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De-materialization of shares in a joint-stock company

As of 1 March 2021, shareholders in joint-stock companies and limited joint-stock partnerships are no longer required to hold share documents embodying their corporate rights. De-materialization of shares constitutes a next step in the process of digitalization of commercial relationships and corporate governance in Poland.

On 1 March 2021, an amendment to the Commercial Companies Code came into force which significantly changes the way a joint-stock company and a limited joint-stock partnership operate[1]. This modifies principles governing the relationships between the company and its shareholders, and share documents in paper form have ceased to be valid. The shares have been de-materialized, i.e. paper documents have been replaced by entry into an IT system.

This development will have major implications for both companies and shareholders. Companies are now required to have a digital register of shareholders, maintained by a professional entity, mainly by brokerage offices. The register of shareholders contains information about every shareholder, regardless of the type of shares (bearer or registered shares) held. This allows the company to have information about the identity of all shareholders, which means that holders of bearer shares can no longer be anonymous to the company.

On the other hand, shareholders do not have to keep share documents in paper form to prove their shareholder status. As a result, the process of disposal of shares has changed. Apart from conclusion of an agreement, it is obligatory to register the transfer of shares in the register of shareholders, instead of physical transfer of the share documents. Importantly, a shareholder has to submit to the entity maintaining the register details about their bank account. All financial transfers between the company and the shareholders, including payment of a dividend, now have to be made by this entity, acting as an intermediary.

The changes will affect the operations of approximately 13 500 companies, including non-public joint-stock companies (joint-stock companies in which shares are not traded on the regulated markets) and limited joint-stock partnerships (“spółki komandytowo-akcyjne”).


[1] The Act of 30th August 2019 on the amendment of the Act – Commercial Companies Code and some other acts (Journal of Law of 2019, item 1798, as amended).