The most common organisational form for a VC-backed Start-up in Poland is the limited liability company (Polish: spółka z ograniczoną odpowiedzialnością). This structure is preferred due to its low minimum share capital requirement (PLN 5,000), limited shareholder liability and relatively straightforward corporate governance framework. Although the simple joint-stock company (Polish: prosta spółka akcyjna) was introduced into the Polish legal system in 2021 specifically to address start-up needs, its practical relevance in VC transactions remains limited. Compared to the still relatively new simple joint-stock company, the limited liability company also benefits from clear rules on liability, mature court practice, simpler accounting requirements and fewer uncertainties in transactions. For these reasons, it is usually chosen as the preferred legal form for new companies.

In later-stage transactions or in exit scenarios, some start-ups choose to convert into a joint-stock company (Polish: spółka akcyjna) to facilitate share transfers, as no written form with notarised signatures is required for the transfer of shares, unlike in the case of a limited liability company.

The typical capitalisation and investment structure of Polish start-ups involves equity investment by investors (through share capital increases combined with the subscription for new preferred shares). Convertible loan agreements (CLAs) are increasingly used, although they remain less common than equity financings.

There is no standardised set of model documents comparable to the NVCA forms used in the United States, and the contractual framework typically varies from case to case depending on the investor and the stage of financing, however, most of the equity investment documents follow a similar pattern. In Poland, it is customary either to execute a single combined investment and shareholders’ agreement, or to use two separate documents:

1. an investment agreement, governing the transaction itself; and
2. a shareholders’ agreement, setting out post-investment governance and operational rules.

The most typical structure for the acquisition of a VC-backed Start-up is a share deal. Asset deals are less common in such cases, as they usually involve the transfer of an entire enterprise or an organised part of an enterprise.

The main corporate-law considerations are as follows:

1. Share deals offer a more streamlined and efficient transaction structure, as all key assets – including contracts, employees and intellectual property – remain within the company, which subsequently becomes owned by the buyer; and
2. In both asset and share deals, the required form of the acquisition depends on the type of company and the nature of the transferred assets. For the transfer of shares in a limited liability company, a written form with notarised signatures is required. By contrast, the sale of shares in a joint-stock company or a simple joint-stock company does not require this form; the transfer is effective upon execution of a written agreement and registration in the shareholders’ register.

In a share deal, the seller pays 19% capital gains tax (Polish: podatek od zysków kapitałowych) on the sale of shares. VAT is not applicable, and the company itself is not taxed. From the buyer’s perspective, the buyer does not receive a new tax basis for the company’s assets.

In an asset deal, the transaction may be subject to VAT (unless it qualifies as the sale of an organised part of an enterprise) and usually triggers civil transaction tax (Polish: podatek od czynności cywilnoprawnych). Asset deals can sometimes offer a tax benefit for the buyer, as the acquired assets can be depreciated based on their purchase value.

Both letters of intent and term sheets are commonly used in Poland. They are typically non-binding, although they often include certain binding provisions, such as confidentiality and dispute resolution clauses. Exclusivity provisions are standard in Polish letters of intent and term sheets. Such clauses prevent the seller from negotiating with other potential investors or buyers during that period. Deposits and break-up fees are not commonly used in Polish market practice, however, in some case the return of incurred costs is negotiated in the term sheets.

Using buyer equity as consideration is relatively uncommon in Poland, particularly in transactions involving early-stage companies. When used, such equity consideration typically takes the form of a share-swap transaction, under which the acquiring company issues its own shares to the shareholders of the target company in exchange for their shares in the acquired entity. Depending on the structure, the buyer may be either a Polish or a foreign company.

Under Polish securities law, the issuance or transfer of shares as part of an acquisition (for example, where the buyer offers its own shares as consideration) may, in certain cases, be subject to the rules applicable to public offerings. A prospectus is required only if the offer is made to the public, while private transactions involving a limited number of identified shareholders are generally exempt from such obligations. Any offer of shares or securities addressed to the public — regardless of the number of addressees — may constitute a public offering. However, certain offers are exempt from the obligation to publish a prospectus, including offers directed to fewer than 150 persons or to qualified investors only. In other cases, a prospectus approved by the Polish Financial Supervision Authority (Polish: Komisja Nadzoru Finansowego) is required.

In summary, the issuance or transfer of buyer equity to Polish shareholders may trigger prospectus or offering obligations under the Capital Markets Act. Specifically, any offer of shares or securities to 150 or more persons, or to an unspecified group of investors, qualifies as a public offering and requires the preparation of a prospectus unless a relevant exemption applies.

Earn-outs are very common in Polish technology M&A transactions, particularly in the acquisition of VC-backed start-ups, where founders and key managers typically remain with the company for a defined period following the transaction. Earn-outs serve as an effective tool to bridge valuation gaps, incentivise continued founder engagement and align interests between the buyer and the management team during the post-closing integration phase.

Polish market practice typically relies on two categories of performance metrics:

1. Financial metrics, which are the most prevalent in technology acquisitions and commonly include: (i) revenue-based targets (e.g., ARR – Annual Recurring Revenue, MRR – Monthly Recurring Revenue), (ii) EBITDA or contribution margin thresholds, or (iii) gross profit or unit economics specific to SaaS or platform models.
2. Operational or milestone-based metrics, which are increasingly used when the business is still in a high-growth or pre-profitability stage, such as completion of key product or technology milestones, delivery of roadmap features, customer-acquisition or retention KPIs – Key Performance Indicators, or expansion into strategic markets.

Earn-out periods typically range from 12 to 36 months, depending on the maturity of the target and the complexity of the business plan. In deals where founders retain significant managerial roles post-closing, longer earn-out periods are common.

Earn-out consideration is most often paid in cash, although some structures include share-based payments when the buyer is a larger corporate or private equity-backed platform.

Despite their popularity, earn-outs frequently give rise to post-closing disagreements. The most common issues include: (i) disputes over whether performance targets were met, particularly where KPIs depend on accounting policies or revenue recognition, (ii) insufficient access to operational or financial data, hindering the seller’s ability to verify earn-out calculations, or (iii) impact of the buyer’s post-closing decisions, such as changes in budget, strategy, hiring, pricing or product priorities, which may adversely affect earn-out achievement.

For these reasons, Polish technology transactions often include detailed operational covenants, revenue-recognition principles and expert determination mechanisms to resolve accounting-related disputes efficiently.

In Polish M&A transactions involving VC-backed and technology start-ups, purchase price adjustments are typically structured around either the completion accounts mechanism or, less frequently, the locked-box mechanism. The choice between these models depends on the maturity of the business, stability of financial reporting and the risk-allocation expectations of the parties.

The completion accounts mechanism remains the dominant approach in Polish technology M&A and is particularly prevalent in acquisitions of VC-backed start-ups. Under this model, the purchase price is adjusted post-closing based on actual net debt, working capital and, in some cases, cash as of the closing date.

This preference reflects the typical financial profile of early- and growth-stage Polish technology companies, which often exhibit volatile revenue patterns and uneven cash burn, limited historical predictability, non-audited or investor-grade accounts rather than fully audited financials, and dependence on ongoing financing rounds.

Additionally, earn-out mechanisms tied to KPIs such as ARR, MRR, user growth or margin performance are frequently layered on to bridge valuation expectations in high-growth technology deals.

While used in the Polish market, locked-box pricing is significantly less common in acquisitions of VC-backed start-ups. A locked-box structure generally requires reliable, transparent and stable historical financials. As such, it is typically reserved for later-stage technology companies with recurring revenues.

In Poland, employee equity programmes are typically structured under two frameworks: Virtual Stock Option Plans (VSOPs) and Employee Stock Option Plans (ESOPs). The distinction between them primarily depends on the company’s legal form and regulatory limitations related to share issuance:

1. VSOP — often referred to as phantom shares — is the most common mechanism used by Polish start-ups and VC-backed companies organised as limited liability companies, where equity-based incentive schemes are not directly regulated under Polish company law. Under a VSOP, beneficiaries are not granted actual shares but are entitled to a cash payout linked to the company’s valuation upon a sale transaction; and
2. ESOP — based on actual shares, stock options or subscription warrants — can only be implemented in joint-stock companies or simple joint-stock companies, as limited liability companies are not permitted under Polish law to issue stock options or subscription warrants. These mechanisms allow greater flexibility in issuing new shares and implementing equity-based incentive instruments. Such plans are typically approved by the shareholders’ meeting and implemented by way of share issuances based on target capital or a conditional share capital increase dedicated to the incentive scheme.

In practice, Polish start-ups typically establish or reserve an employee option pool as part of their capitalisation structure, often in the form of a VSOP while operating as limited liability companies, or as a true ESOP in the case of joint-stock companies.

In a sale transaction in an ESOP-implemented company, the process usually follows two stages: first, ESOP beneficiaries receive their shares, and subsequently these shares are sold as part of the transaction. In some ESOP structures, beneficiaries initially receive subscription warrants or stock options, which entitle them to acquire shares prior to the exit event.

Under a VSOP, by contrast, the settlement typically occurs in cash based on the company’s valuation at the time of the transaction, without the transfer or issuance of actual shares.

In Poland, employee retention following an acquisition is primarily driven by cash-based and contractual mechanisms. The key tools include:

1. Retention bonuses (Polish: premie retencyjne) – the most common form of retention incentive. These are typically payable after a defined period following completion (usually 6–12 months) and are conditional on continued employment and satisfactory performance. Retention bonuses are often agreed at signing or shortly after closing to ensure continuity of key personnel during the integration phase;
2. Short- to mid-term incentive programmes – buyers may introduce or adjust bonus schemes to align management’s objectives with the post-acquisition business plan. These typically take the form of annual or multi-year bonuses tied to operational or financial targets;
3. Equity-based incentives – while cash incentives remain the dominant motivator, equity or share-linked structures (e.g., VSOPs, ESOPs or roll-over arrangements) are becoming increasingly common for key employees, especially when the buyer’s corporate form and capitalisation structure allow for share issuance or option-based programmes. Equity awards are generally used for senior or strategically important personnel and are designed to promote long-term alignment with the new ownership;
4. Re-vesting or roll-over mechanisms – where founders or key executives already hold equity, buyers frequently require partial re-investment of sale proceeds or the re-vesting of part of their shareholding under a new management incentive plan to ensure continued engagement after closing; and
5. Contractual improvements – Enhanced employment terms (e.g., salary adjustments, expanded benefits packages, or compensation for non-compete obligations) remain a common and practical tool to secure retention of key staff.

Overall, Polish market practice relies predominantly on cash and contractual retention incentives, while equity-based instruments are used selectively and primarily where the buyer’s corporate structure facilitates such arrangements.

Works councils and trade unions are generally absent in VC-backed start-ups and technology companies in Poland. This is primarily because many individuals engaged by such companies provide services on the basis of civil-law contracts (such as contracts for the provision of services or mandate agreements), rather than employment contracts. As a result, the number of employees formally employed under the Labour Code (Polish: Kodeks pracy) is typically too low to meet the statutory thresholds required for establishing employee representation bodies.

The tax treatment of a holdback in Poland depends on whether the payment is classified as deferred consideration for the sale of shares or as remuneration for services. If a founder or key individual receives the holdback as a deferred portion of the share purchase price, it is generally treated as capital gains income and taxed at a flat rate of 19%.

If, however, the holdback is linked to continued employment or the continued provision of services, the tax authorities may recharacterise it as employment income or income derived under a civil-law services contract. In such cases, the payment may be subject to progressive personal income tax rates (up to 32%) and, depending on the legal basis of the relationship, social security contributions.

From a tax perspective, it is generally advisable to structure the holdback as deferred consideration for the shares and to avoid creating a direct contractual link between the payment and the individual’s ongoing employment or service obligations.

Non-compete and non-solicitation provisions for founders and key employees are standard features in both VC investments and M&A transactions involving Polish VC-backed and technology companies. These clauses typically restrict individuals from competing with the company or soliciting its clients, employees or contractors during their engagement and for a defined post-termination period. They are commonly included in investment agreements, shareholders’ agreements, share purchase agreements and management or employment contracts.

In transactional practice — particularly in strategic and private equity acquisitions of technology businesses — buyers often require robust post-closing non-compete and non-solicitation protections to safeguard the value of the acquired intellectual property, key personnel and customer relationships. Such restrictions are typically introduced at an early stage of the transaction process, often at the term sheet or letter of intent stage, and remain in force throughout negotiations, due diligence and the post-closing integration period. They are frequently restated or further detailed in the definitive transaction documents.

The scope and enforceability of non-compete and non-solicitation provisions depend primarily on the legal basis of the individual’s relationship with the company — whether the individual performs services under a civil-law services agreement or a management contract, holds a corporate office governed by the Commercial Companies Code (Polish: Kodeks spółek handlowych), or is employed under an employment contract.

Civil-law service providers and management contractors

For individuals engaged under civil-law contracts or management agreements, the parties benefit from broad contractual freedom under the Civil Code (Polish: Kodeks cywilny) to determine the duration, scope and consequences of a breach, including contractual penalties. Courts may, however, limit the enforceability of such penalties if they are disproportionate. In addition, members of the management board are subject to statutory duties of loyalty and non-compete obligations arising directly from the Commercial Companies Code.

Employees

For employees, non-compete clauses are governed by the Labour Code, which sets out separate rules for in-employment and post-termination restrictions. Such clauses must be in writing, may only be applied to employees who have access to confidential information and must specify a fixed duration. Post-termination non-competes must also provide compensation of no less than 25% of the employee’s remuneration received prior to termination. In practice, such restrictions usually range from three to twelve months.

Non-solicitation clauses

Non-solicitation clauses relating to employees, contractors, clients or business partners are governed by the Civil Code and are enforceable to the extent that they are reasonable in scope, duration and subject matter. They are widely used in technology M&A to protect key personnel, established client relationships and the continuity of product development.

Typical closing conditions for the acquisition of a Polish VC-backed start-up include:

1. Satisfactory due diligence – completion of legal, financial, tax and technical due diligence to the buyer’s satisfaction;
2. Corporate approvals – obtaining all required shareholder and supervisory board resolutions, as well as any investor or financing-party consents required under existing corporate or investment documents;
3. Third-party consents – securing consents required under the company’s key contracts, particularly where change-of-control or assignment restrictions apply;
4. Fulfilment of pre-closing covenants – including operating the business in the ordinary course and refraining from changes to the corporate, financial or organisational structure prior to closing;
5. Reorganisation and verification of the shareholding structure – ensuring the cap table is complete, accurate and aligned with the factual and legal status of the company. This may include removing inactive minority holders, converting share classes or regularising prior share issuances;
6. Regulatory or antitrust clearances – obtaining any merger control approvals, sector-specific authorisations or foreign investment screening approvals where required;
7. Execution of ancillary documents – such as intellectual property assignments, updated management or employment agreements, transitional arrangements or documentation needed to transfer or secure key assets;
8. Finalisation of employee incentive arrangements (ESOP/VSOP) – clarifying, settling or restructuring employee option rights prior to closing to ensure that no outstanding awards distort the post-closing cap table or transaction economics;
9. Repayment or conversion of shareholder loans – resolving any founder or investor loans so they do not remain outstanding post-closing unless expressly agreed; and
10. Bring-down of representations and warranties – confirming that no breach of representations and warranties has occurred between signing and closing.

Material Adverse Effect (MAE/MAC) Clause

The use of a “material adverse effect” (MAE/MAC) clause as a closing condition is not typical in acquisitions of VC-backed start-ups in Poland. Early-stage companies inherently operate with greater commercial and operational volatility, making it difficult to define what constitutes a “material” adverse change in a meaningful and enforceable way. For this reason, MAE/MAC provisions introduce uncertainty for founders and investors and are generally considered inconsistent with the execution-certainty expectations typical for start-up deals.

Consequently, signing and closing usually occur simultaneously in VC/start-up transactions to avoid conditionality and the risk of deal disruption. A gap between signing and closing is generally introduced only when required by law — for example, where merger control, sectoral regulatory approvals or foreign investment screening processes are mandatory.

a. Is deemed disclosure of the dataroom common?

The use of deemed disclosure provisions in Poland varies depending on the stage and sophistication of the transaction. In later-stage financing rounds (such as growth, Series A and subsequent rounds) and in most M&A transactions involving technology companies, deemed disclosure of the data room is considered standard market practice. Buyers typically accept such clauses provided that the data room is properly indexed, well-organised and finalised at the time of signing.

At earlier stages (pre-seed or seed), deemed disclosure is far less common. This is primarily due to the limited scope of documentation maintained by early-stage companies and the practical difficulties in relying on incomplete, informal or rapidly changing information.

Where a deemed disclosure mechanism is included, its scope, level of granularity and the standard of attribution (e.g. to which specific warranties it applies) are usually subject to negotiation, particularly in venture transactions with multiple investors.

b. Are “knowledge” qualifiers common? Is it common to make representations that are “risk shifting” (e.g., where sellers cannot completely validate the accuracy of such representations)?

“Knowledge” qualifiers are widely used in Polish VC and M&A transactions, especially where the seller cannot fully verify factual matters (for example, data protection, IP infringement, cybersecurity incidents or historical compliance matters). The most common qualifier used in practice is “best knowledge”.

There is, however, a divergence in negotiation strategy:

• Sellers typically seek an “actual knowledge” qualifier, limiting liability to facts of which specified individuals had actual, conscious awareness; whereas
• Buyers prefer broader standards such as “best knowledge”, “knowledge after due and careful inquiry”, or “knowledge that should reasonably have been known”.

Under Polish law, none of these terms has a statutory definition; their meaning is therefore shaped entirely by the drafting of the relevant agreement. For this reason, the definition of “knowledge” (including whose knowledge counts and whether inquiry is required) is typically discussed in considerable detail during negotiations.

“Risk-shifting” representations — statements that allocate risk to the seller in areas where the seller cannot fully verify factual accuracy — are relatively rare but may arise in competitive technology M&A processes or in transactions with significant information asymmetry. In such cases, buyers may require representations relating to IP ownership, data protection compliance, the absence of code contamination or cybersecurity incidents. Sellers generally resist overly broad risk-shifting provisions and seek to limit them through materiality qualifiers, knowledge qualifiers or specific disclosures.

a. Coverage (fundamental, specified, general reps, covenants, shareholder issues, pre-closing Tax, specific indemnities, employment classifications, etc.)

Indemnification provisions are among the most negotiated elements of Polish VC and technology M&A transactions. Although structures vary by stage and bargaining leverage, indemnities typically cover the following categories:

1. Fundamental warranties — these concern title to shares, authority and capacity to enter into the transaction, valid corporate existence and ownership of key intellectual property. Breaches generally benefit from the highest level of protection and are often uncapped or subject to higher caps;
2. General business warranties — these include representations on financial statements, commercial contracts, employment matters, regulatory compliance, data protection, IT systems, litigation and the absence of undisclosed liabilities. In technology deals, buyers frequently seek enhanced protections relating to software architecture, open-source usage, cybersecurity, IP chain-of-title and source-code governance;
3. Tax warranties and tax indemnities — pre-closing tax risks are usually covered by tax warranties and a separate tax indemnity addressing historical tax periods, withholding obligations, transfer pricing and exposures arising from pre-closing restructurings;
4. Covenants — indemnification may extend to breaches of pre-closing conduct covenants or post-closing obligations such as perfecting IP assignments, correcting corporate governance shortcomings or implementing agreed restructuring steps;
5. Specific indemnities — specific indemnities are commonly used to ring-fence identified risks uncovered during due diligence, for example incomplete IP assignments, regulatory or licensing gaps, employment misclassification, pending disputes, or historical data protection non-compliance. These often operate outside general warranty caps and may carry separate, higher limitations; and
6. Shareholder-related matters — indemnity coverage may include leakage in locked-box structures, claims by former minority shareholders or irregularities in historical share issuances (including undocumented option or incentive rights).

Special Considerations for VC-Backed Start-Ups

In transactions involving VC-backed start-ups, investors typically resist giving broad business warranties or accepting substantive indemnity exposure, particularly where they are minority shareholders and not involved in day-to-day operations.

As a result:

1. Founders may be asked to give a more extensive set of operational warranties, while investors limit their liability to fundamental warranties only;
2. Negotiation around warranty scope and allocation of liability between founders and investors is often one of the most contentious aspects of the transaction; and
3. Depending on deal size, Warranty & Indemnity (W&I) insurance is increasingly used to bridge the gap between buyer expectations and seller limitations, allowing investors to avoid providing extensive warranties while giving the buyer appropriate coverage.

b. Liability limit

Liability caps vary depending on the category of warranty and the nature of the transaction:

1. Fundamental warranties: often uncapped or capped at up to 100% of the purchase price;
2. Tax indemnities and specific indemnities: typically subject to separately negotiated caps, often up to 100%;
3. General business warranties: commonly capped at 10–30% of the purchase price in technology M&A, and sometimes lower in competitive exit processes; and
4. VC transactions: investors typically negotiate minimal caps or exclusion from operational warranties altogether, with founders bearing the majority of warranty risk.

c. Survival periods –

Survival periods are calibrated to statutory limitation periods and the commercial significance of the underlying risk:

1. Fundamental warranties: generally 5-10 years;
2. Tax warranties and tax indemnities: usually aligned with the statutory tax assessment, extending up to 6-7 years;
3. General business warranties: usually 12–24 months; and
4. Specific indemnities: survival tailored to the nature of the risk and may extend beyond general periods.

In VC financing rounds, survival periods for warranties may expire at the next financing event, whereas in technology M&A transactions, survival periods tend to follow the longer timelines outlined above.

Indemnification provisions in Polish VC and technology M&A transactions operate within the contractual liability regime of the Polish Civil Code. The Civil Code provides broad contractual flexibility, allowing parties to modify default liability rules under the general principle of freedom of contract and to create a bespoke indemnification framework tailored to the transaction. In this context, indemnification – especially for breach of representations and warranties – is typically structured on a guarantee and risk principle basis. Under this approach, a seller’s liability arises simply because a warranted fact proves untrue at closing, regardless of fault. The guarantee character of warranties is therefore a central risk-allocation tool in Polish technology and VC-backed M&A transactions, while sellers seek to manage exposure through caps, knowledge qualifiers and materiality thresholds.

Polish law recognises two categories of recoverable damages:

1. actual loss (damnum emergens) – direct, measurable financial harm; and
2. lost profits (lucrum cessans) – profits that could reasonably have been earned but for the breach.

Both may be recovered, subject to causation and foreseeability requirements. Damages calculated using valuation multiples (e.g., EBITDA or revenue multiples) may be rejected by courts as too speculative unless the methodology is expressly agreed in the transaction documents and justified as a predictable and reasonable measure of loss.

The Civil Code imposes a mandatory duty to mitigate, requiring the injured party to take reasonable steps to limit losses after discovering a breach. Failure to do so may reduce or defeat a claim.

Given these statutory constraints, Polish M&A practice makes extensive use of contractual mechanisms to refine and allocate liability, including: detailed definitions of indemnifiable losses ,liability caps, baskets and de minimis thresholds, structured notice and claim procedures, tailored survival periods, and specific indemnities for identified risks such as IP chain-of-title issues, open-source contamination, tax exposures or regulatory non-compliance.

Finally, exclusions or limitations of liability cannot extend to damage caused by intentional misconduct or gross negligence, as such limitations are invalid under the Civil Code.

Warranty & Indemnity (W&I) insurance is still not standard in transactions involving Polish VC-backed start-ups, but it is becoming increasingly common, particularly as insurers introduce products tailored to small and mid-cap technology deals. Although historically limited to larger M&A transactions, W&I is now used more frequently to bridge gaps where sellers—especially institutional investors—are unwilling to provide extensive business warranties or meaningful indemnity recourse.

The main challenges in start-up and technology transactions relate to the company’s higher risk profile, the informal nature of early-stage documentation, and the proportionality of underwriting costs relative to deal size. These factors may result in narrower coverage or more cautious underwriting.

Tax risks are generally insurable, subject to the insurer’s assessment and due diligence depth, while customary exclusions continue to apply for identified issues, known risks, price adjustments, fines and penalties, and certain cyber or regulatory exposures.

The Polish antitrust regime is governed by the Act on Competition and Consumer Protection. Merger control matters are handled exclusively by the President of the Office of Competition and Consumer Protection (Polish: Prezes Urzędu Ochrony Konkurencji i Konsumentów, “UOKiK”), who is responsible for assessing whether a planned concentration may significantly restrict competition on the Polish market.

A mandatory notification to UOKiK is required if one of the following turnover thresholds is met in the financial year preceding the notification and no exemption applies:

1. EUR 50 million – the combined turnover in Poland of all undertakings participating in the concentration exceeds EUR 50 million; or
2. EUR 1 billion – the combined worldwide turnover of all undertakings participating in the concentration exceeds EUR 1 billion.

If either threshold is met, the transaction cannot be completed before clearance is obtained (standstill obligation).

The most commonly relied-upon exemption applies where the undertaking being acquired (i.e., the target or the business unit over which control is gained) generated turnover in Poland not exceeding EUR 10 million in either of the two preceding financial years. In such cases, a merger filing is not required, regardless of the buyer’s turnover. Additional exemptions apply to intra-group transactions.

Foreign direct investments in Poland are regulated primarily under the Act on the Control of Certain Investments (Polish: Ustawa o kontroli niektórych inwestycji). In accordance with provisions amended in July 2025, the responsible authority is the Minister for Economic Affairs and Finance (Polish: Minister Gospodarki i Finansów). The foreign direct investment provisions apply to strategic sectors including defence, critical infrastructure, energy, technology and transport.

To be recognised as a foreign investment in Poland, the investor must be a non-EU, non-EEA and non-OECD individual (or entity) — for example, a natural person not having citizenship in an EU/EEA/OECD state, or an entity not registered in the EU/EEA/OECD for at least two years. However, EU investors may also be subject to the FDI regime in the case of sensitive sectors.

The Polish FDI regulations apply if the target:

1. has its registered seat in Poland;
2. has generated in Poland revenues exceeding EUR 10 million in at least one of the two preceding financial years; and
3. operates in a strategic sector (for example electricity production, telecommunication activities, manufacture of medicines and other pharmaceutical products).

Other material regulatory regimes applicable in Poland depend on the sector in which the company operates, including:

1. Telecommunications and electronic communications regulation – any acquisition involving operators of telecommunications networks, mobile or wireless services, or internet access providers may require the consent of the President of the Office of Electronic Communications (Polish: Prezes Urzędu Komunikacji Elektronicznej), provided that the transaction involves the transfer of frequency reservations, numbering assignments or radio licences;
2. Financial and payment services regulation – acquisitions involving companies providing payment services, e-money, fintech or other regulated financial technology services may require the consent of the Polish Financial Supervision Authority;
3. Real estate – certain acquisitions involving agricultural real estate may require the prior consent of the National Support Centre for Agriculture (Polish: Krajowy Ośrodek Wsparcia Rolnictwa);
4. Defence and dual-use technology – transactions involving products or software with military or dual-use applications (e.g., encryption, AI for defence, drone technology) may require authorisation from the Ministry of Economic Development and Technology (Polish: Ministerstwo Rozwoju i Technologii);
5. Data protection – where personal data of Polish or EU citizens is processed, the transaction may trigger GDPR-related compliance obligations, particularly in relation to data transfers, data security practices and ongoing processing obligations; and
6. Cybersecurity and critical infrastructure – for operators of essential services and digital service providers (such as cloud service providers, online marketplaces or software controlling critical infrastructure in energy, finance or transport). The buyer may be required to notify or coordinate with the relevant cybersecurity authority if the target company provides services in critical sectors.

Intellectual property is typically one of the most critical areas in the acquisition of a technology company, and shortcomings in IP ownership or protection frequently drive negotiation dynamics, valuation adjustments and specific indemnities. The most common issues include:

1. Improper or ineffective IP assignment.

This is the single most prevalent issue in Polish technology start-ups. Founders, employees and external contractors often create core IP before formal structures are in place, and assignments are subsequently executed in the wrong form—most commonly in simple documentary form rather than the written form required under Polish copyright law (non-compliance results in nullity). Missing or defective assignments may also arise where contractors transferred only specific deliverables, but not source code, documentation or know-how.

2. Ownership of trademarks, domain names and branding assets.

It is common to find trademarks, domains or product names registered in the personal name of a founder, contractor or marketing agency. Failure to consolidate ownership in the company can result in loss of control over key market assets or require corrective transfers prior to closing.

3. Incomplete scope of IP rights transferred in contracts.

Many engagement agreements lack clear provisions assigning: derivative works, modifications, updates or improvements, rights to use IP in all required fields of exploitation, rights in background or jointly developed IP.

As a result, the company may not own all rights needed to commercialise its technology or license it to third parties.

4. Open-source software compliance.

Start-ups frequently use open-source components without tracking licences or maintaining compliance processes. Combining proprietary code with open-source code—particularly under copyleft licences (e.g., GPL)—may trigger obligations that conflict with the company’s business model or restrict commercial use. Lack of an OSS policy is a common red flag in due diligence.

5. Lack of registration or incomplete IP portfolio protection.

Inventions, designs, trademarks or software may be unregistered or insufficiently protected. This exposes the company to third-party infringement claims, enforcement difficulties and reduced defensibility of its technology.

Poland’s data privacy framework is primarily grounded in the European Union legislation and further refined through national implementing legislation. The two most important legal acts on data privacy are:

1. EU General Data Protection Regulation (Regulation (EU) 2016/679) (Polish: Ogólne rozporządzenie o ochronie danych) – directly applicable in Poland and being the main source of data privacy; and
2. Data Protection Act (Polish: Ustawa o ochronie danych osobowych) – supplementing the GDPR on the national level.

The most common issues that arise in relation to data privacy are:

1. lack of GDPR compliance documentation – this is the most common issue for technology companies and typically includes the absence of privacy policies, records of processing activities, and data processing agreements;
2. lack of internal controls and breach procedures – this often results from failure to obtain valid consent or to provide clear information about tracking and analytics tools;
3. non-compliant user data collection or cookie practices – lack of proper consent or provide clear information about tracking and analytics tools; and
4. personal data stored outside the European Economic Area without appropriate safeguards – storing or processing data in jurisdictions without adequate protection measures can violate GDPR requirements and expose the company to enforcement actions or administrative fines.

In technology M&A transactions in Poland, employment law considerations often give rise to significant risks, particularly because technology companies frequently rely on flexible engagement structures and maintain lean formal employment footprints. The issues most commonly encountered include:

1. Reclassification of civil-law contractors into employees

Many technology companies engage developers, engineers and designers under civil-law services agreements, often with sole proprietors. Employment contracts are less common.

However, if the actual performance of work resembles an employment relationship—e.g., personal performance, subordination, fixed working hours or place of work, or the employer bearing economic risk—the arrangement may be reclassified as an employment contract.

In accordance with the draft bill currently under consideration, the National Labour Inspectorate (Polish: Państwowa Inspekcja Pracy) will have authority to unilaterally reclassify such contracts by administrative decision, accompanied by the introduction of remote inspections and higher penalties. This represents a significant diligence and post-closing compliance risk in technology acquisitions.

2. Transfer of undertaking

In asset deals or transactions that result in the transfer of an undertaking, employees automatically transfer to the buyer by operation of law, along with all rights and obligations under their existing employment relationships.

The buyer must comply with statutory information obligations, including notifying employees or trade unions of the reasons, timing and consequences of the transfer. Failure to comply may result in claims or administrative penalties.

3. Risks relating to non-compete and confidentiality agreements

Start-ups frequently use non-compete and confidentiality clauses to protect intellectual property and key commercial relationships.

Common issues include: overly broad or imprecise scopes of restriction; lack of mandatory compensation for post-termination non-competes (required under the Labour Code); insufficiently defined “confidential information”; contractual penalties that may be deemed disproportionate or unenforceable.

These deficiencies often surface during M&A due diligence and may require remediation prior to closing.

4. Deficiencies in employment documentation and HR compliance

It is common to encounter incomplete or improperly maintained personnel files, missing signatures, undocumented amendments, or inconsistent terms of employment.

Such deficiencies may expose the company to: administrative fines imposed by the Labour Inspectorate; employee claims (e.g., regarding overtime, holiday entitlement or termination); and GDPR compliance risks, particularly in relation to HR data retention and lawful processing.

In Polish technology M&A transactions, the recommended dispute resolution framework typically follows a two-step structure: (i) negotiation or mediation as the first step, and (ii) arbitration if the dispute cannot be resolved amicably. Arbitration is preferred due to its confidentiality, procedural efficiency, and the ability to appoint arbitrators with M&A or technology-sector expertise – advantages that Polish common courts generally do not provide given their longer timelines and public nature. To ensure enforceability, an arbitration clause must be expressly included in the transaction documents.

The leading arbitration institutions in Poland include:

1. the Court of Arbitration at the Polish Chamber of Commerce in Warsaw (Polish: Sąd Arbitrażowy przy Krajowej Izbie Gospodarczej w Warszawie), and
2. the Arbitration Court at the Polish Confederation Lewiatan (Polish: Sąd Arbitrażowy przy Konfederacji Lewiatan).

International buyers or cross-border technology transactions may also choose international arbitration rules – such as International Chamber of Commerce or Vienna International Arbitral Centre – where a neutral forum or multi-jurisdictional enforcement is desirable. This approach is particularly common in larger-cap deals, where parties expect more sophisticated procedures and greater predictability in cross-border enforcement.

For disputes of a financial or accounting nature – such as purchase price adjustments, completion accounts or earn-out calculations – the parties typically opt for a market expert determination rather than arbitration. The share purchase agreements usually specify either a pre-agreed expert (often a reputable audit firm or accounting specialist) or provides for an appointment mechanism. The expert’s decision is generally final and binding, reflecting the need for a fast, specialised and technically sound resolution of financial issues.

Technology acquisitions may commonly give rise to disputes concerning:

1. breaches of representations and warranties;
2. Seller liability and indemnification;
3. non-compete and non-solicitation obligations; and
4. purchase price adjustment, completion accounts, and earn-out mechanisms.

Several corporate and formal requirements must be taken into account when completing transactions in Poland, particularly in the context of VC-backed and technology companies. The key formalities include:

1. Notarisation.

Certain actions require a specific form under Polish law:

• transfer of shares in a limited liability company must be executed in written form with notarised signatures;
• amendments to the Articles of Association require a notarial deed (including, as a rule, share capital increases, changes to the company’s business scope, name changes or structural amendments).

2. Corporate resolutions and consents.

The following actions must typically be approved by the relevant corporate bodies:

• appointment or removal of management board members, supervisory board members or commercial proxies;
• shareholder resolutions approving the transaction, where required by the Articles of Association;
• reserved matters, where defined in shareholders’ agreements or investor rights documents.

3. Filings with the commercial register (Polish: rejestr przedsiębiorców).

Most corporate changes require filing an application with the National Court Register (KRS). Some changes are effective upon adoption (e.g., personal changes in corporate bodies, changes of address), while others only take effect upon registration—such as amendments to the Articles of Association, name changes or changes to business activity codes.

4. Updating the shareholders’ register.

Joint-stock companies, simple joint-stock companies and limited joint-stock partnerships must update their electronic shareholders’ register, maintained by an authorised institution (typically a brokerage house or licensed bank). The register records all shareholders, their shareholdings and any changes in ownership structure.

5. Updating the Ultimate Beneficial Owners Register (Polish: Centralny Rejestr Beneficjentów Rzeczywistych).

Companies must update their UBO information following any changes in ownership or control.

6. Sworn translations.

Documents not prepared in Polish must either be drafted in a bilingual version (with Polish as one language) or accompanied by a sworn translation when submitted to a notary public or authorities, as official documents must be presented in Polish.

7. Apostille / legalisation of foreign documents.

Documents executed abroad—such as powers of attorney or corporate resolutions—must be apostilled or legalised depending on the jurisdiction of origin.

8. Civil law transaction tax (PCC).

Transfers of shares in a Polish company—such as shares in a limited liability company—generally trigger a 1% PCC calculated on the market value of the shares. Some other transactions (e.g., certain contributions or increases of share capital) are taxed at 0.5%, depending on the nature of the transaction and applicable exemptions.