Know your asset: understanding real estate implications in share deal transactions in Poland

Common limitations affecting share deals include restrictions related to the ownership of the agricultural land. The State Treasury holds a pre-emptive right to acquire shares in companies that own agricultural land, as well as in Polish companies dominant in such. The restrictions are broader, also covering share capital increase for agricultural land owners, when the State Treasury may have a subsequent right to acquire the newly created shares. Assessing the target company's assets is crucial in this context, as some constraints may not be obvious. For instance, agricultural land often poses challenges when selling industrial businesses, as the property's status is determined by the land registry and not simply by its current use.

Surprisingly, the transaction can be influenced not only by the ownership of property by the target company but also by real estate it leases. In transactions involving owners or lessees of seaport land, the statutory provisions grant a pre-emptive right to acquire shares in such owners or lessees. For indirect transactions, acquiring a dominant position in a company owning or leasing seaport land requires the consent of the port manager.

A thoughtful analysis of the target company's assets should precede all share deals. Even seemingly minor aspects can impact not only the business rationale of the transaction but also its structure and validity.

author: Karolina Samocik