Change of control clauses: do you need a customer’s consent to a Polish share sale?

A share sale is different from an assignment

When shares are sold, the company keeps its contracts, rights and obligations. Its shareholder changes. The transaction does not, by itself, transfer the company’s receivables — such as its right to payment under an invoice — to the buyer. A transfer of those rights would be an assignment.

An assignment restriction therefore does not answer the separate question of whether a share sale needs the customer’s consent. Look for provisions dealing with ownership or control, even if they appear in the same section of the contract.

An asset sale raises different questions about transferring contractual rights and obligations. A merger follows a different set of rules again. Those consequences should not be assumed to apply to a share sale.

Check how the contract defines control

More than 50% of the shares is only one possible test. The definition may refer to voting rights, the ability to appoint directors or the power to exercise decisive influence over the company. A minority investment can therefore require review if it gives the investor extensive governance rights.

Indirect control may also be covered. A sale of the parent company could trigger a clause in a subsidiary’s contract even though the subsidiary’s immediate shareholder stays the same. Review the whole proposed structure, including internal reorganisations and transactions completed in stages.

Under Polish law, the wording is read in light of the parties’ common intention and the purpose of the agreement. A statutory definition may matter where the contract adopts it or the relevant rule applies. It does not automatically replace a different contractual definition.

Find out what action is required

Some clauses require notice only. Others call for prior consent, allow termination or provide for another contractual consequence. Establish the deadline, required form and correct recipient. Telling the usual account manager may not satisfy the contract.

Timing also depends on the event described in the clause. It may apply when the parties enter into an agreement to sell, or only when ownership actually passes. Waiting until the price is paid can therefore be too late.

Failure to obtain consent required by a customer contract does not, by itself, make the share sale invalid. It may instead give the customer contractual rights or lead to liability for breach. Restrictions on transferring shares under the company’s articles of association and applicable law need a separate review. Customer consent and company approval for a share transfer serve different purposes.

Make the consent part of the deal timetable

If losing a customer would undermine the acquisition, the buyer may require consent before completing the deal. The share purchase agreement, often called the SPA, can make it a closing condition: a requirement that must be met before the parties carry out the agreed steps to complete the transaction.

The consent should identify the proposed transaction and deal clearly with its consequences under the customer contract. If the customer has a termination right, the document should address that right expressly. A friendly email welcoming the new owner may leave the legal issue unresolved.

The approach to the customer must also respect confidentiality arrangements. Leaving the request too late, however, can leave little time for a response or for discussions about any conditions the customer proposes.

Negotiate the clause before a sale is on the table

A change of control provision deserves attention when the commercial contract is first negotiated. A customer may reasonably want to protect confidential information or avoid having a competitor control its business partner. An overly broad clause, however, may make a future investment difficult.

Useful points to negotiate include a precise definition of control, a clear response period and stated grounds for refusing consent. An exception for internal group reorganisations may also be appropriate where the ultimate controller remains unchanged.

Do not assume that silence amounts to approval without a basis in the contract or applicable law. If the parties want that result, its validity and the conditions under which it will apply need to be considered and clearly agreed.

Look beyond the commercial clause where necessary

Financing arrangements, licences, public procurement and regulated businesses can involve additional legal requirements. The review should cover the relevant law and the other terms of the contract or permit. A counterparty’s consent does not replace a required regulatory approval or remove a statutory restriction.

Contracts governed by foreign law also need their own assessment. The outcome of the review should give the deal team a practical answer: what must happen before signing or completion, and what the parties will do if it does not.