How to prepare a Polish company for legal due diligence

Start with the proposed deal

The preparation should reflect what is being sold or financed. A sale of all shares, a minority investment and a sale of part of the business raise different questions. The company’s industry, group structure and progress in negotiations also influence the scope.

This guide is for owners preparing their own Polish company for a transaction. A legal review covers the company’s documents, legal risks and any corrective work needed. Financial due diligence, tax due diligence and valuation are separate assignments for the relevant advisers. Buyers can refer to the guide to buy-side legal due diligence in Poland.

Appoint someone to coordinate the process and identify who can answer questions about each part of the business. This avoids requests being passed between management, finance and the operational team without a clear response.

Make sure the ownership records tell the same story

For a Polish limited liability company, the starting point is its articles of association and amendments, share register, resolutions and documents showing how the shares were issued and transferred. These should support the ownership structure presented to the investor.

Earlier share transfers, capital increases and powers of attorney deserve attention. So do agreements between the company and its shareholders or management. A business may have operated for years without anyone questioning a missing document, but a buyer will still need to understand the legal position.

Focus on contracts the business depends on

Begin with agreements that generate substantial revenue or keep the business running. These may include customer and supplier contracts, financing, premises and access to essential technology. Establish how long each agreement lasts, how it can end and what the company still has to deliver or pay.

Look for change of control clauses: provisions that attach consequences to a change in who controls the company. A share sale may leave the same company as the contracting party but still require notice, the other party’s consent or a review of termination rights.

The signed contract may not be the whole story. Amendments, discounts agreed by email and commitments made outside the standard terms can all matter. Explain these arrangements alongside the documents so that the buyer can understand how the relationship actually works.

Review the arrangements with the team

Gather employment agreements, contracts with self-employed individuals, bonus arrangements and provisions dealing with confidentiality, competition and termination. Where the business depends on particular people, consider what will determine whether they remain after the transaction.

Compare the documents with working practices. Under Polish law, describing someone as an independent contractor does not settle their employment status. How the work is carried out also matters. Any mismatch is easier to address before the buyer begins asking questions.

Establish the company’s rights to its technology

For software, designs and content, identify the creators and the legal basis on which the company uses their work. The company may own the economic copyright or rely on a licence. Paying an external developer’s invoice does not, by itself, transfer that copyright.

The rules for software created by an employee as part of their duties differ from those for software commissioned from an independent developer. For external work, review the contract, the scope of the rights acquired and whether the assignment was made in the required form. The practical question is whether the company can develop and supply its product as its business model requires.

Also review rights to the brand and domain names, third-party software licences and essential technology services. Open-source components are supplied under licences with their own conditions; their use still needs to be checked against those conditions.

Explain regulatory matters, data protection and disputes

Where the business requires permits, registrations or notifications, collect the supporting documents and check them against its current activities. Include information about inspections and outstanding requests or requirements from the authorities.

For data protection, the review should consider how personal data is actually used, relevant supplier agreements and any recorded breaches. For disputes, explain the claim, its current stage and the potential effect on the company. A serious claim can matter before court proceedings have started.

Build a data room people can use

A data room is the organised, usually online repository used to share documents for the review. It should make it easy to find a contract and its amendments, distinguish signed documents from drafts and trace an answer back to the relevant file.

Decide who needs access to which materials before uploading them. Personal data and confidential information require an assessment of what can be disclosed, to whom and for what purpose. Depending on the material, redaction, anonymisation or restricted access may be appropriate.

Keep a shared record of questions and answers. It helps the team respond consistently and provides a record of what was disclosed during the process.

Give each finding a next step

Some gaps can be resolved before the buyer starts its review. Others will need an explanation and may affect the price, the seller’s contractual liability or the conditions that must be met before the deal completes.