Who are cross-border processes for?
Polish companies with share capital and limited joint-stock partnerships may participate in cross-border reorganization processes. The legislation governing cross-border mergers, demergers and transformations was introduced into the Polish legal system in September 2023 as part of the implementation of EU law. The European legislator’s objective was to harmonize the legal regulations governing cross-border processes across all EU Member States and to integrate the European market based on the freedom of establishment. As a result, Polish companies may undergo transformations and demergers and participate in mergers involving entities from all EU and EEA countries.
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What does a cross-border transformation involve?
Under Polish and EU law, this process involves a company transforming the legal form under which it is registered in the Member State of departure into a legal form available in the Member State of destination, while transferring at least its registered office to that state.
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What does a cross-border merger involve?
This process involves the merger of two or more companies incorporated in different EU or EEA countries, provided that at least two of the companies participating in the merger are governed by the laws of different Member States.
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What does a cross-border demerger involve?
A cross-border demerger involves transferring part or all of the assets of the company being divided to a newly incorporated company through a demerger by spin-off, demerger by separation or transfer of all assets. The company being divided may be a Polish company and the newly incorporated company may be based in another Member State, or vice versa.
Cross-border processes: how Grant Thornton can support you
The Grant Thornton team provides comprehensive support in carrying out cross-border reorganizations, including legal, tax and accounting advice, as well as cooperation with specialist teams across the EU and EEA.
Depending on the process and the client’s needs, we can also prepare the necessary valuations and arrange for a statutory auditor to review the cross-border merger, demerger or transformation plan.
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Assessment of the current situation and the viability of a potential cross-border process
Involving a Polish company or Polish companies, including the identification of opportunities to achieve the objectives associated with the cross-border process.
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Development of feasible cross-border process scenarios
Aimed at achieving the objectives of the process from the perspective of Polish law.
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Advice on selecting the optimal cross-border process scenario
covering legal and tax matters, in cooperation with foreign advisors where necessary.
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Identification of legal, tax and accounting risks
associated with the cross-border process involving the company or companies, from the perspective of Polish and EU law.
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Preparation of documents related to the implementation of the cross-border process
including the cross-border demerger, merger or transformation plan, relevant resolutions of the governing bodies of the company or companies, and the necessary notifications and applications, depending on the role of the Polish company in the process.
Cross-border processes: key facts
- Cross-border processes are useful legal tools that enable businesses to expand across EU and EEA Member States and create opportunities to optimize operating costs.
- In practice, a cross-border transformation may involve either a Polish company whose owners have decided to transform it into, for example, a company governed by German law, or the reverse situation, where a company governed by the law of another EU Member State is transformed into a company governed by Polish law and transfers its registered office to Poland.
- Cross-border mergers can be particularly effective for consolidating and optimizing international corporate groups, as well as where companies decide to expand into new markets to achieve business benefits.
- A cross-border merger may be carried out either as a merger by acquisition, involving the transfer of assets to another existing company, or as a merger by formation of a new company, involving the transfer of the companies’ assets to a newly incorporated company.
- A cross-border demerger may be used, among other purposes, to strengthen the autonomy of a foreign branch that is to be separated into an independent company. In addition, due to the principle of succession, a demerger by separation provides an attractive alternative to the cross-border asset deals previously used for such purposes.
Implementation process
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Business analysis, discussion of the client’s needs and process planning
At this stage, we examine the company’s domestic and international operations. We review matters such as the company’s assets, employment matters, agreements with customers and suppliers, administrative decisions, permits and licenses. Once the client’s needs have been identified, we prepare an implementation plan.
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Consultations with foreign advisors and preparation of a joint action plan
At this stage, once the client’s needs have been identified and an action plan that can be implemented under Polish law has been prepared, we discuss and agree on a joint timetable with foreign advisors. Together, we identify the risks that may arise during implementation, considering the requirements applicable in the jurisdictions of the companies participating in the process.
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Process implementation
At this stage, we guide the client through all formalities associated with the process. We manage the process comprehensively, from liaising with the notary or relevant authorities and preparing all necessary documents to submitting the required documentation to the court and continuously monitoring registration. Depending on the type of process, we also coordinate activities with foreign advisors.
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Ongoing consultations during and after the process
Cross-border processes present an organizational challenge both for the governing bodies of the entities undergoing reorganization and for the employees responsible for implementing changes in the relevant areas, such as accounting and administrative staff and HR teams. Our many years of experience gained through domestic and international projects allow us to support clients with all ongoing matters related to cross-border reorganization processes at every stage of the project, including after its completion.
At this stage, we examine the company’s domestic and international operations. We review matters such as the company’s assets, employment matters, agreements with customers and suppliers, administrative decisions, permits and licenses. Once the client’s needs have been identified, we prepare an implementation plan.
