New legal regulations have a strong impact on the business activity of every entrepreneur. Learn about 12 key issues that will shape the business environment in 2022.
Learn about the legal trends for 2022:
Przeczytaj pozostałe trendy
- Protecting the Whistleblowers
- Electricity purchasing strategies
- Maintaining payment discipline
- Transfers of data outside the EEA
- The New Deal - the return of employment contracts?
- Succession and the Polish family foundation
- Cloud transformation
- Sustainable revolution (ESG)
- Proceedings for the approval of an arrangement
- AML regulations are increasingly demanding
- Cybercrime - the dark side of hyper-digitization during the pandemic
- Consumer protection in the digital world
Protecting the Whistleblowers
17 December 2021 was the deadline for the implementation of an act bringing into effect the provisions of Directive (EU) 2019/1937 of the European Parliament and of the Council of 23 October 2019 on the protection of persons who report violations of Union law by Poland. So far, only the first version of the draft act has been published and, according to an information from the Ministry of Family, Labour and Social Policy which is piloting the legislative work, the next version is expected in January 2022.
Although we cannot predict the future (what a pity!), based on the provisions of the Directive it can be assumed that certain regulations provided for in the draft act will not change. For example, it should be assumed that, in the first place, the obligation to implement appropriate internal regulations and to provide whistleblowers with channels for reporting irregularities will, as a rule, be imposed on employers with more than 250 employees. However, we can no longer be certain as to the final shape of the detailed solutions. It is unknown if the Polish legislator will finally decide to ensure the mandatory anonymity of reporting channels (the Directive leaves this to the discretion of the Member States) and what sanctions it will provide for non-compliance with the act (the current draft provides exclusively for criminal sanctions - up to three years of imprisonment for persons responsible for violations, which, if no appropriate procedures / tools are implemented, can mean the persons managing an organization).
The prolonged work on the draft act gives enterprises more time to prepare for this demanding implementation. Due to:
- a short vacatio legis (14 days) and
- the need to agree the contents of internal procedures with employees’ representatives / trade unions,
provided for in the current draft act, we recommend taking advantage to the time to carry out conceptual work and to prepare the organization at least preliminarily for the forthcoming implementation (e.g. by designating preliminarily the persons responsible for processing of reports and operating methodologies, drafting internal regulations and analyzing the available solutions in the area of channels for reporting irregularities).
We also expect that, once the act has come into force, the number of reports concerning irregularities will increase significantly. In consequence, organizations will have to allocate additional resources for the proper verification of reports and taking appropriate follow-up measures. The situation will be further complicated by the fact that, most certainly, not all reports will be made in good faith, and the protection provided for whistleblowers may be used instrumentally as part of a dispute between an employee and the employer.
Electricity purchasing strategies
A dynamic increase in electricity prices is a fact. This is perfectly illustrated by the data: on the first Monday of December 2020 the average “base” energy price on TGE (Polish Power Exchange) amounted to 244.89 PLN/MWh, whereas on the first Monday of December 2021 it was 1,076.42 PLN/MWh. As a result of the abrupt change, many companies are urgently seeking savings in purchasing energy. Climatic and environmental conditions also play a major role, and a suitable, properly structured purchasing strategy makes it possible to enhance the pursuit of the environmental protection objectives set. What other elements are crucial in this area? First of all the identification of the obligations, restrictions and risks relating to energy investment projects in the power industry. Proper attention must be paid to obtaining concessions and permits, as well as drawing up and negotiating power purchase agreements (cPPA - corporate Power Purchase Agreement, connection agreements, etc.). Subsequently, it is important to verify opportunities to use systems of support for renewable energy sources, cogeneration and energy-intensive companies. Finally, it is also worth checking how to apply for industrial customer status.
Maintaining payment discipline
Due to numerous obligations related to counteracting the phenomenon of the so-called payment backlogs, entrepreneurs must gain a good understanding of the obligations imposed on them and to what extent they are fulfilling such obligations. The proper operations of businesses requires legal and administrative solutions geared towards minimizing the risk of payment backlogs.
Comprehensive technological solutions covering the reporting and monitoring of payments offer invaluable support in this area. They are also tremendously supportive in the event of possible UOKiK (Office of Competition and Consumer Protection) proceedings relating to payment backlogs, as well as playing an important part during the course of any investigative proceedings.
Transfers of data outside the EEA
Transfers of personal data outside the European Economic Area remains a major challenge for entrepreneurs, following the Schrems II judgement.
In order to carry the transfers out safely, enterprises are required to assess the risk related to such transfers. The assessments should concern legal, technical and data security risks. The results of such analysis will help determine what kind of risk mitigating measures are needed. It is also worth remembering that such assessments should be carried out regularly and objectively.
What will 2022 bring? From no later than 27 December 2022, enterprises making use of standard contractual clauses (SCC) should begin using updated standard contractual clauses. This means that negotiations with counterparties have to begin sufficiently early enough.
The New Deal - the return of employment contracts?
A debate has been going on in Poland for some time, about encouraging employers to hire staff on the basis of employment contracts. The changes arising from the tax regulations, caused by the New Deal, partially curb the fiscal incentive to select the B2B (business to business) model of cooperation. Could this mean the renaissance of employment contracts? Certainly, the changes being introduced could reduce the area in which employees and employers are interested in selecting the B2B model, and they could give rise to more interest in models based on flexible working time and flexible remuneration under employment contracts.
Succession and the Polish family foundation
When thinking about succession, many Polish entrepreneurs consider which model of handing over their business to future generations will ensure its continued and stable development through reinvesting (and not paying out) profits and resisting the temptation of dividing and selling off parts or the entire business by the family members.
A Polish family foundation, which is to be implemented in the Polish legal system on 1 June 2022, may help dispel these doubts. A family foundation will enable family-run businesses to plan for intergenerational succession, emulating solutions popular in Western Europe. Furthermore, tax solutions are also aimed at making the foundation a holding structure that is attractive for private businesses.
We encourage Polish entrepreneurs to become acquainted with the proposed solutions in 2022 and to verify whether the Polish family foundation fits in with their succession goals.
Cloud transformation
Transferring some of the resources to the cloud is a trend that is noticeable in all sectors. In the financial services sector, regulatory support, including tailoring the rules of cooperation with suppliers of cloud services to the requirements of national law and the PFSA, is of particular importance in the transformation process.
Of course, the regulations also affect the implementation of cloud technologies in other sectors. For example, the personal data protection regulations are of key importance. The coming year will be another year in which many enterprises will decide to begin using cloud solutions. We shall be watching the regulatory environment and the changes taking place in it closely.
Sustainable revolution (ESG)
The new EU regulations on sustainable development pose a considerable challenge for both financial market entities and non-financial companies. Financial institutions have been put under an obligation to address several issues concerning sustainable development. The key regulations, including the SFDR and the Taxonomy, the CSRD provide for obligations relating to, among other things, extended non-financial reporting, taking account of ESG risks in investing activities and reporting sustainable development indicators. Non-financial companies that report non-financially have been put under an obligation to extend the information they report to cover the eligibility of their activities under the Taxonomy. The first reports will come out in 2022 for 2021. Certain duties regarding the sustainable development indicators have been imposed indirectly on listed companies. The obligations arising from the ESG regulations, imposed on the financial sector indirectly, will affect all entities seeking financing or an investor. 2022 and the following years will be periods of intensive implementation, including the fulfilment of the obligations arising from the ESG regulations. Nearly every sector of the economy should take the impact of the ESG regulations into account.
Proceedings for the approval of an arrangement
Since, for the last year and a half, simplified restructuring proceedings have given rise to so much interest among enterprises, following the implementation of their main aspects in the proceedings for the approval of schemes of arrangement (1 December 2021), this type of restructuring proceeding will probably be the most frequently selected by entities at risk of insolvency or insolvent ones.
An assessment of the financial position of an enterprise at the stage of the risk of insolvency and selecting an appropriate form of restructuring may:
- prevent it from declaring bankruptcy;
- enable an agreement to be reached with its creditors;
- help to take action quickly, while avoiding the high costs of proceedings at the same time.
While we are on the subject, it is also worth mentioning that even though the COVID-19 pandemic has had a strong impact on the financial standing of many enterprises, it has not inhibited their development plans. It has also drawn investors’ attention to entities which have found themselves in a difficult financial position. Taking over distressed assets may be an opportunity, however, it is one that requires careful preparation - we think that in 2022 many companies will consider taking such measures.
AML regulations are increasingly demanding
Another year in AML and further changes in the regulations. The EC is planning a new set of AML regulations for 2022.
The changes include, among other things, establishing a new EU supervisory authority for AML, introducing a regulation which will put the Member States’ regulations in order, and implementing changes as regards the list of high-risk third countries by combining it with the list published by the Financial Action Task Force (FATF). The changes as part of the so-called AML package which the European Commission is going to introduce will make it necessary to update the internal documentation of the obliged institutions (the internal procedure, risk assessment, Group procedure), training the employees of the obliged institutions, and modifying the existing AML/CFT processes within the organization.
The new EBA guidelines on AML risk assessment and draft EBA guidelines on remote customer onboarding.
The latest Guidelines of the European Banking Authority (EBA) take into account the current risks related to illicit trafficking in funds and constitute an extension of the applicable EU regulations on AML/CFT, supplementing the risk assessment solutions arising from the Polish AML Act. The latest EBA Guidelines expand the obligations arising from the old version of the guidelines, and they also add new requirements which should also be implemented shortly by the Polish obliged institutions. The publication of the new Guidelines by the EBA is important in that it will require reviewing the applicable Know Your Customer (KYC) regulations and processes by the obliged institutions, in particular in the context of their risk assessment. In addition, the EBA has published draft guidelines on remote customer onboarding which is to introduce significant changes in establishing economic relations with customers by means of digital communication methods.
Amendment of the AML Act - a small revolution in the implementation of financial security measures.
On 31 October 2021, the most important changes as regards the amendment of the AML Act came into force. What is important, the amendment concerns primarily financial security measures, that is the most important obligations arising from the AML Act. Therefore, in order to reflect the assumptions behind the amendment, the obliged institutions should update their internal procedure and risk assessment document and also to conduct training for their employees. That is not all - financial security measures are, in fact, the actual processes functioning within the organization, and these should also be updated to meet the latest requirements arising from the amendment.
Cybercrime - the dark side of hyper-digitization during the pandemic
The pandemic has sped up the process of the digitization of our daily lives by leaps and bounds. In step with the progress, however, our exposure to risks to which both natural persons and organizations are vulnerable is growing. For example, according to UN estimates the number of “malicious” e-mails has increased by 600% during the pandemic. Also in Poland, the authorities appreciate the scale and importance of the problem - hence the initiative to establish the Central Office for Combating Cybercrime at the beginning of 2022. The attacks by cybercriminals require swift and decisive measures not only in the IT area but also in the legal sphere. In order to ensure comprehensive protection of the interests of enterprises and demonstrate due diligence in managing crisis situations, it may prove necessary to notify law enforcement bodies of any suspicion that an offence has been committed and to report the incident to the competent bodies in charge of cybersecurity and personal data protection. The aim of such measures is not only to reduce the negative impact of the incident on the organization and to fulfil specific regulatory obligations, but they also protect the natural persons (e.g. the employees) whose data may have been unlawfully seized by criminals. Moreover, these measures may prove necessary, e.g., in the context of the possibility to pay compensation under the organization’s insurance policy.
Therefore, we expect that 2022 will be another year of dynamic increase in the activity of cybercriminals. It is worth securing our organization properly by implementing adequate IT security measures, internal procedures and regulations on information security and responding to cyber-incidents, as well as by training staff. When, in spite of this, we become victims of cybercriminals, we should remember about the legal action we should take in such a situation.
Consumer protection in the digital world
2022 will bring many novelties in the area of consumer protection in the digital market, related to the implementation of EU regulations.
What will change? Among other things, the organization and advertising of price reductions and price-related information obligations. There will also be new requirements for agreements concluded by and between enterprises and consumers on the supply of digital content or digital services (e.g. hosting of files, data clouds, social media).
The coming year will also bring big changes in concluding agreements and discharging information obligations as well as security which will impact on? entities in the TMT sector that provide electronic communication services or obtain marketing consents in the Internet. What does this mean for enterprises? First of all the need to verify the documents they use, including the regulations and consent clauses, and to tailor them to the new rules.
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