Contact
Magdalena Ludwiczak

Wirtschaftsprüferin (Polen)
Partnerin
Phone: +48 61 624 49 43
E-Mail

Therese Baginski

Magister, Wirtschaftsprüferin (Polen)
Partnerin
Phone: +48 71 346 77 70
E-Mail

Investors assess the financial standing and the development prospects of a company based on information provided by the stock market participants. Reliable information plays a key role for investors in taking rational decisions.  If a market is transparent and secure, investors are more willing to engage in transactions on that market.  Therefore, it is vital that all entities whose shares are traded on the stock exchange fulfil their reporting obligations. 

Who must meet the reporting obligations in Poland?

Reporting obligations are incumbent on issuers who have applied for admission to trading or whose securities are traded on the regulated market. This is because every investor, regardless of their status or assets held by them, has the equal right to access the information about an issuer and its securities. This is the feature that distinguishes organised markets. This applies to institutional, qualified and retail investors as well as individuals not holding but intending to invest in financial instruments. 

Information to be disclosed by an issuer

The regulation of the Minister of Finance of 19 February 2009 governs the type and scope of the current and periodical information and the form in which it should be submitted by issuers. The reporting obligation allows shareholders and prospective investors to access the current information, confidential information (within the meaning of Article 154 of the Act on Trading in Financial Instruments) and periodical reports regarding each publicly traded company in Poland. The reporting obligation starts with the publication of the prospectus.

Publishing confidential information plays an essential role in this process. Access to such information is a key factor allowing investors to make rational decisions and ensures that the share price fully and reliably reflects the issuer's business and financial situation. Public companies must not publish selective information that omits events important to stock market participants. Stock exchange transactions require continuous supply of information. This applies to both direct and indirect information about issuers (macroeconomic environment).

Rules of disclosing information in issuer's reports

Information disclosed in the report must present a true, fair and complete view of the issuer's business situation. The issuer should give investors the possibility to assess how the information disclosed in the report will affect the issuer's standing. The reported data can be used to determine the fair value or price of financial instruments, so they allow the appropriate estimation of the investment risk.

The required information about shares admitted to trading on the regulated market of the Warsaw Stock Exchange [WSE] is published by a designated information agency – in Poland this is the Polish Press Agency [PPA] – which obtains the data via the Electronic Information Transmission System [ESPI], supervised by the Polish Financial Supervision Authority [PFSA].

Whenever the shares are admitted to the alternative trading system on NewConnect or Catalyst, issuers provide information via the Electronic Information Base managed and maintained by the WSE. 

All information is published on the PPA website, on the PPA and WSE shared website www.gpwinfostrefa.pl  and on the stock exchange operator's website www.newconnect.pl

Current reports in Poland

Current reports disclose information about all events that significantly influence an issuer's net worth, financial standing and results of operations or that can substantially affect the price or value of financial instruments listed on the stock exchange. Current events that have to be reported are enumerated in the aforementioned Regulation of the Minister of Finance and in the provisions on confidential information set out in the Act on Public Offering. The list of reporting obligations applicable to issuers who have their securities traded on NewConnect and Catalyst is included in the WSE internal guidelines.

Reporting obligations apply to, among others, the acquisition or disposal of assets of a substantial value or their loss as a result of a random event, entering into or terminating an important contract, cancelling treasury shares, registering a change in the share capital with the registry court, adopting a decision on a merger with another entity, company demerger or transformation, choosing an auditor, appointing or dismissing a management board or supervisory board member, preparing a financial forecast, receiving a credit rating, and all information about the payment or the intention to pay a dividend. 

If the publication of information about an issuer at certain time is going to violate the issuer's interests, the issuer can apply to the PFSA for the postponement of the publication. The PFSA may decide in favour of the applicant in justified cases. In such a case, just as in many other cases that require a PFSA decision, the PFSA considers any possible damage that such postponement may inflict on the market participants. The issuer must publicly disclose the information in a current report immediately, however no later than 24 hours, after the occurrence of or learning about a reportable event. In the case of the subscription or sale of securities, the current report must be published within two weeks of the end of the subscription period or date of sale. The issuer must disclose information about the planned meeting of shareholders at least 26 days in advance. 

Periodical reports in Poland

In periodical reports, issuers disclose information in the form of e.g. financial statements for the relevant period. The reports provide investors with information that guides them in making investment decisions.

A quarterly report in Poland includes e.g.:

  • the data for a financial quarter and the cumulative data for all financial quarters in the form of abbreviated quarterly financial statements consisting of the balance sheet, the income statement, the statement of changes in equity and the cash flow statement;
  • a description of the organisational structure of the issuer's group;
  • a list of the shareholders holding at least 5% of the total number of votes at the general meeting of shareholders.

Issuers of shares on the main market must submit the reports for the 1st and the 4th financial quarters no later than 45 days of the quarter end.  Reports for the 2nd financial quarter need not be submitted. Reports for the 4th financial quarter must be submitted no later than 60 days of the end of the financial year. 

Noteworthy, issuers can sometimes be released from the duty to submit the report for the 4th financial quarter. This is the case when the issuer submits its annual report no later than 80 days of the end of the relevant financial year. In 2014, this option could be used by e.g. Benefit Systems S.A., Zakłady Chemiczne Police S.A., Newag S.A., CD Projekt S.A.

In the case of securities traded on NewConnect, the time limit for the submission of quarterly reports may not exceed 45 days of the quarter end.

A semi-annual report in Poland includes e.g.:

  • the semi-annual financial statements consisting of the balance sheet, the income statement, the statement of changes in equity, the cash flow statement and the notes to the financial statements; the financial statements must be first verified by an auditor;
  • the management report on the issuer's business activity;
  • the auditor's report on the review of the financial statements.

Issuers of shares on the main market must submit the reports for the first half-year no later than two months of the half-year end. No report is prepared for the second half-year.

An annual report in Poland includes e.g.:

  • a letter of the president of the management board or the manager of the issuing entity, describing the most important achievements or setbacks of the entity in the financial year as well as the prospects for the entity's development in the following financial year;
  • the annual financial statements consisting of the balance sheet, the income statement, the statement of changes in equity, the cash flow statement and the notes to the financial statements; the financial statements must be first verified by an auditor;
  • the auditor's opinion on the audit of the financial statements;
  • the management report on the issuer's business activity; 

Issuers of shares on the main market must submit the annual reports no later than four months of the end of the financial year. In the case of shares traded on NewConnect, reports must be submitted immediately after the issuing of an opinion by the auditor, no later than seven days of receiving such an opinion by the issuer and no later than six months of the balance sheet date.

If the issuer is a parent entity, it is additionally obliged to submit periodical reports in the form of consolidated financial statements.

Also, by the end of the first month of each financial year, issuers must submit a current report with a schedule of dates for the publication of the periodical reports.  Issuers must observe the publication dates included in the schedule because not all interested market participants may have equal chances to access the information they need if there are any deviations from the schedule.

Other reporting obligations in Poland

Besides the aforementioned obligations, publicly traded companies in Poland must inform the PFSA , PPA and WSE on the following events immediately after their occurrence:

  • taking by any of the shareholders of 5%, 10%, 15%, 20%, 25%, 33%, 33 & 1/3%, 50%, 75% or 90% of the total number of votes in the public company or decreasing their share of votes below these thresholds;
  • a change in the number of shares presently held by any of the shareholders, carrying above 10% of the total number of votes, that results in a change by at least 2% in the total number of votes – if the shares have been admitted to trading on the official stock exchange market, and by 5% in the total number of votes if the shares have been admitted to trading on another regulated market;
  • a change in the number of shares presently held by any of the shareholders, carrying above 33% of the total number of votes, that results in a change by at least 1% in the total number of votes;
  • a list of shareholders entitled to take part in the general meeting of shareholders along with the information about the number of shares held by them and the number of votes attached to each share;
  • a list of shareholders holding at least 5% of the votes at the general meeting of shareholders, along with the information about the number and the percentage share of votes attached to each share held by them (within 7 days of the date of holding the general meeting of shareholders).

Issuers whose shares are traded on NewConnect, must additionally publish monthly reports according to the standards set in the “Good Practices of Companies Listed on NewConnect”. The reports include the description of current significant events both in the company and in its market environment, as well as the investor's calendar. In addition, the issuers of shares listed on the main market and on NewConnect are obliged to provide information regarding compliance with corporate governance rules.

The most frequent violations of the reporting obligations in Poland

The most frequent violations that public companies commit with regard to issuing current reports are the non-observance of the statutory deadline or form prescribed for submitting the required information. The most frequent violations with regard to issuing periodical reports, which negatively affect the trust that investors place in the public companies, include:

  • incorrect estimation of sales revenues or sales costs;
  • incorrect calculation of consequences of business acquisitions;
  • incorrect valuation of financial instruments;
  • setting up incorrect provisions or calculating incorrect provision amounts; 
  • It also happens that cumulative data published in quarterly reports are not consistent with those published in other periodical reports. 

Violations of reporting obligations also include intentional actions resulting in the overstatement of understatement of results.

Liability for violation of reporting obligations in Poland

Administrative penalties for failure to fulfil or properly fulfil the reporting obligations include exclusion of the securities from trading on the regulated market or imposition of a monetary fine of up to PLN 1 million. It is also allowed to impose both of these penalties for the same offence. 

Violation of the obligation to publish confidential information triggers liability under the civil law (Article 98 of the Act on Public Offering). According to the above regulation, the entity responsible for the documents made available in connection with a public offering is obliged to remedy the damage it caused by publishing unreliable, untrue or incomplete information or by concealing information from the public.

According to Article 98(7) of the Act on Public Offering: “The issuer or the entity which has prepared or participated in the preparation of the information referred to in Article 56(1) is obliged to remedy the damage caused by either publishing untrue information or concealing information from the public. This does not apply if neither any of them nor any person for whom any of them is liable is at fault.”

Besides the administrative and civil law, also the criminal law provides for penalties for non-observance of the reporting obligations by issuers. According to the Act on Public Offering, disclosing untrue data or concealing the true data, where the disclosure or concealment of data significantly influences the information content, is liable to a fine of up to PLN 5 million and to imprisonment for a term from 6 months to 5 years. The penalty of PLN 2 million is imposed for disclosing untrue data or concealing data with the purpose to postpone the publishing of confidential information, where such disclosure or concealment of data significantly affect the information content to be published. Similar penalties apply in the case of a threat of unlawful disclosure or use of confidential information.

The PFSA, which is responsible for supervising the fulfilment of reporting obligations, conducts analyses of current and periodical reports. If any irregularities are identified, the PFSA initiates an inspection and explanatory proceedings which are followed by administrative proceedings. If it is found out that the issuer has not complied with its reporting obligations, the PFSA imposes a penalty.

Our auditors with proven experience in assisting listed entities will gladly provide you with any information regarding the reporting obligations that your company must meet. In particular, they are on hand to assist you in preparing periodical reports and audit financial statements in Poland. Please feel free to contact us at our offices in Gdansk, Gliwice, Cracow, Poznan, Warsaw and Wroclaw.