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Holding Law: Poland to Introduce a New Revolutionary Holding Regulation
Legislation related to corporate groups in Poland is picking up speed. A draft law has now been submitted which reorganises the powers of parent companies over subsidiaries. This includes, for example, that parent companies can issue legally binding instructions or request inspection of the subsidiary’s books.
As reported several months ago (see box), legislative work related to groups of companies (holdings) has accelerated in Poland in 2021. The government recently sent an official draft to parliament. The draft indicates a “vacatio legis” of six months, which means that depending on the pace of the legislative process, it can be expected that a holding regulation will come into force in the first half of 2022.
We can advise you on which measures you can consider if you are affected by the changes in the new holding law. Piotr Pruś, Attorney-at-law, Partner, ECOVIS Legal Poland, Warszawa, Poland
The Cornerstones of the New Holding Law
The new law provides for some new solutions, such as the parent company’s power to issue legally binding instructions to subsidiaries that have elected to participate in a group of companies.
In addition, the supervisory and management bodies of the parent company will have the right to inspect the books and documents of the subsidiary, which is not currently the case. However, this solution will merely confirm the already existing practice in many companies.
What the New Holding Law Means for Shareholders
A shareholder representing no more than 10% of the share capital of a subsidiary will have the right to request that the parent company purchase its shares (a sell out right). On the other hand, the parent company will have the right to squeeze out minority shareholders of the subsidiary holding no more than 10% of the share capital of the subsidiary.
Balancing out the newly introduced right to issue legally binding instructions to subsidiaries, the parent company will bear material liability towards creditors of the subsidiary. This means that the creditors of the subsidiary will have the right, under certain conditions, to claim compensation from the parent company for any damage to creditors caused by such binding instructions being issued, say the Ecovis advisers.
The holding law will affect the operations of all capital groups with subsidiaries in Poland. In the coming months, shareholders and managers of such groups will have to consider and prepare the appropriate actions. This is important, as a decision on whether to participate in a group of companies will have a material influence on the operations of not only the subsidiary, but also the parent company, explain the Ecovis experts. The draft also contains numerous other new provisions, especially concerning the organisation and conduct of the supervisory board.
Do you want to know more about the holding regulations in Poland?
Poland is reforming its company law and wants to introduce more robust rules for holding companies. The proposed changes will be essentially important for all companies in a group of companies registered in Poland. More:
Digital Nomads in Greece: Work Independently with Benefits and Privileges
Greece is seen as an attractive destination for digital nomads. This is particularly due to the benefits and privileges, such as lower income tax, provided for in law L. 4825/2021 passed by the Greek parliament. However, there are some bureaucratic hurdles to overcome for digital nomads wishing to work in Greece.
Αccording to the provisions of L. 4825/2021 Art. 11, digital nomads are usually considered to be residents of third countries who may work remotely through the use of digital devices for a period of at least twelve (12) months. To obtain their national visa, these people must submit the following documentation to the Greek consular authorities:
A) A solemn declaration declaring their will to stay in Greece based on the national visa they hold and at the same time assuring that they will not provide their services to any employer based in Greece.
B) An employment agreement with the employer, individual or legal entity based in a foreign country.
C) Details of the digital nomad work, i.e. the profession, name, legal seat or object of the company in cases where the person comes from a third country and keeps his/her own business based outside of Greece.
D) Any certificates proving their economic self-sufficiency and independence meaning that they will be able to cover their daily living expenses during their stay in Greece.
E) A national visa fee of EUR 75.
Do you have questions about income tax in Greece? Contact us. Anastasia Moschovaki, Tax Lawyer, ECOVIS HELLAS L.T.D., Athens, Greece
Digital nomads may be accompanied in Greece by their family members who, in turn, may obtain a national visa with same expiry date as that of the digital nomad, explain the experts from Ecovis.
Transparency Register Germany: A Paradigm Shift and What it Means for Companies
Germany is intensifying the fight against money laundering (see also Tip). Against this backdrop, the German parliament has also passed a new law governing the “Transparency Register and Financial Information” (Transparenzregister- und Finanzinformationsgesetz, TraFinG), which came into effect on 1 August 2021.
While the amendment is a step towards the interconnection of all European transparency registers, the changes come with a variety of new obligations for companies which were previously exempt from registration obligations.
Previously, mandatory registration in the transparency register only applied to cases where the beneficial owners were not mentioned elsewhere, such as in the commercial, cooperative or partnership register. However, with the new regulation, the paragraph under which companies were previously exempted from registration has been omitted without replacement. As a result, many companies that previously benefited from an exemption must now comply with the new bureaucratic challenges.
We can answer your questions about the transparency register and take care of registration for you. Richard Hoffmann, Lawyer, Ecovis Heidelberg, Germany
The German Parliament (Bundestag) has indicated that approximately 2.3 million companies will now be subject to mandatory registration. For foreign companies, this regulation applies if the company directly or indirectly owns real estate in Germany (e.g., with GmbH shares).
Tip: New Money Laundering Offense in Germany
On 18 March 2021, the German federal government introduced the new Section 261 of the Criminal Code (StGB) – the criminal offense of money laundering. You can find out what the consequences are here:
Companies that were previously exempted from mandatory registration can take advantage of a transition period, during which they can prepare the necessary steps. The deadlines differ according to the company form, as set out in the new law:
31 March 2022
Public limited companies, SE, partnerships limited by shares
30 June 2022
Limited liability companies, cooperative companies and partnerships
31 December 2022
Registration after the deadline could lead to heavy fines. It is important to note that these transition periods only apply to companies which, under the old regulation, were exempted from registration in the transparency register before 31 July 2021. This means that the majority of limited partnerships (including GmbH & Co. KG) are already obliged to register now. The transition period also does not apply to companies founded after 31 July 2021.
What Companies Should Do Now
Even if the coming year is still a long way off, businesses should act now. To avoid fines or complications, the beneficial owner of the company must be determined and the necessary information must be submitted to the transparency register, explain the Ecovis experts.