Cross-border mergers in the practice of polish family foundations – opportunity or obstacle?

The introduction of the Act on Family Foundations on January 26, 2023 (Journal of Laws of 2023, item 326) opens a new chapter in the management of family assets in Poland. Article 1 of this act clearly defines its purpose: regulating the organization and operation of family foundations, including the rights and obligations of the founder and beneficiary. This innovative legal form allows founders to effectively transfer material values to designated beneficiaries, while ensuring asset protection against unforeseen events. However, utilizing a family foundation for asset transfer, especially in an international context, poses certain challenges, primarily due to the process of cross-border mergers.

Cross-border mergers, in the context of company law, involve a situation where a Polish company acquires a company from another European Union country. This procedure is complex and requires the precise fulfillment of a series of legal formalities, including obtaining an opinion from the tax office. This process is not only time-consuming but also costly – the need to engage lawyers, accountants, and auditors in two different countries significantly increases transaction costs.

Given these challenges, it’s worth considering an alternative method involving changing the registered office of the acquired company to Poland before initiating the merger process. Such a change of registered office requires a resolution by the company’s shareholders’ meeting and the making of appropriate entries in the court registers of both countries. Although this requires some formal actions, the entire process is usually faster and less complicated than a traditional cross-border merger.

The change of registered office allows for the merger to be carried out under Polish law, opening the door to the simplifications provided for in the Polish Commercial Companies Code. For example, Article 492 § 1 of the Commercial Companies Code (Journal of Laws of 2023, item 1030) describes the procedure for merging companies, enabling the use of mechanisms that simplify the merger process.

In conclusion, although cross-border mergers offer a range of opportunities for Polish family foundations, they also come with significant challenges. The alternative method of changing the registered office of the company being acquired to Poland before the merger seems to be a more efficient and less financially burdensome solution that allows taking advantage of the simplifications of Polish law. However, the choice of the appropriate path should be carefully considered and adapted to the specifics of the given assets and the expectations of the beneficiaries.