Private placement rules and law in Poland

There is no specific definition of private placement under Polish law, however, after the introduction of Regulation 2017/1129, every offering addressed to more than one person shall be considered public offering. The concept of “private placement” is usually associated with the offering run under the exemption from the requirement to publish an offering document (including a prospectus) under the provisions of Regulation 2017/1129 and of the local public offering law supplementing Regulation 2017/1129 (jointly “Prospectus Law”) and refers to a placement by any entity (including an AIF which shares are in the form of securities).

The standard Prospectus Law exemptions shall apply in case, among others, (i) the offering  is addressed to not more than 149 identified investors (within the last 12 months) ;(ii) the offering is addressed to qualified investors only; (iii) the offering is addressed to investors acquiring securities worth no less than EUR 100,000 or securities with a nominal value of no less than EUR 100,000; (iii) the value of the whole offering does not exceed EUR 1,000,000 (or EUR 1,000,000, if a simplified offering document is published).

A qualified investor, as mentioned above for the exemption purposes, is a qualified investor in the meaning ascribed in Regulation 2017/1129.

AIFMD was implemented into Polish law in March 2016 and came into force at the beginning of June 2016 as an amendment to the Polish Acton Investment Funds. The rules on marketing/placement of the EEA AIFs are substantially the same as in case of EU AIFs, provided that their AIFM is running its activity in compliance with the EU laws regulating AIFMs’ activity. However, as a rule, no non-EEA AIFs can be marketed in Poland.

Pursuant to the Polish Acton Investment Funds an AIF may be offered only to professional investors (clients) and retail investors in the meaning of the Polish Act on Investment Funds. However, placement to retail investors is possible only with regards to the EEA AIF which obtained the authorisation referred to in Article 5(1) of Regulation (EU) 2015/760 of the European Parliament and of the Council of 29 April 2015 on European long-term investment funds.

The Polish Act on Investment Funds does not provide any specific rules for treating investors other than qualified investors as professional investors (clients) by an EU AIFM. However, in case of Polish AIFMs it has been established in the Act that only investors with knowledge, experience, and risk acquittance in investing can be considered professional clients, provided that the entity treating them like professional clients has ensured that the client knows the consequences of treating him as a professional client. Additionally, it has been indicated that a natural person must invest in a specific AIF at least EUR 60,000.00 to be treated as a professional client. The criteria mentioned in the preceding two sentences are related to obligations of a Polish alternative investment fund manager, however, as there are no specific criteria on treating investors as professional investors for foreign AIFMs, the mentioned criteria can be used as benchmark.

Reverse solicitation may be considered as a non-marketing activity. Assessments of reverse solicitation are made on a case-by-case basis.

Mandatory contractual consequences:

Possible application of contract law resulting in an invalidation of the placement and payment of damages. However, market practice is very limited.

Regulatory sanctions:

The Polish Financial Supervision Authority has a limited authority to supervise EEA AIFs’ activity. The sanctions are rather limited, as they include informing home state’s supervision authority about non-compliance, and, provided that such information does not improve the situation, PFSA could impose a fine of up to PLN 500,000.00. Additionally, in case of non-compliance with public offering rules, some additional sanctions may apply.

Penal sanctions:

Marketing of non-EEA AIFs’ shares in Poland or of EEA-AIFs’ shares incompliant with the binding rules can result in imposing criminal penalties by the court (fine up to PLN 5,000,000.00 and/or up to 5 years of imprisonment). Such penalties are to be imposed at person directly responsible for incompliance and can be imposed solely if the guilt of such particular natural person is proven. Please note that, for the above reasons, imposing criminal sanctions is relatively rare for incompliance cases within the capital market institutions.

Generally, the private/public placement distinction is applicable to all issuers of securities, including in particular ordinary companies, municipalities and other separately regulated issues. The same exemptions from the prospectus publication obligation apply in case of non-fund issuers.