Reverse vesting in Venture Capital transactions in Poland

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Polish law allows the use of reverse vesting clauses, involving the use of call options to repurchase shares from the founder in the event that he or she wishes to leave the company before the end of the agreed period.

The number of shares that can be repurchased in this way usually decreases over time.

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Venture Capital transactions in Poland and liquidation preference

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In investments made by Venture Capital funds in Poland, it is common practice to introduce the so-called liquidation preference for the VC fund.

In case of a liquidity event (e.g., sale of shares or liquidation of the company), the VC fund first receives funds to recover its investment.

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Liquidation of the LLC in Poland takes time

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Liquidation (dissolution) of a limited liability company in Poland is a relatively lengthy process and requires a number of formal steps.

Since the assets remaining in the company after liquidation cannot be distributed among the shareholders until 6 months after the announcement of liquidation in the official journal, the entire liquidation process usually takes no less than 8 months.

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MAC clause in Polish M&A transactions

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In Polish mergers and acquisitions (M&A) transactions it is common to use a material adverse change (MAC) clause.

The MAC clause usually allows the purchaser to withdraw from the transaction in case of events that have a negative impact on the business, assets, or financials of a target entity.

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Seller’s Liability in Polish M&A Transactions #PolishLegalTips

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In Polish M&A transactions seller’s liability for representations and warranties included in the share purchase agreement (SPA) is usually based on a guarantee agreement legal concept.

This way the parties to the transaction can set the rules and terms of liability freely and exclude statutory warranty for defects rules.

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Simple Joint-Stock company introduced in Poland #PolishLegalTips

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Share Purchase Agreements (SPA) in Poland #PolishLegalTips

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