On 22 May 2020 the Government of Poland published a proposal for a new law on the screening of foreign investments in Poland. The new screening tool aims to protect public security, order and health during the COVID-19 pandemic, and will introduce a new notification obligation for investments into Polish companies. The screening will be carried out by the Office for Competition and Customer Protection (the "Office"). Once in force, the new law will thus set in place a screening mechanism referred to in EU FDI Screening Regulation 2019/452. So far, FDI screening in Poland was limited to a very narrow defined set of selected companies. It is planned that the new screening instrument will be in force for two years.
Scope of the proposed law
Under the new legislation, investments by non-EEA investors resulting in – among others – an acquisition of control or an acquisition of a significant participation, including a share of at least 20 % in protected entities, will require prior screening and approval by the Office.
The new law captures investments in companies that have their seat in Poland, achieved revenues in Poland (from the sale of goods or services) exceeding EUR 10m in at least one of the last two years and at the same time:
- are public (listed) companies; or
- own assets defined as critical infrastructure under Polish law; or
- develop software for a strategic sector; or
- operate in specified "critical" sectors such as telecommunications, power generation and distribution, fuel production, transport and storage, production of chemicals, manufacturing of medicines or medical devices, processing of meat, milk, grains, fruits and vegetables, manufacturing and trade of arms and ammunition as well as technologies used for military purposes, etc.
It is envisaged that the government will have the right to narrow down the aforementioned list of protected entities.
Procedural provisions and sanctions
The investments by non-EEA investors will require prior notification to the Office. For routine cases, a review period of 30 business days is envisaged (phase 1), while in more complex cases the authority can launch an in-depth review (phase 2) which can last an additional 120 days.
The draft law provides for a standstill obligation and stop-the-clock mechanism in case of an information request.
The implementation of a relevant investment in spite of the objection or without a notification are null and void (and the decisions of the corporate bodies of the protected entities may be challenged as null and void).
In addition, the proposal envisages sanctions for breaches of the proposed rules: a fine of up to PLN 50m (approx. EUR 12m) or imprisonment of six months to five years may be imposed on persons who were obliged to notify (or, in certain instances, representatives of the protected entities).
The proposal for the new law is now with the Parliament.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.