The Act on Public Offer and Conditions for Introducing Financial Instruments to Organized Trading System and on Public Companies
30 May 2022 marked the entry into force of the main part (relating to calls) of the Act of 7 April 2022 amending the act on covered bonds and mortgage banks and some other acts (the “Act”).
The Act introduces some essential changes to, without limitation, provisions of the Act on Public Offer and Conditions for Introducing Financial Instruments to Organized Trading System and on Public Companies, which came into force on 30 May 2022 (in principle, the Act is going to take effect on 8 July 2022).
Changes to calls
The change is to apply to calls for subscription for the sale and conversion of shares in public companies and strengthening the position of minority shareholders.
The call for subscription for sale or conversion of all other shares in public companies will have to be published if the limit of 50% of the total number of votes is exceeded.
Introduction of a single limit for mandatory calls (previously the limits were 33% and 66% of the total number of votes in a company) is intended to consolidate the Polish law with the laws of other EU Member States and with the requirements of the Directive on takeover bids (2004/25/EC). The threshold of 50% of the total number of votes provided for in the Act is much higher than the thresholds on the EU main markets, and as such it may be perceived as overly high.
The Act introduces the possibility of voluntary calls, which have so far not been envisaged in the Act on Public Offer and Conditions for Introducing Financial Instruments to Organized Trading System and on Public Companies. After the change, voluntary calls, same as mandatory calls, will be announced and carried out through an investment company and after establishment of a collateral of a value corresponding to at least 100% of the value of shares subject to the call.
The collateral will enable prompt (after the end of the deadline for purchase of the shares covered by subscriptions made in response to the call) satisfaction from the object of the collateral. The change is intended to eliminate securities (e.g. mortgages) which prevented prompt satisfaction, and thus to increase the level of investor protection.
Voluntary calls, same as mandatory calls, will apply solely to shares of companies admitted to trade on regulated market. Thus, it will not be possible to use voluntary calls for the intended acquisition of shares listed in the alternative trading system (ATS). Consequently, despite the changes regarding calls, the only mandatory call with respect to companies listed in the ATS is still a call published as part of de-listing, i.e. withdrawal of shares from trade.
Price in calls
The Act also provides that the price offered in the call may not be lower than the price already paid by the offeror and the entities which control the offeror if shares are acquired indirectly. For companies with low liquidity, the minimum price in the call will be established based on the fair value of shares determined by the auditing firm selected by the caller. This solution will be used if, in the periods for which the average market price of shares is provided as the basis for determination of the minimum price in the call (calculated according to daily volume weighted average price per share) (i.e. in the periods of three and six months preceding notification of the Financial Supervision Authority about the intended publication of the call), the shares were traded at less than one third of sessions and at minimum one third of the sessions there was at least 5% difference between the closing price of the shares and the closing price at the preceding session over that period.
Changes in determination of the minimum price were also introduced. The amendment explicitly provides for the requirement to take into account the price of indirect acquisition of shares in a company.
The share price specified in the call cannot be lower than the price of indirect acquisition of the shares, provided that such indirect acquisition took place 12 months before notifying the Authority about the intended publication of the call. The indirect purchase price is to be determined by the auditing firm selected by the entity publishing the call, taking into account the fair value of the shares acquired indirectly as at the day of their indirect acquisition.
The above regulation is to complement the regulations governing calls for subscription for sale or conversion of shares according to the position expressed by the Supreme Court in the judgment of 18 July 2019 (I CKS 587/17), in which the Court held that Article 79 (2)(1) of the Act on Offer should also apply to indirect acquisition of shares in the public company.
The second change regarding determination of the minimum price applies to low-liquidity companies: if the share price cannot be determined based on the market price, the share price cannot be lower than the fair value of the shares as determined by the auditing firm selected by the caller.
Transitional provisions
As regards calls published before 30 May 2022, the transitional provisions to the Act envisage a rule whereby the call-related provisions apply in their heretofore wording if, before that date, securities and cash were not handed out in return for shares covered by the subscriptions made in response to such calls and shares acquired in response to such calls were not handed out. As regards entities which hold more than 50% and no more than 66% of the total number of votes in a public company after 30 May 2022, the obligation to publish the call will arise if, after the effective date of this regulation, the share in the total number of votes in the public company is further increased.
KONTAKT
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