New legal regulations – 7 hot legal issues for 2020

New legal regulations will have a significant impact on the business activity of every entrepreneur.

Find out more about 7 key legal issues that will shape the business environment in 2020
 


Determining Ultimate Beneficial Owners

On 13 October 2019, it became necessary to register ultimate beneficial owners (UBO) with the new Central Register of Ultimate Beneficial Owners. Entities registered with the register of entrepreneurs of the National Court Register (KRS) before that date have an additional interim period of 6 months to complete their initial registration, i.e. until 13 April 2020. Any subsequent changes to the data entered in the Central UBO Register will need to be reported within 7 business days.

Registration will apply to all Polish partnerships and companies registered in the KRS (except for professional partnerships and listed joint-stock companies).

Failure to declare the UBO within the statutory time limit may result in a fine of up to PLN 1 million.

In addition, notifying parties who report false data to the UBO Register will bear criminal liability. The representatives of entities subject to registration will be liable for any damage caused by the failure to report the relevant data to the Central UBO Register, or changes to such data, within the statutory time limit, as well as by the reporting of false data.
 

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Dematerialisation of shares and a shareholder register for joint-stock companies and partnerships limited by shares

In view of the upcoming amendment to the Code of Commercial Companies, a number of provisions relating to joint-stock companies and partnerships limited by shares will be modified. The most important changes among those about to take effect will introduce, among other things:

  • the mandatory dematerialisation (i.e. doing away with paper share certificates) of nominal shares and bearer shares;
  • a mandatory shareholder register to be kept at each company, which will be tantamount limiting the shareholders’ right to remain anonymous (access to the register will be granted to the company, its shareholders and fiscal authorities alike);
  • harmonised share disposal rules and;
  • harmonised rules for convening general meetings.

The upcoming changes will involve major organisational challenges and costs for many companies operating as a joint-stock company or a partnership limited by shares.

This is the result of a number of changes in the law related to anti-money laundering measures and the introduction of transparency to Polish business law. Even though a large number of these changes will take effect in 2021, the so-called “preparatory part" has already placed a number of new obligations on companies with effect from 1 January 2020.
 

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Payment deadlines in commercial transactions

As of 1 January 2020, a new law has entered into force amending certain existing acts to limit payment defaults. The new regulations concern, among others, the issue of setting and meeting payment deadlines in commercial transactions, especially as regards large companies. 

From the civil law perspective, an unjustified extension of payment deadlines for the delivery of goods or services will constitute an act of unfair competition, while in the domain of public law, the President of the Office of Competition and Consumer Protection (UOKiK) will become authorised to initiate administrative proceedings in connection with excessive payment delays. Such proceedings can potentially lead to the imposition of very high penalties (up to several million zloty).

Moreover, the biggest corporate taxpayers (with annual revenues in excess of EUR 50m) will be obligated to submit publicly available reports to the Ministry of Economy on the due application of the payment deadlines. 

While the final wording of the amended regulations is already known, their practical application is yet to be revealed. The uncertainty is exacerbated by the fact that the law uses a number of vague terms.
 

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RegTech – compliance during digital transformation

The increasing number of regulations in various economic sectors makes compliance with these numerous and frequently changing regulations a challenge for many entrepreneurs. The frequently changing legal environment, the growing complexity of legal requirements and the threats inherent in the advent of new technologies require measures that enable companies to respond quickly and efficiently to any compliance risks which may appear.

It should be expected that in the coming years we will observe the growing importance of machine learning and blockchain technologies, as well as the widespread adoption of these solutions for compliance purposes. The legal regulation of artificial intelligence and distributed ledger technology will help with the wider adoption of regulatory technologies (RegTech) in the area of compliance. The core areas in the development of RegTech compliance include cybersecurity, digital identity, measures against money laundering and terrorist financing, data protection and management, and consumer protection in its broad understanding.

2020 will be another year in which we will observe the intensive development of RegTech, and we therefore recommend keeping a close eye on this important area in the economy’s digital transformation.
 

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Digital transformation / Going paperless

For a long time now, the law has provided tools enabling legally effective transactions to be performed without the need for paper or for the parties to be present in person (it is sufficient to exchange a qualified electronic signature or eID). We can also see a strong trend towards communicating solely via digital channels, with respect to various types of registration and reporting to public authorities.

Nevertheless, research indicates that a large number of companies are still at the beginning of their journey to full digital transformation. Although the potential is immense and constantly growing, the number of difficult legal issues related to a company’s entry into the digital world is also increasing.

In addition to provisions that specifically regulate a given market area, there are also universal issues which still remain problematic, such as, for example: the evidentiary value of electronic communication, the legal nature of technologically advanced tools such as blockchain, and liability in the digital world (including the definition and meaning of digital damage).

For a digital transformation to be successful, the legal aspects always need to be taken into account. It cannot be denied that the law determines the shape of modern business – sometimes it creates obstacles, but on the other hand it also opens up a whole spectrum of opportunities.
 

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Green (r)evolution – nearly zero-energy buildings

Buildings account for 40% of energy consumption in the European Union and 36% of CO2 emissions. A sustainable approach on the real estate market has become a must, and investors are increasingly likely to look at the measurable benefits of eco-friendly construction.

EU and national regulations alike are aimed at increasing the energy efficiency of buildings. Investors will only have a year to adapt to the more restrictive low-energy requirements – as new technical conditions will come into effect from January 2021.

Poland is the building certification leader in the CEE region (with more than half of the certified buildings located in Poland).

However, many buildings are still characterised by low energy efficiency. There is also still a lot to be done in terms of the use of buildings, including the cooperation between the building owner and manager, and the tenant. This is being addressed by the so-called “green leases”, which are popular in other countries and now slowly entering the Polish market as well, as they are intended to reduce the negative environmental impact of the use of buildings.

The green (r)evolution will change the real estate market both next year and also in the years to come.
 

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Brexit

The United Kingdom’s exit from the European Union will represent a fundamental change in the functioning of the Community market. The existing unification of the basic rules for conducting business activities in the countries of the EU ensured that locating certain corporate processes in the UK, or conducting activities directly within the British Isles, could be done smoothly and in an unrestricted way.

The UK’s exit from the common regulatory and customs area will mean that companies with links to the United Kingdom, e.g. those with companies incorporated in the UK which form part of their commercial, production or service structures, will need to ensure that on the exit date all the certification, location and tax requirements related to the status of cooperation with a third country are met.

Considering the uncertainty as to the final form of Brexit, and the still very real risk of a no-deal exit for the UK, entrepreneurs must take the necessary preparatory and preventive steps and continue to monitor political developments on an ongoing basis.
 

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Contact us

Cezary Żelaźnicki

Partner PwC Legal, Radca Prawny, PwC Poland

Tel: +48 519 507 081

Marta Dąbrowska

Associate, PwC Legal, PwC Poland

Tel: +48 519 504 439

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