POLAND Law and Practice Contributed by: Rafał Celej, Arkadiusz Klejnowski and Karolina Piotrowska-Andryszczyk, Kondracki Celej
resolution and subscription of shares, and the increase becomes effective upon registration. In terms of stakeholder dynamics during a new financing round: • existing investors often retain information and pre-emption rights, and in some cases anti- dilution protection. In negotiations, they often act collectively through joint legal counsel. Their primary focus is usually on preserving their rights and ensuring fair treatment in the capital structure post-transaction; • new investors, particularly the lead investor, generally engage independent legal counsel and are involved in drafting or revising key transaction documents such as the invest - ment and shareholders’ agreements and AoA; and • amendments to the governing documents, including investment and shareholders’ agreements and AoA, usually require unani - mous or qualified majority consent, depend - ing on existing contractual arrangements. The overall transaction timeline, from term sheet to closing, typically ranges between eight and 12 weeks, but may extend further in transac - tions involving foreign investors or detailed due diligence. 3.3 Investment Structure While “common stock” is used in some early- stage transactions, Polish VC practice frequently involves offering alternative instruments to inves - tors. These include: • preferred shares, offering rights such as liquidation preference, and veto or enhanced voting rights on key decisions; • convertible instruments, such as CLAs, widely used in pre-seed and seed rounds to delay
valuation setting. CLAs often carry interest, a discount on conversion and a valuation cap; • founder vesting mechanisms, including reverse vesting or share buy-back rights upon founder departure; and • put options, used selectively to provide exit rights or downside protection in distressed scenarios. The legal enforceability and structuring of these instruments may vary depending on the com - pany’s legal form. For instance, limited liability companies face certain limitations on issuing preferred shares and may require creative struc - turing or conversion to a joint-stock company ( spółka akcyjna ) to accommodate more sophis - ticated investor rights. 3.4 Documentation The core documentation in a Polish VC financing round typically includes: • an investment agreement – setting out the key commercial terms of the transac - tion, including the amount of capital being invested, the type and number of shares to be issued, payment terms, conditions prec - edent to signing, warranties and post-closing obligations; • a shareholders’ agreement (SHA), which gov - erns investor rights, corporate governance, exit mechanisms and restrictions on share transfers (lock-ups, rights of first refusal), and anti-dilution protection – this remains the principal document setting out the relation - ship between the parties; • the AoA, amended to reflect the issuance of new shares, the new capital structure, and any new corporate governance and investor rights, and filed with the public register; • relevant corporate resolutions, including a notarial resolution of the shareholders’ meet -
437 CHAMBERS.COM
Powered by FlippingBook