The Polish FDI regime, introduced in 2020, establishes a foreign investment screening mechanism governed by the Polish Competition Authority (UOKiK). It supplements the 2015 investment control regime, which is governed by the relevant ministries, involves a limited number of strategic entities and is applicable regardless of an investor's "nationality."

Recent updates

• The main change concerns the extension of the FDI regime until July 2025. The FDI regime was introduced as a response to the COVID-19 outbreak for an initial period of two years. In mid-2022, the Polish Parliament decided to extend the FDI regime for another three years. The provisions of the FDI regime remained unchanged
• The FDI regime is still developmental in Poland, and there are limited precedential decisions available. The UOKiK has issued four clearance decisions so far and has not objected to any of the transactions reviewed under the FDI regime
• Based on the publicly available data, in 2022, no FDI decision had been issued by the UOKiK. In 2021, the UOKiK initiated eight FDI proceedings. Two cases were cleared in standard review and one case was cleared after conducting an in-depth control review. In the remaining cases, the UOKiK issued decisions refusing to initiate a preliminary investigation because the transactions were not subject to the FDI regime. In 2020, four FDI filings were submitted to the UOKiK. In two of the 2020 cases, the UOKiK refused to initiate the proceedings, as the transactions were not covered by the FDI regime; one case was cleared; and one was continued in 2021 (the UOKiK ultimately refused to initiate the proceedings, as the transaction was not covered by the FDI regime).

Who files

All non-EEA/non-OECD nationals (natural persons who do not have EEA or OECD citizenship) or non-EEA/non-OECD entities (entities without a registered office in the EEA or OECD at least for the past two years) are obliged to file for clearance when entering into any of the covered transactions (except from the indirect acquisitions when a duty of a post-closing filing is on the acquired entity holding dominance or a qualified holding in the covered entity). The FDI rules include specific provisions against circumventing the EEA/OECD-domicile rule, in particular: (i) subsidiary entities, branches or representative offices of a non-EEA/non-OECD national or non-EEA/non-OECD entity that are also regarded as non-EEA/non-OECD entities; and (ii) even if an acquisition is pursued by an EEA/OECD citizen or an entity having its registered office within the EEA/OECD, the buyer may still be regarded as "foreign" if there is an allegation of circumvention of the law, such as where the buyer does not carry out any business activity other than holding shares or controlling other entities or does not run a sustainable enterprise or employ staff within the EEA/OECD.

Types of deals reviewed

Any transaction involving a covered entity that involves direct or indirect:

• Acquisition of control over the covered entity, i.e., any of the following:
  • Holding more than 50 percent of votes at the general/shareholders' meeting or 50 percent or more of the capital
  • Having the right to appoint and/or dismiss the majority of the members of the management board or the supervisory body of the covered entity
  • Having any other right to decide on directions of the covered entity's business, including under an agreement with the covered entity
• Acquisition of a qualifying holding in the covered entity, i.e., a holding representing 20 percent or more (as well as the acquisition of any holding that would bring the buyer above 40 percent) of the: (i) votes at the general/shareholders' meeting; (ii) share capital; and/or (iii) share in distributed profits
• Purchase or lease of the enterprise (or an organized part thereof) of the covered entity through an asset deal

The clearance obligation will also be triggered if any of the above results from: (i) redemption of shares of a covered entity; (ii) a covered entity's purchase of its own shares; or (iii) the merger or spin-off of a covered entity.

Scope of the review

The UOKiK may issue an objection if the transaction poses at least a potential threat to public order, public security or public health in Poland, or when the transaction might have a negative impact on projects or programs of interest to the European Union. Therefore, political considerations are likely to become the basis for potential objection decisions issued by the UOKiK.

A transaction made without the required notification or in spite of an objection by the UOKiK are null and void.

In the case of an indirect acquisition through transactions not governed by Polish law (e.g., a merger of non-Polish entities resulting in a change of control over a covered entity), even though such transactions will not be unwound, the acquirer will not be allowed to exercise its corporate rights in the covered Polish company.

Additionally, a breach of the clearance obligation would constitute a criminal offense punishable by a fine of up to PLN 50 million and/or imprisonment for up to five years.

Finally, in case of an indirect acquisition, a person required by law or by an agreement to manage the affairs of a subsidiary that has not submitted the required notification will also be subject to a fine of up to PLN 5 million and/or imprisonment for up to five years if such a person was aware of the acquisition being made.

Review process timeline

The FDI review procedure before the UOKiK takes up to 30 business days, but it can be extended for a further 120 calendar days if the UOKiK decides to initiate control proceedings. Deadlines are suspended when the UOKiK is waiting for requested information and documents (i.e., the clock is stayed if the UOKiK is awaiting further information).

How foreign investors can protect themselves

Merging parties need to take the FDI rules into account each time they contemplate a transaction with a Polish element, i.e., when a Polish company is a direct target of the deal or belongs to the target's group.

Based on our past experience, most transactions require an assessment of whether an FDI filing is required in Poland. It is often a complex process requiring obtaining data from the parties to the transaction (e.g., detailed information on the capital group structures, the ultimate beneficial owner's domicile, and the transaction structure and scope of business of Polish targets). Moreover, because the FDI rules can be interpreted in many ways and consultation with the UOKiK is sometimes necessary, the FDI analysis should be contemplated and started early on in the transaction process.

As in other jurisdictions, it is therefore critical for foreign investors to consider Polish FDI issues in planning and negotiating transactions. In particular, an investor should ensure that it introduces a condition precedent related to obtaining FDI clearance in Poland, where appropriate, prior to closing. It may also be appropriate for merging parties to allocate the potential risks related to FDI proceedings.

In most cases, obtaining quick clearance would require ensuring that an FDI notification is drafted in a clear and informative manner and supplemented with convincing evidence proving that the completion of the transaction would not lead to any concerns. Such a result requires not only an in-depth knowledge of the transaction dynamics, but also efficient cooperation between different teams of advisers and smooth communication with the client.

Following submission of an FDI filing, it is crucial to be proactively involved in the proceedings, establish a good working relationship with the UOKiK and promptly reply to all queries raised by the authority.

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