When conducting a transaction, the parties and their advisers, focus primarily on agreeing on the substantive elements to work out details of the relevant provisions. In order to ensure that the closing process goes smoothly and that the counterparties meet the planned deadline for execution of the agreement (which is sometimes also important for accounting and financial reasons), when preparing the closing, it is also worth bearing in mind formal requirements, non-fulfilment of which may result in failure of the transaction, its subsequent invalidity or imposition of additional obligations on the parties to the transaction causing practical difficulties.
Issues relating to the identification of the parties to the transaction
Extracts from registers
Although both the data entered in the registers of National Court Register (pl: KRS) and the data entered in Central Registration and Information on Business (pl.: CEIDG) are available online, it is a good idea to have a printed copies of extracts from the relevant register when signing an agreement. The printed copy allows quick verification of the entrepreneur’s data (name, entry number, address), the numbers under which the entrepreneur is registered in other registers (NIP, REGON), and the data of persons authorized to represent the entrepreneur (and the manner of representation).
Verification of disclosed data of persons authorized to represent the parties
Despite due diligence of the entrepreneur, the data disclosed in the registers do not always reflect the up-to-date factual circumstances, e.g. with regard to the data of persons authorized to represent the parties. This may be due to changes in the composition of the management board, which, despite submitting appropriate application, are not disclosed in the relevant register by the date of signing the agreement. In such a case, a resolution appointing members of a representation body and a confirmation of submitting the application to the register to disclose the changes should be provided.
Powers of attorney
If the agreement is to be signed by an attorney-in-fact, it is important to verify, before the transaction, whether the scope of the power of attorney includes the authority to sign the document in question and that you have the original power of attorney or its certified copy to present it to the counterpart.
Electronic signature
If the agreement is to be signed using an electronic signature, it should be verified whether the certificate is valid on the date of the transaction (usually certificates are issued for a period of 1-2 years). It is also possible to purchase a service that allows to use the electronic signature only once. It should be also remembered that the electronic signature is not the same as a signature with trusted profile. The trusted profile service is used to identify an individual only in contacts authorities of with public administration and using it when signing an agreement with a private entity will not lead to the effective signing of that agreement.
Issues relating to the subject matter of the transaction
In addition to the correct identification of the parties to the agreement, it is equally important for the transaction to prepare all the necessary documents relating to the subject matter of the transaction or indicated by the parties in the agreement.
Schedules to the agreement or documents to be provided when signing the agreement
Sufficiently in advance, it should be verified which documents, according to the draft of the agreement, should be presented at the conclusion of the agreement (or attached to it). The most common ones include, for example, information from a bank on the amount of the debt encumbering the object of the transaction, a promise of release of funds or encumbrance, a certificate from the tax office or social security institution on the absence of arrears in the payment of taxes or contributions (or on the amount of arrears). The necessity to present specific documents will result from the content of the agreement concluded by the parties (and will depend on the subject matter of the transaction). In this respect, when planning the date of the conclusion of the agreement or the date of submission of the statement, it should be kept in mind that the competent authorities (or entities) obliged to issue certain documents, need time to prepare them. Therefore, it is necessary to verify in advance the actual time of issuance of such documents (which, in practice, may be longer than the deadlines indicated by the law) and also to determine which party will be applying for a given document and, if needed, to obtain relevant powers of attorney.
It is also necessary to verify the conditions required by the entity before which, or with whose participation, the transaction is concluded (e.g. a bank, a notary public) regarding the date of issue of the presented documents required by such an entity. Even if the law does not indicate the date of validity of a given document (e.g. an extract from the land register), practice shows that a document issued at a date earlier than three months before the transaction may raise doubts as to whether it is up-to-date.
Form of documents
If the presented documents are in a language other than Polish and the other party to the transaction does not speak the foreign language in question, it will be necessary to have the document translated into Polish in advance (and if the transaction is conducted before a notary public or if the document will be submitted to a court or a public office), it should be translated by a sworn translator and, in some cases, appended with an apostille clause. These are steps that should also be included in the time schedule of planned pre-transaction activities. In the event that the party to the transaction speaks a language that another party does not know, or if the transaction is conducted before a notary public, a sworn translator should also be invited to participate in the transaction.
Funds in a bank account
Irrespective of the obligation to make payments to the other party, the conclusion of the agreement itself may involve the obligation to pay fees (e.g. notarial costs, PCC tax), therefore it should be verified whether there will be an adequate amount of free funds in the bank account on the day of the transaction.
Statements made before a notary
For some transactions, the law requires them to be concluded in the form of a notarial deed or with a notarised signature. In this case, it is important to remember that the notary will verify the identity of the persons signing the agreement (or making the declaration of intent). One should therefore remember to bring the identity document (or the phone if the identity will be confirmed using documents in the mObywatel application).
PESEL blocked
From 1 June 2024, in the event that a natural person (including a self-employed person) will be a party to the transaction, and the transaction will be carried out, among others, before a notary public or with the involvement of a bank, it should be remembered that PESEL has to be unblocked to allow designated entities to verify this number.
Additional obligations of the parties relating to the transaction
In addition to the issues identified above, the negligence of which may lead to transaction defects (in particular, the invalidity of the agreement concluded or the representation made), additional issues must also be considered, the negligence of which may render the entrepreneur involved in the transaction liable.
Central Register of Ultimate Beneficial Owners (CRBR)
It should be verified whether the data disclosed in CRBR are up-to-date and, if discrepancies are found, the entries should be updated.
Waste Data Base (BDO)
If an entrepreneur has been assigned a number in BDO register, this number should be included in documents drawn up in connection with the business activity (so, for example, in an agreement or an invoice issued in its performance)
White list of taxpayers
If any payments are made to the other party to the agreement, it should be verified whether the bank account number of such party is disclosed in the white list. If the entrepreneur in question will be obliged to make payments, it is also recommended to verify the entry of the bank account belonging to such an entrepreneur, thus avoiding possible objections raised by the other party.
Large enterprise status
If either party to a transaction has a large entrepreneur status, it is required to make a declaration in this regard to the other party to the transaction. Therefore, before proceeding with the transaction, the status of the entity in question should be verified in terms of meeting the prerequisites of a large entrepreneur.
Sanctions lists
Irrespective of carrying out a counterparty analysis at the transaction planning stage, it is recommended that the counterparty is also verified shortly before the agreement is concluded. The preparation of a transaction is usually stretched over many months. During this time, the counterparty’s situation (or that of its affiliates) may change, which may have an impact on the scope of the obligations related to carrying out the transaction.
The author of the article is attorney-at-law Katarzyna Czechuła.
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