Selling a Business in Poland: Share Deal or Asset Deal?

When selling a business in Poland, the transaction is typically structured either as a sale of shares in a company (share deal) or as a sale of an enterprise or an organised part of an enterprise (asset deal). Each structure has different legal consequences and requires a separate analysis before the transaction is carried out.

Selling a Business in Poland – Two Main Transaction Structures

Under Polish law, the sale of a business is usually effected in one of two ways:

• by selling shares in a company (share deal), or
• by selling an enterprise or an organised part of an enterprise (asset deal).

Although both structures lead to the transfer of control over the business, they differ significantly in terms of legal mechanics, scope of transferred elements and liability.

Dulewski Sikora advises sellers in M&A transactions, including the analysis of transaction structure and full legal execution of the sale process.

1. Sale of Shares in a Company (Share Deal)

In a share deal, the subject of the transaction is the shares in a company. As a result:

• the ownership of the company changes,
• the company itself continues to exist without interruption,
• all assets, rights, obligations and contracts remain with the company.

From a legal perspective, the transaction concerns the shares only, not the individual components of the business.

Consequences of a Share Deal

When selling shares:

• the buyer acquires the company together with its entire history,
• the seller’s liability is typically regulated contractually (representations and warranties),
• risks identified during due diligence are usually addressed in the share purchase agreement.

As a rule, a share deal is procedurally simpler than an asset deal, as it does not require the transfer of individual assets or contracts.

2. Sale of an Enterprise or an Organised Part of an Enterprise (Asset Deal)

In an asset deal, the subject of the transaction is:

• an enterprise as a whole, or
• an organised part of an enterprise.

Under the Polish Civil Code, a legal act concerning an enterprise generally covers all elements that form part of that enterprise, unless the parties agree otherwise.

This means that, as a rule, the sale includes everything that constitutes the enterprise.

What Is Transferred in an Asset Deal – and What Is Not?

Legal Form of the Agreement

The sale of an enterprise or an organised part of an enterprise requires:

• written form with notarised signatures.

If the enterprise includes real estate, either:

• the entire sale agreement must be concluded in the form of a notarial deed, or
• the transaction must be divided into two separate agreements:
  • a notarial deed for the sale of the real estate, and
  • a written agreement with notarised signatures for the remaining part of the enterprise.

Corporate Consents and Restrictions

Under the Polish Commercial Companies Code, the sale of an enterprise or an organised part of an enterprise requires:

• approval granted in the form of a shareholders’ resolution.

The articles of association may impose additional requirements or restrictions.

Because such a transaction exceeds the scope of ordinary management, it will also usually require:

• a management board resolution approving the sale (in the case of a multi-member management board).

Transfer of Contracts and Liabilities

Liabilities connected with the conduct of business do not automatically form part of the enterprise and therefore do not pass to the buyer by operation of law.

This is a significant practical issue, as contracts are often one of the most important elements of an enterprise.

To transfer both:

• rights (receivables), and
• obligations (debts) arising from contracts,

the consent of the other party to each contract (the creditor) is required.

In practice:

• obtaining such consents is often a condition for closing the transaction, or
• directly affects the calculation of the purchase price.

Personal Liability for Debts

A buyer acquiring an enterprise or an organised part of an enterprise is jointly and severally liable with the seller for liabilities related to the conduct of the enterprise, unless the buyer was unaware of those liabilities despite exercising due diligence.

The buyer’s liability is limited to:

• the value of the acquired enterprise as at the date of acquisition,
• determined according to prices at the time the creditor is satisfied.

This liability cannot be excluded or limited without the creditor’s consent.

However, as between the parties to the transaction, the seller may agree in the sale agreement to release the buyer from liability for debts related to the conduct of the enterprise. Such an arrangement has only internal effect and does not affect the rights of third-party creditors, who may still pursue the buyer directly. In practice, this contractual allocation of risk is functionally similar to specific indemnities commonly used in share purchase agreements, under which the seller undertakes to compensate the buyer for identified liabilities.

Transfer of Employees

If the enterprise operates with employees hired under employment contracts, the sale of the enterprise results in:

• a transfer of the undertaking to the buyer.

This means that:

• the buyer becomes the new employer by operation of law,
• employment relationships continue automatically with the buyer.

Choosing the Appropriate Structure

The choice between a share deal and an asset deal depends on:

• • the scope of the business being sold,
  • the legal and contractual risks involved,
  • the need to transfer contracts and employees,
  • the seller’s liability exposure,
  • the tax implications.

Each transaction requires an individual analysis before the structure is selected.

Key Takeaway for Business Owners

Selling a business in Poland may take the form of either a share deal or an asset deal, but the legal consequences of these structures differ substantially.

Understanding:

• what is transferred,
• what formal requirements apply,
• how liabilities are allocated,

is essential to properly preparing and executing the transaction and avoiding unexpected risks at later stages.

In practice, the choice between a share deal and an asset deal is often analysed as part of a broader sell-side advisory process, combining legal, transactional and execution considerations.

Note on Legal and Transactional Advisory

Dulewski Sikora advises sellers in M&A transactions, including the analysis of transaction structure and the full legal execution of the sale process.