Indirect privatisation, as defined by the Act, consists in the transfer of shares held by the Treasury in companies.
The process which precedes indirect privatisation is commercialisation of a state-owned enterprise which consists in the transformation of the state-owned enterprise into a sole shareholder (joint stock or limited liability) company of the Treasury. Commercialisation of a state-owned enterprise is performed by Minister of the Treasury on the motion of the founding body, director of the state-owned enterprise and the workers’ council or on his own initiative. An executive body of the relevant self-government unit may motion with a justified application to Minister of the Treasury to perform commercialisation for the purpose of communalisation.
In a company established as a result of commercialisation the Treasury takes up, until privatisation is conducted, 100 per cent of shares. Minister of the Treasury represents the Treasury, as the sole shareholder of such a company, at the general meeting of shareholders.
In accordance with Article 69b of the Act, the provisions of the Act pertaining to the transfer of shares held by the Treasury (Articles 33-35 of the Act), are also applied to the transfer of shares held by the Treasury in companies established in accordance with separate provisions and under a procedure different than the procedure defined in the Act.
Before shares in a company held by the Treasury are offered for transfer, Minister of the Treasury orders for an analysis to be performed as regards the legal status of the company’s assets and valuation of the enterprise’s value, as well as for an analysis of the standing and growth prospects of the company’s enterprise and for estimates as regards implementation of responsibilities arising from requirements pertaining to natural environment protection, as well as other, as may be determined from time to time, should it be required to protect the interest of the Treasury. The scope of the analysis and other important information within that scope are defined by the Ordinance of the Council of Ministers of 17 February 2009 on the scope of the analysis of a company, conducted before shares in a company held by the Treasury are offered for transfer (Journal of Laws No. 37, item 288).
Ensuring the public character of the process in which Treasury shares are transferred requires an offer for the transfer of those shares to be announced, as well as an invitation to submission of bids in a tender or an invitation to negotiations or an invitation to participate in an auction to be published in at least one daily newspaper of nationwide circulation and in the Bulletin of Public Information (BIP) on the page of the Minister of the Treasury.
The transfer of Treasury shares in a procedure other than “public” procedure, indicated in Article 33(1) of the Act (publicly announced offer, public tender, negotiations undertaken on the basis of a public invitation, acceptance of an offer in response to a call announced on the basis of the Act on the Public Offer submitted by the entity announcing the call, publicly announced auction, if the starting price is not lower than a book value of shares) requires approval of the Council of Ministers on pain of nullity. It is also possible to alienate the shares belonging to the Treasury otherwise than by the public procedure referred to in Article 33(1) of the Act, without applying for the approval of the Council of Ministers, if the buyer and the price are specified in the privatisation agreement, and the subject of transaction are shares of companies, where the Treasury owns less than 50% of the share capital or if the subject of transaction are shares owned by the Treasury, constituting less than 25% of the share capital.
Detailed legal regulations concerning the procedure for the transfer of shares in Treasury companies and the form of payment for those shares are comprised in the Ordinance of the Council of Ministers of 17 February 2009 on detailed procedure as regards transfer of Treasury shares (Journal of Laws No. 34, item 264), as well as the Ordinance of the Council of Ministers of 14 December 2004 on the manner in which the disbursement of shares is conducted, the form and the terms of payment for shares acquired from the Treasury (Journal of Laws No. 269, item 2666 as amended).
The selection of one of the “public procedures” for the transfer of Treasury shares referred to in Article 33(1) of the Act, is conducted by Minister of the Treasury, taking into consideration, in particular, the degree of complexity of the envisaged share transfer transaction, as well as the size and economic / financial standing of the entity whose shares are the subject of transfer.
1. Publicly announced offer
Transfer of shares as a result of a publicly announced offer takes place in accordance with the terms set forth in Article 66(1) of the Civil Code. An offer compliant with that provision should comprise material provisions of the share transfer agreement and enable its conclusion without the need to conduct prolonged negotiations as regards the terms and conditions of the agreement [Cf. A. Chróściński, Commentary to Article 33 of the Act of 30 August 1996 on Commercialisation and Privatisation of State-Owned Enterprises (Journal of Laws: 96.118.561), [in:] A. Chróścicki, The Act on Commercialisation and Privatisation of State-Owned Enterprises. Commentary, Dom Wydawniczy ABC publishing house, 2001].
2. Public Tender
Public tender consists in a public invitation of potential buyers to submit bids for purchase of Treasury shares. In the invitation to the tender, the Minister of the Treasury specifies, inter alia, the number and type of shares which are the subject of the tender, the minimum sales price, minimal requirements as regards investment and social commitments, the amount of the bid bond, the date, place and form of the bid bond contribution, the manner in which the bids are submitted along with the scope of information made available by the bidder.
After the bid submission deadline expires, a committee appointed by the Minister of the Treasury, in an open procedure, opens all the bids submitted by potential buyers and evaluates their consistence with the invitation. Subsequently, in a closed procedure, it evaluates the merits of the submitted bids and either selects the most advantageous bid or withdraws from the tender without making a selection. In the process of selecting the most advantageous bid the committee follows the criteria specified in the tender announcement, in particular the price, as well as the manner and the date of purchase price payment.
3. Negotiations undertaken on the basis of a public invitation
This privatisation path is generally applied in privatisation of medium-sized and large companies, whose controlling stakes are sold to strategic investors. Negotiations undertaken on the basis of a public invitation consist in negotiations as regards paid acquisition of shares in that company. The negotiations are conducted in accordance with the procedure set forth in Article 72 of the Civil Code. When parties arrive at an understanding as regards all the material provisions concerning the transfer of the company’s shares, the agreement is concluded. The requirement for the procedure to be “public” only concerns the fact of the public invitation to negotiations. The negotiation process is not of the open nature [Ibidem].
Potential investors are invited to participate in the negotiations on the basis of a public invitation announced by the Minister of the Treasury. The entities interested in submission of a reply to the invitation, after signing of a confidentiality agreement, receive the information memorandum comprising information on the legal status, as well as financial and economic standing of the company whose shares are the subject of the negotiations and, additionally, the structure of the reply to the invitation to negotiations. On that basis the entities which collected the information memorandum submit written replies. The seller selects the entities which he admits to negotiations on the basis of the submitted reply to the invitation to negotiations, following the criteria which he had specified as the subject of negotiations, also taking into account information as regards credibility and financial capacity of the entities which replied to the invitation.
Entities admitted to negotiations gain the right to examine the documents of the company and of its enterprise. The conditions for admission to such an examination and its date are defined by the seller. After the survey of the company has been performed, entities which had been admitted to negotiations, within the time defined by the seller, present binding terms and conditions for the agreement. The presented draft terms and conditions constitute the basis for negotiations.
If more than one entity participates in the negotiations, the seller may grant to one of them a specific period of time for exclusive negotiations, on the basis of the contents of the submitted binding draft terms and conditions for the agreement. Ineffective expiry of the exclusivity period results in taking up negotiations with other entities admitted to negotiations.
In the case when negotiations are conducted with more than one entity, the seller, unless he withdraws from the negotiations, may conclude an agreement only with that entity which offers the seller the most advantageous terms and conditions of the agreement, in particular as regards the share price, other criteria specified in the subject of the negotiations, as well as credibility and financial capacity of the entities with which the negotiations are conducted. After completion of negotiations, the entity participating in the negotiations submits in writing the binding terms and conditions of the agreement which it proposes. The seller is under obligation to inform all the entities admitted to the negotiations that one entity was granted an exclusivity period for negotiations and also about the fact that an agreement to transfer shares was concluded.
4. Admission of the bid submitted by an entity announcing the call
Minister of the Treasury, acting on behalf of the Treasury, may sell shares of public companies on the basis of a call announced on the basis of the Act on the Public Offer and Terms and Conditions of Trading of Financial Instruments and Public Companies. That procedure applies exclusively to companies listed on the stock exchange.
5. Publicly announced auction
Potential investors are invited to participate in an auction on the basis of announcements of Minister of the Treasury published in a daily newspaper of a nationwide circulation. The auction may be conducted if the starting price is not lower than the book value of shares.
In the announcement the Minister of the Treasury specifies, inter alia, the number and type of shares which are the subject of the auction and their share in the initial capital of the company; the face value of one share; starting price; the manner of purchase price payment; the amount of the bid bond, the date, place and form of the bid bond contribution; specification of detailed conditions that must be met by the application for participation in the auction; the venue, the date and the hour of the beginning of the auction; the contents of the agreement for the sale of shares.
Application for participation in the auction should be submitted in a written form and include: name, surname and address or the business name and the registered seat of the entity which is interested in participation in the auction; correspondence address; other data required by the seller, and set forth in the invitation to participate in the auction. The application should be accompanied with the receipt confirming that the bid bond has been contributed.
The volume of the bid bond the seller specifies within the 1% and 10% of the starting price. The bid bond may be contributed in one or more forms specified by the seller:
in cash; in a bank-certified cheque; in a bank surety; in a bank guarantee; in an insurance guarantee.
In order to conduct an auction, the seller appoints an auction committee. The chairman of the committee opens the auction, conveying to the auction participants the names of persons or the business names of entities which paid the bid bond and were admitted to participate in the auction. The chairman of the committee informs the auction participants that after the third call of the highest price offered further bids will not be accepted and about the minimum value of bids. Auction participants verbally make subsequent bids on the price until, despite three calls being made, no further bids are made. After bids cease to be made, the chairman of the committee calls three times the last, highest, price and informs about the auction participant who offered the highest price, as well as the place and time when the agreement for the sale of shares will be signed. The winning bid is made when the seller and the relevant auction participant sign the agreement for the sale of shares, whose contents are specified in the invitation to participate in the auction.
6. Sale of shares on the regulated market
Regulated market is the most prestigious segment of the securities market, where individual and institutional investors can buy and sell securities. Regulated market allows the entities to acquire the capital necessary for implementation of investments, find a strategic investor and create a positive corporate image among their clients and contractors.
Privatisation may take place in a manner of the sale of shares admitted for sale on the regulated market. To this manner shall apply the provisions regulating the securities trade, and in particular the provisions of the Financial Instruments Trade Act of 29 July 2009 (Journal of Laws No. 183, item 1538 as amended) and the Act on the Public Offer and Terms and Conditions of Trading of Financial Instruments and Public Companies of 29 July 2009.
7. Public offering
8. Subsidiary stabilization
9. Selling shares outside organized trading
Employee entitlements to acquire shares
Entitled employees of a company established as a result of commercialisation have the right to acquire, free of charge, up to 15% of the shares taken up by the Treasury on the date when the company was entered to the register. The right to acquisition of shares free of charge comes into existence three months after the Treasury has sold the first shares in accordance with general principles and expires 24 months after it has come into existence. The aforementioned entitlements also apply to farmers or fishermen as defined by the Act.