Global Share Option Plans
Poland
Securities laws and regulation
Exchange control
Company law
Employment law
Plan communications
Data protection
Governing law
Tax treatment
Non-employee options
Other
Securities laws and regulation
Red flags
What are the key securities laws and regulatory obligations or restrictions in relation to granting options, exercising options, selling resulting shares or other relevant events? For example, would a prospectus or any filings be required?
Response
Prospectus: The grant of options typically falls within an exemption from the EU Prospectus Regulation, such as the grant to fewer than 150 participants per EU Member State or where a document is made available containing relevant information on the number and nature of the options granted and details and reasons for the grant to directors or employees.
The grantor company must ensure that the options are granted solely to the employees (ie parties to an employment contract) or contractors. The exemption does not apply to contractors providing services on the basis of a business-to-business contract.
Securities law filings: On exercise of an option by employees in Poland, the company whose shares are subject to options must register and report the allotment or delivery of shares in satisfaction of such exercise to the Polish Financial Supervision Authority (Komisja Nadzoru Finansowego).
Exchange control
Red flags
Are there any exchange control restrictions, notification/filing, or approval requirements related to the exercise of options or sale of shares?
Response
There are generally no Polish exchange controls restrictions, notifications or filings in relation to the grant or exercise of options, or sale of the underlying shares.
Company law
Red flags
Are there any red flag company law and corporate governance considerations, for example, shareholder approval requirements or financial assistance restrictions?
Response
Subject to the company's corporate documents certain consents or approvals may be needed.
A resolution on the conditional increase in the share capital may be required to confer rights to employees, members of the Management Board or the Supervisory Board to acquire shares in exchange for in-kind contributions, allowing them to participate in the profits of the company.
Employment law
Red flags
Are there any material employment law issues to be aware of, for example the requirement to consult employees?
Response
In general, there are no employment law issues related to granting options to Polish employees. As this matter is not explicitly regulated in Poland, option plans are governed by the plan and grant documentation. There is generally no obligation to consult with either the works council or the trade unions before adopting an option plan and granting options, as it is ultimately the employer's decision whether to introduce such a scheme. Companies may grant options to Polish employees and administer such option grants on a discretionary basis, provided that such discretion is not applied in a discriminatory manner. However, once the employee is an option holder under an option plan, any options granted may enjoy special protection against discretionary termination or modification to the detriment of the employee during the vesting period.
Plan communications
Red flags
Are there any requirements for the communications, for example, a translation into any language(s), and if so, which?
Response
Generally, all documents related to the employment must be in Polish or in a bilingual version (Polish and English) document. This is a legal requirement and non-compliance may result in a pecuniary fine. It also serves to ensure that the option holders fully understand their rights and obligations arising from their participation.
If the options are granted by an employer that is a Polish company, either the option plan and/or a sub-plan must be made available in the Polish language. If the options are offered by a non-Polish company (eg, the employer’s shareholder), the plan may be drafted in English only and be governed by foreign law.
Data protection
Red flags
What are the key data protection requirements, if any?
Response
Employees should be informed about how their personal information is collected, processed and disclosed in connection with a share plan. A privacy notice should be provided, or the plan should include details of how to access the company's privacy notice.
Alternatively, the option plan may contain provisions regarding the processing of employees’ data in connection with the administration and management of the option plan. This is particularly recommended if Polish employees are covered by a foreign company’s option plan.
Governing law
Red flags
Will governing law and jurisdiction clauses be effective?
Response
The governing law and jurisdiction clauses are typically effective, but the Polish courts may also assert jurisdiction over issues specifically relating to the Polish employment relationship.
Tax treatment
Red flags
What is the tax and social security treatment (including other employee and employer levies)? Are there any red flag issues, for example tax on grant, filings or notifications?
Response
The tax treatment may differ depending on the terms of a specific plan.
Tax on grant and exercise: The grant and exercise of options may be treated as part of the overall remuneration of the employee and subject to the standard progressive rates of taxation and social security contributions. The employer is required to withhold any arising tax and social security contributions.
In certain circumstances, it may be possible to either defer taxation or benefit from capital gains tax treatment in connection with the grant and exercise of options.
Tax-favoured plans: Personal income reliefs are available for share plans that meet the qualifying conditions. These plans enable the deferral of taxation connected with the options until the shares are ultimately sold, and the resulting proceeds may be treated as capital gains, subject to a flat rate of tax. Tax is declared and paid by the employees individually.
Non-employee options
Red flags
Are there any issues with granting options to non-group employees, eg advisers/consultants or PEO employees?
Response
Options may be granted to non-employees such as advisers or consultants. However, to mitigate the risk of reclassification (ie independent contractors as regular employees), the eligibility criteria and rules or terms for granting the options to non-employees should differ from the rules applicable to regular employees.
Tax-favoured plans do not typically apply to non-employees, including business-to-business contractors. Such individuals should seek independent tax advice, as a tax liability can arise on the grant of options, depending on their individual circumstances.
Other
Red flags
Are there any other red flags, for example, is a sub-plan required?
Response
A Polish sub-plan is recommended (but not mandatory) for Polish employees. A Polish sub-plan may be required for regulatory reasons.
From an employment law perspective, the correct drafting of the share plan and/or sub-plan is crucial, as this legal instrument is not regulated by law in Poland, and therefore companies in Poland have some flexibility in defining its terms according to business and organisational needs.
