TGC Corporate Lawyers Legal review – October 2023

Newsletter – changes in regulations and interesting decisions – October 2023.

1. The amended Penal Code came into force   

On 1 October 2023, one of the most controversial amendments to the Penal Code in years came into force, i.e. the Act of 7 July 2022 amending the Act – Penal Code and certain other acts (Journal of Laws 2022, item 2600). The act not only toughens penalties for the most serious crimes and introduces a new catalogue of punishments, such as absolute life imprisonment, but also provides for the aggravation of criminal liability for economic crimes. 

One of the important changes for entrepreneurs is the increase in the punishment for invoicing offences, From 1 October, these offences are punishable by imprisonment from six months to eight years.   

The amended Penal Code provides for a new type of offence of corruption – related to the so-called great financial value, i.e., exceeding the amount of PLN 1 million. In the light of the new provisions, ‘whoever gives or promises to give a financial benefit of great value to a person performing a public function, in connection with the performance of that function, shall be subject to a penalty of deprivation of liberty for a period between 3 and 20 years (Article 229 § 4a of the Penal Code). The amendment also applies to persons accepting a bribe or its promise.  

The removal of the sentence of 25 years imprisonment from the Penal Code for offences involving the use of invoices for amounts higher than PLN 10 million is also crucial for economic participants. The statutory limits of imprisonment, i.e., Article 37 of the Penal Code, have been modified. Currently, this measure is imposed between 1 month and 30 years. This change will have an impact on the scope of penalties for economic crimes, even those not regulated by the Criminal Code. 

Learn more. 

2. Amendment of the Act on Formation of the Agricultural System 

The amendment to the Act on the Formation of the Agricultural System (UKUR), i.e., the Act of 13 July 2023 amending the Act on the management of agricultural real estate of the State Treasury and certain other acts, entered into force on 5 October 2023. The purpose of the changes to the legislation was primarily to streamline the trade in agricultural land. e.g., by extending the catalogue of cases in which the provisions of the UKUR will not be applied or the acquisition of agricultural land will not require the consent of the Director General of the National Centre for Agricultural Support (KOWR). The amendment also extended the pre-emptive right and the right to purchase shares and stocks in capital companies vested in the KOWR, as well as the powers of this body. The new provisions allow a wider range of entities to purchase agricultural property.   

Another important change is the extension of the catalogue of close relatives to include parents of the spouse, stepparent and stepfather, which changes the rules of inheritance of agricultural real estate. This will enable a wider transfer of agricultural real estate within the family.  

The amendment of the UKUR is particularly important in the context of M&A transactions. The legislator has proposed a new catalogue of corporate processes enabling the disposal or acquisition of agricultural real estate. 

Learn more. 

3. Amendment of the Social Assistance Act – free legal protection for employees  

On 1 November 2023, an amendment to the Social Assistance Act, i.e., the Act of 28 July 2023 amending the Social Assistance Act and certain other acts, enters into force. This act is intended to guarantee social workers free legal protection in connection with their professional activities. They are to be provided with free legal aid or reimbursement of half of the costs incurred in the case of criminal proceedings in which they act as victims or auxiliary accusers. The provision of legal aid or reimbursement of costs will be the responsibility of the facility where the social worker is employed or the relevant local authority. 

Learn more. 

4. Amendment of the Civil Code – new inheritance rules 

In the first half of November this year, an amendment to the Civil Code regarding inheritance rules will come into force. One of the changes is the narrowing of the circle of persons entitled to statutory succession. In the case of succession of descendants of grandparents who did not live to see the opening of the inheritance, the circle of statutory heirs has been limited to children of those grandparents, i.e., siblings of the testator’s parents and the testator’s cousin or uncle siblings. Two new grounds for declaring an heir unworthy of inheritance have also been added to the Civil Code: 

1. persistent failure to fulfil a maintenance obligation imposed by a court judgment against the testator; and 

2. persistent evasion of the duty of care towards the testator. 

The amendment to the Civil Code will enter into force on 15 November 2023, and the new provisions will apply to inheritances opened after the date of entry into force of the law. 

Learn more. 

5. The number of complaints filed with the National Labour Inspectorate and fines imposed on employers is increasing  

According to the National Labour Inspectorate (PIP) activity report for last year, employees file complains to PIP more often. In 2022, the authority received more than 50,500 complaints, which is 10% more than the year before. The number of inspections carried out by the PIP is also increasing. Last year, there were nearly 59.6 thousand of them.  

The PIP report shows that non-payment of wages or their untimely payment, incorrect holiday pay settlements, as well as termination of contracts contrary to the regulations were the most frequent reasons for reporting irregularities. As a result of their inspections, labour inspectors enforced as much as PLN 19.2 million in 2022 in favour of claimants. A significant part of this amount concerned the payment to employees of wages and other benefits due under the employment relationship. In 2022 PIP issued decisions ordering the payment of these benefits to the amount of PLN 73.2 million. 

Our expert talked about PIP inspections on FOCUS ON Business website. Link to the statement. 

6. Amendment of the Commercial Companies Code 

An amendment to the Commercial Companies Code, which is the next step in the implementation of the so-called company law package relating to cross-border and domestic company conversion processes has recently entered into force. The main objective of the amendment was to implement EU directives on cross-border conversion processes. 

Selected changes in conversion processes of companies:   

• introduction of the possibility of cross-border conversion of limited liability companies 
• introduction of a new type of simplified merger of companies  
• granting a limited joint-stock partnership the capacity to divide (also cross-border) 
• introduction of mandatory opinions on cross-border mergers by tax authorities  
• greater protection for members, employees and creditors of a company undergoing national and cross-border conversion 
• new rules for transferring the registered office of a company to another EU member state or a country party to the EEA Agreement 

The above changes should be assessed positively, since they will contribute to a significant development of the Polish share in the market of cross-border operations and reorganisations, incorporating to Polish law numerous mechanisms provided for by EU regulations. The legislator’s intention is to harmonise the rules of domestic and foreign conversions and to increase the competitiveness of Polish entrepreneurs and facilitate their expansion into EU markets – sums up Anna Szczerba, Director of Company Law Department and Corporate Secretarial Services at TGC Corporate Lawyers. 

Learn more. 

Webinar: E-delivery for commercial companies in Poland – how to prepare for the new obligation? 

We encourage you to download the recording of our webinar on the obligation of commercial companies to switch to e-delivery, during which our experts explained how and when to prepare for the transition to electronic delivery. We covered the following topics: 

• What is e-delivery? 
• How to prepare the company for the upcoming changes? 
• Which entities are obliged to use e-delivery? 
• How to set up an e-delivery address mailbox?

Download the recording here. 

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