Key considerations when acquiring shares in a Polish company

A guide for foreign investors | ATL Law 2026

The role of due diligence in M&A transactions

Due diligence constitutes a fundamental stage of any transaction involving the acquisition of shares in a Polish limited liability company (spółka z ograniczoną odpowiedzialnością, sp. z o.o.) or a joint-stock company (spółka akcyjna, S.A.). Its purpose is to comprehensively identify legal, tax, financial and operational risks associated with the target entity, enabling the investor to make an informed investment decision and to appropriately structure the terms of the acquisition agreement.

Polish law does not impose a formal obligation on the parties to a transaction to carry out due diligence. The absence of such an investigation therefore does not constitute a legal obstacle to the valid conclusion of a share purchase agreement. Nevertheless, from the perspective of transaction risk management and the liability of members of the governing bodies of the acquiring company – who, pursuant to Articles 209 and 293 of the Code of Commercial Companies (Kodeks spółek handlowych, KSH), are required to exercise the diligence arising from the professional nature of their activities – the failure to conduct due diligence may be assessed as a breach of the duty of care. It should be noted, however, that the liability of management board members is assessed on a case-by-case basis having regard to the circumstances of the specific transaction – the mere absence of due diligence does not automatically give rise to liability, but may constitute a significant aggravating factor in the event of loss.

For foreign investors who do not possess direct familiarity with the Polish regulatory environment, due diligence additionally serves an educational function – it enables an understanding of the specificities of the Polish legal system, the identification of areas requiring particular attention, and the appropriate planning of the transaction structure and post-transaction integration. This article discusses the key areas of legal due diligence that should be covered when acquiring a Polish capital company, as at the legal status in force in 2026.

Corporate structure and legal standing of the company

Verification of entries in the National Court Register

The starting point for corporate due diligence is the analysis of the current extract from the National Court Register (Krajowy Rejestr Sądowy, KRS), which contains the basic identification data of the company, the composition of its governing bodies, its capital structure and the manner of representation. It should be borne in mind, however, that the KRS does not always reflect the current legal status of the company – this is influenced both by delays in making entries and by the fact that certain changes (e.g. the transfer of shares in a sp. z o.o.) are declaratory in nature, meaning that the legal effectiveness of the change is not conditional upon entry in the register.

The verification should include a comparison of the data disclosed in the KRS with the content of the articles of association (deed of incorporation), the minutes of shareholders’ meetings, the share register or shareholder register, and the documents confirming the appointment of the current members of the management board and supervisory board. Discrepancies between the status disclosed in the KRS and the actual status constitute a warning signal requiring detailed clarification.

Articles of association and internal regulations

The analysis of the articles of association (or the statute, in the case of joint-stock companies) is essential to assess whether the planned transaction can be carried out in the intended manner. In particular, the existence of clauses restricting the transfer of shares should be verified, such as rights of first refusal, pre-emption rights, the requirement to obtain the company’s consent for the transfer of shares (Article 182 KSH), as well as tag-along and drag-along clauses. Such clauses may significantly affect the timetable and mechanics of the transaction.

The investigation should also cover the rules of procedure of the management board and supervisory board, shareholders’ agreements, powers of attorney granted on behalf of the company, and any agreements on the exercise of rights attached to shares, which may create obligations or restrictions not apparent from the articles of association themselves.

Capital structure and history of share transactions

A complete review of the history of changes in the ownership structure of the company allows for the identification of potential defects in the legal title to shares. The analysis should cover the continuity and correctness of all historical share transfer transactions, with particular attention to compliance with the requirements as to the form of the legal act. In the case of a sp. z o.o., the transfer of shares requires written form with notarially certified signatures, under pain of nullity, in accordance with Article 180 KSH. Failure to observe this form results in the absolute nullity of the legal act, which may undermine the legal title of the current seller.

It should also be verified whether the shares are encumbered with a pledge, a registered pledge, usufruct or other third-party rights, and whether they are the subject of court proceedings or security measures.

Real estate and fixed assets

The examination of the legal status of real estate owned by the company or used by it under another legal title constitutes an important element of due diligence, particularly in transactions involving manufacturing, logistics or retail entities. The analysis should cover the land and mortgage registers of the relevant properties, including entries relating to ownership, mortgage encumbrances, easements, third-party claims and the right of perpetual usufruct.

In the context of foreign investors, particular attention should be paid to the provisions of the Act of 24 March 1920 on the Acquisition of Real Estate by Foreigners, which in certain cases requires the obtaining of a permit from the Minister of Internal Affairs for the acquisition of real estate. This obligation also applies to the indirect acquisition of real estate – the acquisition of shares in a company that is the owner or perpetual usufructuary of real estate may require the obtaining of a permit if the acquirer is an entity controlled by a foreigner within the meaning of the Act. Although the Act provides for a number of exemptions from the permit requirement – including, among others, for real estate located within city limits and for entities from the European Economic Area – the scope of these exemptions is limited and subject to significant qualifications, particularly with respect to agricultural and forestry land (additionally regulated by the provisions of the Act on the Shaping of the Agricultural System and the powers of the National Support Centre for Agriculture, KOWR) and companies controlled by foreigners from outside the EEA. In each case, an individual analysis of whether the conditions for the exemption are met is required in the context of the specific transaction and the nature of the property being acquired.

The investigation should also cover the compliance of the manner of use of the real estate with the local zoning plan, planning decisions, building and occupancy permits, as well as the environmental status of the property, including any potential soil contamination.

Contractual obligations and legal disputes

Material commercial agreements

The review of the company’s contractual portfolio focuses on agreements that are material from the perspective of operational continuity or that generate significant financial obligations. In particular, agreements containing change of control clauses should be identified, as these may grant the counterparty the right to terminate or renegotiate the agreement in the event of an acquisition of the company. Such clauses are commonly found in credit agreements, commercial lease agreements, distribution agreements and licence agreements.

The analysis of contracts should also take into account non-compete clauses, exclusivity clauses, most favoured nation obligations, and any guarantees and sureties granted by the company or in its favour.

Court, arbitration and administrative proceedings

The investigation covers the identification and assessment of risks associated with pending court, arbitration and administrative proceedings in which the company is a party or participant. Not only proceedings already commenced are relevant, but also potential claims of which the company is aware – in particular employee claims, consumer claims, claims for infringement of intellectual property rights and contractual damages claims.

For foreign investors, the analysis of proceedings before public administration authorities is also important, including proceedings in the area of construction law, environmental protection, competition law (UOKiK – the Polish Competition Authority) and tax proceedings. Tax liabilities of the company – including tax arrears together with interest – remain the obligations of the company regardless of changes in its ownership structure, which means that the acquirer of shares becomes the owner of an entity burdened with these liabilities. This makes the examination of the company’s tax history a key element of due diligence.

Employment matters and labour law

The examination of employment aspects covers the analysis of the employment structure, the legal forms of engagement (employment contracts, civil law contracts, B2B arrangements), the work regulations and remuneration regulations, collective bargaining agreements and arrangements with trade unions. Particular attention should be paid to obligations arising from post-termination non-compete agreements, confidentiality agreements and incentive programmes (including management options and ESOP share plans), which may generate significant financial liabilities on the part of the company.

In share deal transactions, the acquisition of shares does not constitute a transfer of an undertaking within the meaning of Article 23¹ of the Labour Code – the company remains the employer, and a change of shareholder does not, as a rule, directly affect the employment relationships. Nevertheless, it should be verified whether contracts with key employees contain clauses entitling them to terminate their employment or to receive additional benefits in the event of a change of control over the company (so-called golden parachute clauses).

The correctness of the company’s settlements with the Social Insurance Institution (ZUS) should also be verified, including the timeliness and completeness of insurance registrations and contributions. As the contribution payer, the company bears responsibility for the correct calculation and timely remittance of social security contributions, and arrears may generate significant financial liabilities together with late payment interest and potential penalties. This risk is particularly material for companies that rely on civil law contracts or engage self-employed individuals, as the legal characterisation of such arrangements may be challenged by ZUS.

Tax risks – a critical area of due diligence

Tax due diligence is one of the most important areas of investigation from the investor’s perspective, as the company’s tax liabilities – including tax arrears, late payment interest and potential penalties – remain with the company even after a change in its ownership structure. The analysis should cover at least five years back, taking into account the five-year limitation period for tax liabilities under Article 70 of the Tax Ordinance (Ordynacja podatkowa). It should be noted, however, that the running of the limitation period may be suspended or interrupted in the cases specified in Article 70 §§ 2–8 of the Tax Ordinance – including, among others, where criminal fiscal proceedings are initiated, an appeal is lodged with an administrative court, or security measures are imposed on the taxpayer’s assets – which in practice may significantly extend the period during which tax liabilities remain enforceable.

CIT, VAT and transfer pricing

The investigation covers the analysis of the correctness of corporate income tax (CIT) settlements, including in particular the proper qualification of tax-deductible costs, the application of tax exemptions and reliefs (including the R&D relief and the IP Box preference), foreign exchange differences and the correctness of depreciation and amortisation of fixed assets and intangible assets.

In the area of VAT, the key issues are the correct application of tax rates, the right to deduct input VAT, the timeliness of filing returns and the settlements under the split payment mechanism, which applies on a mandatory basis to transactions covered by Annex 15 to the VAT Act.

For companies operating within international groups, the analysis of transfer pricing documentation is of particular importance. It should be verified whether transactions with related parties have been priced in accordance with the arm’s length principle, whether the required local and group documentation has been prepared (Local File, Master File, TPR information), and whether the company is exposed to the risk of income adjustment by the tax authorities.

Withholding tax and payer obligations

Where the company makes payments to foreign entities in respect of dividends, interest, royalties or intangible services, the correctness of the withholding tax rates applied should be verified, including the proper application of reduced rates under double taxation treaties or EU directives. Particular attention should be paid to verifying compliance with the payer’s duty of care requirements, including the possession of current tax residency certificates. In the case of payments to a single taxpayer exceeding two million PLN in a tax year, the correctness of the application of the pay and refund mechanism should also be analysed. This mechanism requires the payer to withhold tax at the statutory rate on the excess above that threshold, with the possibility of subsequently applying for a refund of the difference – unless the company held a valid opinion on the application of preferences or submitted a payer’s declaration (WH-OSC). Irregularities in this area may give rise to tax arrears together with interest, burdening the company in its capacity as the withholding agent.

Compliance – regulatory conformity and registration obligations

AML/KYC and the Central Register of Beneficial Owners

In the context of M&A transactions, verifying the company’s compliance with anti-money laundering and counter-terrorism financing regulations is of significant importance. It should be verified whether the company has correctly registered its beneficial owners in the Central Register of Beneficial Owners (Centralny Rejestr Beneficjentów Rzeczywistych, CRBR) and whether the data is up to date. The penalty for failure to comply with CRBR obligations may amount to up to one million PLN, which constitutes a material financial risk.

Following the completion of the acquisition, an update of the CRBR entry will be required within fourteen business days from the date of the share acquisition, if the change in ownership affects the status of beneficial owners. It should be noted that a draft amendment to the AML Act remains at the legislative stage, providing for significant changes to the functioning of the CRBR – including restrictions on public access to the register’s data. According to the current version of the draft, these changes would enter into force on 1 July 2026; however, the final form and timing of the implementation depend on the outcome of the legislative process.

Personal data protection (GDPR)

The examination of GDPR compliance covers the analysis of the personal data processing procedures implemented by the company, including the register of processing activities, data processing agreements, privacy policies, mechanisms for the exercise of data subject rights, and any data protection breaches reported to the President of the Personal Data Protection Office (UODO). For companies processing personal data on a large scale or processing special categories of data, GDPR violations may result in administrative fines of up to twenty million euros or four per cent of annual worldwide turnover.

Permits, licences and administrative decisions

It should be verified whether the company holds all the required permits, concessions, licences and registry entries that are prerequisites for conducting business activity in its sector. Particular attention should be paid to decisions that are personal in nature or are linked to a specific location, as a change of ownership may in certain cases require a fresh application for the relevant permit. This applies in particular to decisions in the area of environmental law, pharmaceutical law, energy law and transport regulations.

Intellectual property protection

The review of the company’s intellectual property portfolio covers the analysis of patents, trademarks, industrial designs, copyrights to software and databases, and trade secrets. It is essential to establish whether the company is the actual owner of the rights to its key IP assets, whether those rights are not encumbered in favour of third parties, and whether agreements with employees and subcontractors properly regulate the transfer of copyrights and related rights to the company. For technology companies, this area of due diligence frequently determines the entire transaction value.

Environmental and regulatory aspects

Environmental due diligence is gaining in importance in the context of the growing regulatory requirements related to ESG and the tightening of provisions on liability for environmental contamination. The investigation should cover the analysis of environmental permits held by the company, including emission permits, water law permits, environmental conditions decisions, as well as the history of inspections conducted by the Regional Inspector of Environmental Protection.

With respect to industrial properties, the assessment of the risk of historical soil and groundwater contamination is of particular significance. Liability for the remediation of a contaminated site may rest with the property owner irrespective of who actually caused the contamination, which makes this aspect particularly important in transactions involving post-industrial sites.

The due diligence process and the use of its findings

Organisation of the process and access to information

Legal due diligence is typically carried out on the basis of documentation made available by the company (or the seller) in a virtual data room (VDR). The scope of the documentation to be provided is negotiated between the parties and usually includes corporate documents, commercial agreements, employment documentation, tax documentation, permits and administrative decisions, as well as documentation relating to real estate and intellectual property. Incomplete documentation or delays in its provision by the seller is itself a significant warning signal.

The due diligence report and its impact on the transaction

The findings of the due diligence investigation are presented in a report which identifies the risks detected, classifies them by degree of materiality and sets out recommendations on how to mitigate them. The findings of the report directly influence several key elements of the transaction: the price determination mechanism (including the adjustment of the valuation for identified contingent liabilities), the catalogue of the seller’s representations and warranties, the scope of indemnities, the conditions precedent to closing, and the structure of payment security arrangements (escrow, holdback).

Professionally conducted due diligence enables the informed allocation of transaction risks between the seller and the buyer and constitutes the foundation for the safe conclusion of the acquisition agreement.

Key due diligence areas – comparative overview

Summary and practical recommendations

Legal due diligence is an indispensable element of a secure acquisition of a capital company on the Polish market. For foreign investors entering the Polish market – or expanding their presence through acquisition – a professional investigation enables the identification of risks which, under the Polish legal system, may be of a specific nature, different from the experience gained in other jurisdictions.

The scope of due diligence should be tailored in each case to the size, sector and risk profile of the target entity, although irrespective of the specifics of the transaction, the investigation should cover at a minimum the corporate structure and the validity of the title to shares, key contractual obligations and legal disputes, tax risks, employment relations and regulatory compliance in the critical areas of the business.

The proper coordination of legal due diligence with financial and tax due diligence is of particular importance, as many risks are interdisciplinary in nature – requiring simultaneous legal, tax and business analysis for a proper assessment of their impact on the value and security of the transaction. The findings of due diligence form the foundation for the negotiation of the terms of the share purchase agreement, including the system of the seller’s representations and warranties, indemnification mechanisms and conditions to closing. A diligently conducted due diligence investigation, supported by the experience of legal advisors familiar with the specificities of the Polish market, minimises the risk of unforeseen liabilities and enables an informed, secure investment decision.

ABOUT ATL LAW

ATL Law is a law firm specialising in the comprehensive legal services for foreign investors on the Polish market. We provide multilingual advisory services in the areas of corporate law, tax law, transfer pricing, labour law and real estate law. We have extensive experience in conducting legal due diligence for M&A transactions, including the identification of risks specific to the Polish legal system. We support our clients at every stage of the transaction – from the due diligence investigation, through the negotiation of the agreement terms, to closing and post-transaction integration.

CONTACT:  office@atl-law.pl