POLAND Law and Practice Contributed by: Agnieszka Janicka, Krzysztof Hajdamowicz and Jarosław Lorenc, Clifford Chance LLP
rights and preferential rights for multiple vote shares do not apply during a takeover bid. If these restric - tions are introduced, the articles of association must outline the terms for equitable compensation for the shareholders whose rights are restricted during the takeover process, with compensation paid within 30 days of the relevant general meeting. 9.3 Common Defensive Measures A variety of measures may be available. The most common are: • various shark repellents (usually some special rights granted to certain shareholders); • various poison pills; • buyback of shares; or • seeking a white knight alternative buyer. 9.4 Directors’ Duties Directors remain bound by their general duty to act in the interest of the company. 9.5 Directors’ Ability to “Just Say No” Whether or not directors can “just say no” and take action that prevents a business combination depends on the transaction structure. In a tender offer directors may express their opinion and apply some defensive measures but have limited means to block the acqui - sition. Litigation in connection with M&A deals is not very common in Poland. While there are usually a lot of pre-trial or otherwise contentious issues among par - ties to M&A transactions, most of them are settled or otherwise resolved without a formal court dispute or arbitration having to be resorted to. 10.2 Stage of Deal While post-completion disputes over warranties or indemnities happen from time to time, a vast majority of M&A-related disputes seem to arise when share - holders cannot agree on the exit strategy or various types of earn-outs and deferred consideration or post-closing price adjustments (if any). Pre-trial or 10. Litigation 10.1 Frequency of Litigation
contentious issues regarding M&A transactions are therefore pretty commonly raised in relation to put or call options as well as drag-along and tag-along rights or similar arrangements. Disputes often arise over discrepancies in positions on the application of the contractual price determination mechanism. Disputes relating to transactions that failed to sign or close are rather uncommon. 10.3 “Broken-Deal” Disputes For various reasons (eg, limited to the enforcement of specific performance claims (ie, forcing the defaulting party to close the deal)) “broken-deal” disputes are usually not a very practical solution and are hardly ever pursued in practice. Therefore, greater focus should be placed on the appropriate contractual provisions encouraging the parties to perform the agreement (eg, sanctions or security) or regarding the receipt of compensation for the damage incurred rather than on relying on spe - cific performance claims (which are usually technically available but difficult to pursue in practice). Shareholder activism in listed companies is gener - ally relatively high in Poland. There are law firms that specialise in representing activists or play an activ - ist role themselves. It is not uncommon for activists to acquire a small stake (even a single share) and actively exercise their shareholding rights in order to attempt to invalidate corporate resolutions approving transactions or otherwise attempt to jeopardise the company’s management board’s and/or the majority Activists do not really encourage companies to enter into M&A transactions, spin-offs or major divestitures. They usually focus on achieving their own goals or blocking some plans of companies rather than seek - ing to encourage companies actively to move in a certain direction. 11. Activism 11.1 Shareholder Activism shareholders’ agendas. 11.2 Aims of Activists
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