping centers will be able to enter into settlement agreements based on which leases could remain in effect despite the statutory “temporary expiration.”

Given the implications arising from failure to submit an extension proposal (which should be submitted within 3 months of the ban lifting date, rather than now), it might be challenging to determine whether lease agreements are in effect as of now (and to handles a range of related processes, such as invoicing).

Contact us in case of any questions.

Changes in civil procedure following COVID-19 outbreak

Posted on by Lisa Fortmüller

In an effort to counter the coronavirus outbreak, the Ministry of Justice has unveiled a set of emergency regulations designed to mitigate the impact it has on, i.a. civil procedure.

The regulations proposed by the Ministry of Justice have been included in the draft bill on amending the act on emergency solutions designed to prevent, counteract and combat COVID-19, other infectious diseases and emergency situations caused thereby (the “Draft Bill”), which is currently the subject of inter-ministerial consultations.

Key changes:

Urgent matters

1. The Ministry of Justice is to compile a list of urgent matters. The idea behind the list is to avoid a standstill in the administration of justice in respect of the most urgent matters, which must be dealt with by the courts, even if the court with territorial jurisdiction over the matter is shut down due to COVID-19, e.g. in the case where judges, associate judges and other court staff need to be quarantined.

In accordance with the Draft Bill, the act currently in place would be to include a provision listing the following matters (among others) as urgent:

  • preventive detention applications,
  • arrest cases,
  • cases regarding criminal preventive measure orders,
  • European arrest warrant cases,
  • cases regarding temporary release from a correctional facility with the use of electronic monitoring system,
  • cases regarding detention orders where a foreigner in placed in a detention center or under arrest,
  • cases regarding imprisonment or other sentences or coercive measures resulting in imprisonment, so long as the court’s decision regards the release from jail or prison or is necessary to enforce the sentence or coercive measure,
  • cases regarding the removal of a person from the care of a parent or legal guardian,
  • the case referred to in the Act on Mental Health Protection,
  • cases regarding the placement of a juvenile offender or extension of a juvenile offender’s stay in a juvenile detention facility,
  • cases regarding the placement of a minor in a child and youth care facility,
  • preliminary injunction applications,
  • cases involving the examination of a person for the purpose of securing evidence or examination of a person with respect to whom examination in a trial may not be possible,
  • administrative cases which must be heard by a court within the deadline prescribed by law and cases regarding applications to prevent the enforcement of an act or performance of an action.

2. The course of action for a case which ends up on the urgent matters list would be the following:

  • if a common or military court has been shut down due to COVID-19, the chief judge of the appeals court will be able to assign cases of urgent nature within the jurisdiction of the court which has been shut down to a different court of the same instance, located within the same appellate circuit;
  • if all common or military courts within an appellate circuit have been shut down due to COVID-19, the First Chief Judge of the Supreme Court, upon the request of the chief justice of the appeals court within the appellate circuit all courts of which have been shut down, will be able to assign cases of urgent nature within the jurisdiction of the court which has been shut down to a different court of the same instance, located (as far as possible) within the adjacent appellate circuit;
  • if a voivodship administrative court has been shut down due to COVID-19, the Chief Justice of the Supreme Administrative Court would be able to assign cases of urgent nature within the jurisdiction of the court which has been shut down to a different voivodship administrative court.

3. The court assigned to an urgent case in accordance with section 1.2 above would handle the case until the end of proceedings within given instance.

Deadlines

1. In accordance with the Draft Bill, following the announcement of a state of epidemic threat or the state of epidemic due to COVID-19, the procedural deadlines in court proceedings, incl.:

  • administrative court proceedings;
  • enforcement proceedings;
  • criminal, fiscal penal and minor offence proceedings;
  • administrative and administrative enforcement proceedings;
  • as well as the deadlines in other proceedings pending on the basis of the act;
    would not be triggered and, if they have already been set running, would be suspended until the state of epidemic threat or the state of epidemic announced due to COVID-19 is called off.

1.2. The abovementioned rule would also apply to:

  • the deadline for declaring an administrative case handled as a result of an implied decision;
  • deadlines in other cases where the lack of a public agency’s objection, decision, ruling or another determination serves as the grounds for a party to proceedings to take action or complete a formality or affects the scope of the party’s rights and obligations;
  • the deadline for a public agency to issue a ruling of general or individual nature.

It should be noted that before the deadline referred to in section 2.1.1 expires, a public agency or entity would be able to issue ex officio a decision on full acceptance of the party’s request, statement on the lack of grounds for objection and a ruling of general or individual nature.

The relevant public agency, court or entity would be able to request a party to proceedings to perform certain action within the prescribed deadline, if a failure to perform the action might result in:

  • danger to human or animal life or health;
  • severe damage to the public interest;
  • irreparable property damage.

In such a case, the party to the proceedings should perform its obligations within the deadline.

Actions performed as part of the proceedings listed above during the state of epidemic threat or the state of epidemic are effective.

Moreover, pursuant to the Draft Bill, during the state of epidemic threat or the state of epidemic announced due to COVID-19:

  • the regulations covering public agencies’ idleness and the obligation of a public agency and entity to notify a party to the proceedings about the failure to deal with the case on time would not apply;
  • public agencies or entities would not be liable to a fine in the case where they fail to issue a decision within the prescribed deadline.

The Draft Bill also provides that legal measures cannot be pursued on the grounds of idleness, excessive length of proceedings or the right of a person to have their case handled without undue delay in the case where a public agency or entity has stopped operating during the state of epidemic threat or the state of epidemic announced due to COVID-19.

2. In addition, certain other deadlines, provided for in civil and administrative law, would not be triggered or would be suspended, namely:

  • deadlines which must be met in order to obtain legal protection before a court or a public agency, and deadlines for the performance of actions which affect the scope of rights and obligations of a party to a legal relationship;
  • periods of adverse possession, statute of limitation, prescription;
  • final dates which, if not met, produce adverse effects for a party to proceedings;
  • deadlines for entities or bodies required to be listed in the register of business or register of associations, other community and professional organizations, foundations and independent public complexes of health care facilities, the National Court Register (Krajowy Rejestr Sądowy) or a different register kept by a public administration agency to perform an action which must be reported to the relevant register, as well as deadlines for the above-named entities or bodies to perform obligations resulting from regulations pertaining to them.

Similarly as in the case of deadlines discussed in section 2.1, the relevant public agency, court or entity would be able to request a party to proceedings to perform certain action within the prescribed deadline, if a failure to perform the action might result in:

  • danger to human or animal life or health;
  • severe damage to the public interest;
  • irreparable property damage.

It is pertinent to mention that actions performed to exercise a right or discharge an obligation at the time when the deadlines listed above are stopped, triggered or interrupted are effective.

Pleadings

The Ministry of Justice intends to use the Draft Bill to add a provision to the applicable act stating that, during the state of epidemic threat or the state of epidemic, or if a universal postal service provider stops its operations, a pleading may be filed with the court through e-PUAP platform. A pleading filed in this manner should be executed by a qualified electronic signature.

In addition, a pleading with a qualified electronic signature or an electronic copy of a pleading signed by hand may be filed with the court through e-mail.

If a pleading is sent from the sender’s e-mail addressed provided beforehand or if there are no doubts as to the sender’s identity, the pleading is deemed to be executed with a signature producing legal effects equivalent to the effects of a handwritten signature.

Appendices to pleadings filed in one of the above manners should be submitted in digital form, with no need to provide them in hard copy.

It should be noted that the Draft Bill is a work in progress, which means that the final shape of the changes discussed above is yet unknown.

Let us know if you have any questions.

Implications of COVID-19 on M&A Transactions

Posted on by Lisa Fortmüller

We face an unprecedented business environment, given the scale and speed with which the coronavirus situation is developing.

Our clients face various challenges – from protecting and supporting employees and customers, facing material supply chain challenges, to preserving liquidity and adapting to new and to a large extent unknown operating conditions. Also, pending transactions that were signed pre-crisis and that now may or may not be closed, need to be efficiently handled. And despite the background of these current market conditions, we expect that both strategic investors and financial sponsors will, for various reasons, consider and pursue new transactions in the coming months.

To assist clients in navigating the M&A process in this unprecedented environment, here are the key points for the near future from our perspective:

MAC Clauses

Material adverse effect or material adverse change (MAE or MAC) clauses have only been seen very rarely prior to the hit of the Corona crisis in Germany. And even if a purchase agreement contains such an MAE/MAC clause, it might not cover a pandemic such as COVID-19. Therefore, most buyers may not be able to invoke the termination of a transaction based on a MAE/MAC clause at the moment.

As a consequence going forward, the parties of an M&A transaction need to negotiate explicit language to address COVID-19 risk-allocation in the context of an MAE/MAC provision. We have seen this practice followed in response to past crises.

Termination rights

Parties should pay extra attention to the seemingly routine “outside date” termination provisions since government approvals, particularly mandatory merger clearances, and further closing conditions might get delayed under the current conditions. The risks of delay need to balanced between the parties, and so do potential changes in the target’s financial results if the period prior to closing is particularly long. 

In addition, it is now even more important to synchronize termination rights under the financing commitments on the one hand and the purchase agreement on the other hand.

Due diligence and reps & warranties

Extensive due diligence investigations to determine legal and financial risks and vulnerabilities become even more important – from reviewing supply chains to understand dependencies and potential shortfalls, analyzing key contracts to assess, inter alia, termination rights and force majeure provisions, to reviewing liquidity shortages and potential insolvency risks.

Moreover, specific representations (for example as to contingency planning, protocols, etc.) regarding the crisis may become more common in M&A deals in the coming months.

W&I insurance

As COVID-19 is a known risk, insurers will most likely specifically exclude coronavirus-related losses from their policy coverage. In addition, an insured’s “knowledge” of a situation typically excludes that situation from policy coverage. For that reason, the scope of specific diligence regarding COVID-19, which would also apply to post-signing “updates” from a seller, and their effect on the insured party’s knowledge should be carefully addressed with legal counsel in the context of W&I insurances.

Interim operating covenants

In the interim period until closing, sellers normally operate the target’s business in the “ordinary course” to protect its value. However, given the current economic situation, ordinary course might very likely be counterproductive and might actually be the last thing a buyer wants a seller to do – the parties will therefore need to discuss and tailor “emergency” measures to put the seller, without obtaining prior consent of the buyer, in a position to preserve the target’s business in this time of crisis. This applies particularly to liquidity maintenance, debt refinancing and working capital management, but also to exceptions for changes required by law or regulation.

Insolvency protection

Now even more than before, transactions need to be structured insolvency proof, avoiding unpleasant surprises and later disputes with an insolvency administrator or the authorities in the interests of all parties. This relates to analyzing and mitigating the risks for (a) the seller in case of an insolvency of the target and/or the buyer and (b) the buyer in case of an insolvency of the seller.

Employment reorganisation

Potential employment reorganisation features following closing should be addressed in the course of the transaction already – from adhering to essential employment-law procedures to negotiating the effects of potential post-closing reorganization issues on the purchase price.

Purchase price adjustments

Regarding the current uncertainties, we expect locked box mechanics will be rarely seen in the near future – in particular as the net debt and working capital of a target might significantly change in the interim period until closing. A balanced purchase price adjustment mechanism can therefore play an important role to provide for deal certainty.

Act to mitigate the consequences of the COVID-19 pandemic

Posted on by Lisa Fortmüller

The German Bundestag today unanimously adopted the act to mitigate the consequences of the COVID-19 pandemic in civil, insolvency and criminal proceedings in expedited legislative action. With this, the extensive protective measures for companies and private individuals, which the Federal Government already recommended on Monday, will enter into force soon. The law now only has to be approved by the Bundesrat and executed by the Federal President, which is generally regarded as a formality.

If you want to know more about the detailed contents of the passed legislation make sure to check out our detailed reports.

Insolvency: https://blog.actlegal.com/the-planned-changes-by-the-act-to-mitigate-the-consequences-of-the-covid-19-pandemic-in-insolvency-law/

Corporate: https://blog.actlegal.com/the-planned-innovations-in-company-law-resulting-from-the-act-to-mitigate-the-consequences-of-the-covid-19-pandemic/

Commercial/Supply Chain: http://blog.actlegal.com/rights-to-refuse-performance-for-debtors-in-the-corona-crisis-planned-creditors-can-take-countermeasures/

Banking/Finance: http://blog.actlegal.com/corona-crisis-special-features-of-lending-law-from-the-banks-perspective/

Public support for restructuring

Posted on by Lisa Fortmüller


The legislative efforts to help business in the face of the coronavirus epidemic are gaining steam. One of the legal acts currently under consideration is the act on public support to rescue or restructure businesses, a draft of which was published on March 20, 2020. The document has gone to the Social Dialog Council (Rada Dialogu Społecznego) for assessment. Its final shape is yet unknown.

The solutions under consideration cover public support for businesses who are in need of: (a) rescue, (b) provisional restructuring support, (c) restructuring. The main form of help to be provided are loans which can be taken out in each of the above cases. In accordance with the draft bill, such a loan would be secured, with the available security types including a mortgage, a civil-law pledge or a registered pledge, claims assignment, a statement on submission to enforcement and a blank promissory note. Other support offered to businesses which have the option of restructuring is, i.a. shares or bonds subscription, payment of an administrative fine in instalments or cancellation of the fine.

The governmental aid proposed in the draft bill is worth PLN 100m a year, with up to 69% of this amount (PLN 69m) earmarked for loans, further 29% (PLN 29m) for shares or bonds subscriptions and the remaining 2% (PLN 2m) intended to cover the cost of providing the support.

CONDITIONS FOR RECEIVING FINANCIAL SUPPORT

Conditions regarding the purpose of the support

Eligible business should show that the governmental aid will be used to prevent and mitigate social difficulties or overcome market challenges (as defined in detail in the act) as well as demonstrate that in case the support is not provided, these goals will not be fulfilled or will not be fulfilled as fully. Additional conditions have been determined for businesses with assets acquired from another business which received governmental aid before the transaction, as well as for businesses belonging to capital groups. Further detailed requirements have been also defined with respect to the different purposes the aid may be used for: (a) company rescue, (b) provisional restructuring support, (c) restructuring.

Conditions regarding the business

The financial aid is addressed to a limited number of businesses. Eligible businesses must be able to show that they are insolvent, as defined in the Bankruptcy Law, or are facing insolvency, as defined in the Restructuring Law. In the latter case, businesses are also required to satisfy additional conditions related to showing the incurred losses and/or the debt-to-equity ratio.

The financial aid will not be available to businesses which, i.a.:
1) have been operating less than 3 years before applying for the government’s help,
2) operate in the steel, coal mining or finance industry,
3) operate in a market with long-term structural overcapacity or facing long-term structural overcapacity,
4) have already been provided with public support within the last 10 years, with some exceptions allowing to apply for the help sooner. The exceptions cover cases where the help is sough as part of the same procedure regarding the grant of financial aid as on the previous occasion of using governmental support. For instance, it will be possible to obtain help for company rescue, followed by provisional restructuring support and, finally, restructuring.

The abovementioned restrictions will not apply to a business providing services of general economic interest, where the help is necessary to ensure their continuity, however, only until the obligation to provide these services is transferred to another business.

HOW TO APPLY?

Generally, in accordance with the draft bill, a business should apply for the financial support to the minister competent to handle economic affairs, however, the minister may delegate its powers to the extent of this aid program to the Industrial Development Agency (Agencja Rozwoju Przemysłu).

The application should be appended with information and documents similar to the ones required in the case of filing for restructuring, with some types of information required to be provided in more detail (thus, the formal requirements regarding the application may be quite high). The application for company rescue will require the narrowest scope of information. Next in the order of complexity is the application for provisional restructuring support, with the most detailed information being required in the case of the application for restructuring support.

The applications will be processed in the course of administrative procedure. The decision issued as a result will be appealable. Once filed, the application should be examined within the deadline of 30 days, which may be extended up to 60 days if a given case is especially complex.

The proposed changes are a step in the right direction to help struggling businesses obtain the government’s support at the time of epidemic. However, there are some doubts as to the relatively long period of application processing and the lack of practical consequences in case the application is not examined on time.

Let us know if you have any questions.

NEW LABOR LAW REGULATIONS ACCORDING TO THE COVID-19

Posted on by Lisa Fortmüller

It is important to see that the Government has declared a state of emergency throughout the territory of Hungary due to the COVID-19 epidemic causing mass disease, and therefore provides for related measures in government decrees. Thus, under the special legal order, the Government may introduce new rules on the matters covered by this Article, which may even override the following.

There are several decrees concerning the immediate measures adopted to alleviate the economic impacts of the coronavirus epidemic have been published in Magyar Közlöny [Hungarian Gazette].

One, of the most significant decree is adopted new labor law regulations, decree No. 47/2020. (III. 18.) contains very important measures not only for certain sectors but for the whole economy.

Due to the economic downturn resulting from the epidemic, employers need to make quick, accurate, responsible, and last but not least, legitimate decisions for their employees.

According to the government decree, the Labor Code must be applied for the duration of the emergency period and for thirty days after its termination, that the employer may unilaterally assign the employee to work from home or telework. This means, this time there is no statutory limit to the duration of work at home. Before the decree, the total duration of such work might not exceed forty-four working days or three hundred and fifty-two hours per calendar year. Teleworking, which had to be agreed in the employment contract, was made unilaterally ordered by the employer.

A further relief is that the employer may adjust the working time schedule within ninety-six hours before the beginning of the daily work, if there are any unforeseen circumstances in the management or operation of the company.

The decree also contains a rule that the employer may take any necessary and justified measures to control the employee’s state of health.

The decree also contains regulation, that the employer has the right to decide about the ordination of home office alone, without the objection of the employee.

The decree eases the burden on companies operating in certain sectors, such as hospitality, tourism, entertainment, gambling, film, performing arts, event organizer and sports services, by not having to pay the public wage for their employees until June, 2020.

The prime minister stressed the necessity of measures to protect workplaces and warned of a serious wave of unemployment approaching. He asked employers and employees to make personal efforts to preserve jobs.

According to the decree, further regulations will be determined by further regulations.

Corporate resolutions vs. coronavirus restrictions

Posted on by Lisa Fortmüller

Actions aimed at quelling the spread of COVID-19, such as border closures, flight cancellations and severe restrictions on gatherings and travel, may have a massive impact on business operations, especially when it comes to resolutions adopted by shareholders, management boards and supervisory boards.

If resolutions cannot be passed by the shareholders meeting or the management board, it may have a significant adverse impact on the company’s daily business.

With this alert, we want to offer shareholders and members of corporate bodies some insight on solutions that may help mitigate the impact of the state of epidemic, as well as an overview of the amendments to the Commercial Companies Code, which are about to be introduced as part of the so-called “Anti-Crisis Shield.”

Supervisory board

It might be easier for a supervisory board to operate if the following options are applied:
– passing written resolutions by circulation;
– voting on resolutions through electronic means;
– proxy voting (in writing).

The above options are available only if permitted by the company’s articles of association.

Works are underway to change the above as part of the so-called “Anti-Crisis Shield.” Based on the published draft bill amending the “Act on Special Solutions Related to Prevention and Combating of COVID-19, Other Infectious Diseases and Crisis Situations Arising from them,” as well as amending selected other acts (the “Draft Bill”), it would be possible to pass resolutions in the aforesaid manners with no need to define the basis for such action in the company’s articles of association (unless the articles of association expressly exclude such options).

It should be noted that resolutions on matters put on the agenda during a supervisory board meeting, election of the supervisory board president or deputy president, appointment of a management board member, and dismissal or suspension of such individuals cannot be adopted by circulation or through electronic means. The Anti-Crisis Shield is going to change the regulations to allow these resolutions to be passed in the manners listed above.

Management board

At present, there are no regulations that would explicitly allow a management board to pass resolutions by circulation or through electronic means (e.g. during a videoconference). With much debate surrounding this way of adopting resolutions, it is recommended to comprehensively regulate the manner of holding management board meetings in the articles of association.

Pursuant to the Draft Bill, the lawmakers pledge to allow management board members to:
– attend meetings through electronic means (unless the company’s articles of association expressly exclude this option);
– pass resolutions by circulation or through electronic means (unless the company’s articles of association expressly exclude this option);
– vote in writing by delegating the voting power to another management board member (unless the company’s articles of association expressly exclude this option).

These changes have yet to be adopted.

Meeting of shareholders

Shareholders meetings may only be held in Poland, and should take place in the city/town where the company’s registered office in situated or at a different location, as specified in the company’s articles of association or agreed upon by all shareholders.

Shareholders who are unable to attend a meeting in person may use the following solutions:

1) Proxy voting
A shareholder may appoint a proxy who will attend the meeting and vote on the shareholder’s behalf (unless applicable laws or the articles of association impose any restrictions in that respect).
A proxy should be granted in writing or will otherwise be null and void.
The company’s management board members and employees cannot attend a shareholders meeting in the capacity of a proxy.

2) Voting in writing (in a private limited liability company)
In the case of a private limited liability company, shareholders can pass resolutions in writing, i.e. by:
– expressing a written consent for a resolution to be adopted; or
– holding a vote on a resolution in writing, following all shareholders’ approval of such voting procedure.

A vote in writing may be held irrespective of the place where the shareholders are when casting a vote.

Not all resolutions may be adopted by circulation, though. Voting in writing is not an option in case voting secrecy is required (e.g. in case of a resolution on dismissal of a management board member or other HR issues).

3) Attending a meeting through electronic means

A shareholder may attend a shareholders meeting through electronic means (videoconference, teleconference, etc.). However, as things stand now, this is a viable option only if the articles of association allow the possibility to hold meeting in such way.

Holding a shareholders meeting through electronic means (with no need for physical presence) is allowed only if real-time broadcast from the meeting is available, with the absent shareholders being able to communicate and speak during the meeting in real time.

However, this format of a shareholders meeting is not equivalent a virtual meeting. This means that the following rules apply to meetings held through electronic means:
– a meeting should be held in a specific venue in Poland, determined in accordance with the Commercial Companies Code and the company’s articles of association;
– the chairperson and the clerk (or a notary public, if the notarial form is required for minutes from the meeting) must be present at the meeting, with only the shareholders being allowed to communicate electronically;
– written minutes from the meeting are required.

Shareholders may also attend and vote at meetings held through electronic means by proxies, in accordance with the rules specified above.

4) Using the IT system

Shareholders may make decisions using the model resolution available in the IT system but this option is only available to private limited liability companies established through the IT system.

There is no need to hold a formal shareholders meeting in order to pass this type of resolution, with the only condition for its valid adoption being that all the shareholders should vote by submitting a relevant statement through the IT system.

The above-mentioned voting statements must be confirmed with an electronic signature, a qualified electronic signature or a trusted signature.

Annual shareholders meeting

The Draft Bill includes solutions aimed at helping companies to meet the deadline to hold an annual shareholders meeting, at which shareholders approve the company’s financial statements for the previous financial year.

Pursuant to the Commercial Companies Code, all annual shareholders meetings should take place within six months after the end of each financial year. The Draft Bill includes a provision according to which the minister competent to handle public finance affairs would be authorized to issue a regulation entitling him/her to postpone (on a discretionary basis) the deadlines for the approval of financial statements in case of the state of epidemic threat or the state of epidemic, considering the need to ensure proper performance of obligations in that respect (it needs to be noted here that on March 20, 2020, the Health Minister announced the state of epidemic in Poland). If the minister chooses to issue a regulation setting a new deadline for the fulfilment of obligations related to the approval of financial statements, falling more than six months after the end of a financial year, annual shareholders meetings should be held no later than on the date specified in such regulation.

Remuneration policy

The Draft Bill also aims to revise the Act of October 16, 2019 on Amendments to the Act on Public Offerings and Conditions for Introduction of Financial Instruments into Organized Trading, and on Public Companies, and Amendments to Selected Other Acts. Based on the intended changes, the annual shareholders meeting of a public company (i.e. a company with its registered office in Poland, with at least one share admitted to trading on a regulated market) would be obliged to pass a resolution on the remuneration policy applicable to the management board and supervisory board members until August 31, 2020.

Many of the solutions outlined above may significantly facilitate and expedite the operations of corporate bodies and daily business, both during the epidemic and afterwards.

Some of these options are only available if they are permitted under the articles of association, so now might be a good time to insert relevant provisions into the company’s constitutional documents or grant relevant proxies.

Our corporate law team is available to answer any questions you might have.

Shielding business from crisis. Revision of COVID-19 special-purpose act – labour law and salary subsidies

Posted on by Lisa Fortmüller

Shielding business from crisis. Revision of COVID-19 special-purpose act – labour law and salary subsidies

As the Polish government continues to work on the revision of the COVID-19 special-purpose act, we have prepared an overview of the proposed changes regarding employer support in the face of the coronavirus crisis.

Salary subsidies

Paid from the budget of the Guaranteed Employee Benefits Fund (Fundusz Gwarantowanych Świadczeń Pracowniczych)

The government would cover a part of salaries of employees (working on the basis of employment contracts, mandate contracts and other civil-law contracts with social security coverage) whose jobs have been put on hold or working hours cut, and their social security contributions in part paid by the employer for a total of 3 months following the execution of the subsidy agreement.

The government pledges to meet:
– no more than 50% of minimum pay (PLN 1300) of employees whose jobs have been put on hold;
– 50% of pay, but no more than 40% of average monthly pay from the preceding quarter (PLN 2079.43) in the case of employees whose working hours have been cut (by 20%, but no more than to 0.5 of a full-time position).

The subsidies would be paid as long as the employee’s job remains on hold or working hours cut in consequence of a turnover drop caused by the COVID-19 outbreak, defined as a drop in the value or volume of goods/services sales of:
– at least 15%, calculated as the ratio between the total turnover generated over the period of any 2 consecutive months after January 2020 and the total turnover generated over corresponding 2 months of the preceding year; or
– at least 25% over one month after January 2020, compared to the preceding month.

Paid by poviat heads (poviat employment agencies)

Poviat heads would cover a part of salaries and social securitycontributions paid by SMEs in the case they record a turnover drop caused by the COVID-19 outbreak over any 2 consecutive months after January 1, 2020, compared to the total turnover generated over any 2 consecutive months of the preceding year; the subsidies would be paid for up to 6 months in the case of micro and small enterprises and 3 months in the case of medium enterprises.

The level of subsidies would be tied to the size of the drop:
– at least 30% turnover drop – subsidies equal to the product of the number of employees and 50% of minimum pay,
– at least 50% turnover drop – subsidies equal to the product of the number of employees and 70% of minimum pay,
– at least 80% turnover drop – subsidies equal to the product of the number of employees and 90% of minimum pay.

In order to qualify for the above-described support, businesses will need to satisfy a host of other conditions, which are too big a topic to discuss here in detail.

Periodic health examinations determining employee’s ability to work

The government has proposed to suspend the obligation to undergo periodic examination and examination following dealing with hazardous substances, as well as the requirement to hold a valid doctor’s certificate in order to be allowed to work. The examinations are to be carried out no later than 60 days after the state of epidemic threat or epidemic is called off.

Examinations upon returning to work after an absence and before starting a job are still required, however, if a doctor authorized to carry out such examinations and issue certificates is unavailable, the employee may visit a different medical practitioner.

Additional care allowance

Employees who need to take time off to take care of a child below 8 would be entitled to additional care allowance of 14 days (added to the days already granted on the basis of the special-purpose act before the amendment).

Additional care allowance would be also provided over a period of 14 days to:
– insurance holders who need to look after a person with diagnosed moderate to severe disability until they come of age or with diagnosed disability;
– insurance holders who are given time off to look after a disabled adult.

It is also suggested that the Ministers Council should be able to extend the time limits stipulated in the special-purpose act for as long as day care facilities remain closed.

Applying less favourable employment terms

The government proposes that employers, who reported a specified turnover drop and have no arrears in the payment of taxes, social insurance contributions, health insurance contributions and other financial obligations (with some exceptions) by the end of 3rd quarter of 2019, should be able to:
– cut the minimum daily period of rest to no less than 8 hours (compared to 11 hours) and the minimum weekly period of rest to no less than 32 hours (compared to 35 hours), covering at least 8 hours of uninterrupted daily rest; the employee would be able to take advantage of the difference between 11 hours and the reduced period of rest within 8 weeks at the latest;
– enter into an agreement with trade unions or employee representatives (if a company does not have any trade unions) on applying employment terms less favourable than the ones stipulated in employment contracts to the extent and for a period of time specified in such agreement.

Contact us in case of any questions.

Revision of bankruptcy law: pre-pack bankruptcy

Posted on by Lisa Fortmüller


As the coronavirus epidemic upends Polish reality, the effective date of the bankruptcy law amendment, introduced on the basis of the act of August 30, 2019, remains unaffected. New laws enter into force today (March 24, 2020). Next to personal bankruptcy, which may now be sought by almost anybody, debt release procedure regarding sole proprietors and trustees’ duties connected with proof-of-debt submissions, pre-pack bankruptcy is also up for a makeover.

Pre-pack bankruptcy – how does it work?

Pre-pack bankruptcy is one of bankruptcy strategies provided by Polish law, which is meant to enable smooth transition of an insolvent business from one owner to another soon after bankruptcy is declared. Thanks to this solution the business carries on, workers keep their jobs and contracts with clients and suppliers remain intact. A successful pre-pack bankruptcy reduces the bankruptcy process and costs involved, as well as ensures fuller satisfaction of creditors. In this type of proceedings, the petition for bankruptcy is filed along with the petition for approval of the sale terms regarding the insolvent company’s assets. Pre-pack bankruptcy may cover the entire enterprise, its business unit or a major portion of its assets. The pre-pack petition also includes a description and an appraiser’s valuation of the assets in question, the proposed price and the name of the prospective buyer (who can be almost anybody).

If the court finds that it would be more beneficial to sell the assets in the course of a pre-pack procedure than a regular bankruptcy procedure, it will approve the sale terms in addition to declaring the debtor bankrupt. Following a pre-pack sale, the whole enterprise may be handed over to the buyer on the same day the court issues its decision.

Key changes introduced by the revision:

  1. The pre-pack bankruptcy petition may be filed at any stage of bankruptcy proceedings (before the amendment, the pre-pack bankruptcy petition and the regular bankruptcy petition were to be filed together);
  2. All the entities involved in bankruptcy proceedings will have standing to file for pre-pack sale; so, the pre-pack bankruptcy petition may now be filed by:
    – a creditor filing for debtor’s bankruptcy,
    – a debtor filing for bankruptcy,
    – a debtor whose bankruptcy was instigated upon a creditor’s petition, especially, in response to the creditor’s petition (also as an alternative petition filed in case the court declares the debtor bankrupt, against the debtor’s will);
  3. The petition for sale terms approval may cover more than one buyer;
  4. The buyer will be required to post a bond equal to 10% of the price. If the sale falls through due to reasons within the buyer’s control, the trustee keeps the bond;
  5. The protection of creditors with security over the debtor’s assets will be expanded – the petitioner will be required to submit a list of securities over the debtor’s assets, with copies of the petition for all identified secured creditors. The court will notify them about pending proceedings and serve them copies of the petition. Secured creditors will have the option to report comments about the petition to the court within 14 days of being served. They should remember to check if the petitioner’s valuation of the asset backing the relevant claim is accurate;
  6. A provisional court supervisor (or a court-imposed administrator) will be appointed as a matter of obligation. Their duties will include examining the debtor’s situation and preparing a report covering information relevant to the sale terms approval petition. The idea behind this change is to ensure that the pre-pack process runs smoothly and is transparent;
  7. The filing of a pre-pack bankruptcy petition will be advertised in the Court and Commercial Gazette (Monitor Sądowy i Gospodarczy). Advertising the petition is meant to reach out to other prospective buyers who may want to take part in the pre-pack bankruptcy procedure as well and protect those involved in the procedure against claims of acting against creditors’ interests by selling at an undervalue and neglecting to see if any other investors may be interested in purchasing the debtor’s assets;
  8. If two or more petitions for sale terms approval are filed, an auction between the prospective buyers will be held in order to select the best offer. Auction, designed to obtain the highest possible price, is surrounded by much debate. Some argue that the pre-pack process, the main advantage of which has been its speed, will be dragged out, especially since 30 days have to pass from advertising the petition for sale terms approval before it can be examined by the court. There are also concerns about the fact that the new law does not provide for a case where two pre-pack petitions cover different subject matter. How is an auction to work and what rules it should follow when one of the petitions concerns the enterprise as a whole, while the other covers only its business unit? Only by putting the new laws into practice can these and many other questions be answered.

The amendment dispelled many doubts surrounding pre-pack bankruptcy and, to some extent, legitimized the judicial practice spanning 4 years (i.e. the appointment of provisional court supervisor). The introduction of a bond, stronger secured creditor rights and increased transparency of the procedure are definitely an improvement. However, some of the new solutions have led to a new set of questions regarding the application of the revised law, with the obligatory auction in the case of two or more petitions being the most controversial of them. In the end, all the issues related to pre-pack bankruptcy will be worked out in practice by legal scholars and courts in the years to come.

Contact us in case of any questions.