Key legal changes in 2019.

2018 was undoubtedly a year of huge changes in the law for business (we ourselves called it the "year of compliance"). And what legal changes await businesses in 2019? Below is a list by subject area.

# KRS AND ACCOUNTING

• Shorter retention period for approved annual financial statements (SF) - 5 years from the end of the year in which the SF was approved. Entry into force of the amendment: 1.01.2019 r.;
• SF for 2018 will be drawn up only in electronic form and accompanied by a qualified electronic signature / ePUAP trusted profile. Entry into force: 1.10.2018 r.;
• SF to KRS will be submitted not only by a member of the management board, but also by a proxy, attorney, legal counsel, foreign lawyer with a Polish PESEL. We wrote about this change in detail HERE;
• National Register of Debtors. The Law of November 9, 2018 on the National Register of Debtors introduces a free online accessible registry, which, unfortunately, will most likely not start until the end of 2020. We wrote about this change HERE.

# COMPLIANCE

• AML. 13.01.2019 marks the deadline for drafting and implementing your own AML/CFT risk assessment under the new law. I have written about the law, including its scope and obligations HERE;
• Liability of collective entities. Final work is underway on a bill that could revolutionize the compliance system in corporations. I wrote about the bill HERE;
• Competition and Consumer Protection. As of 15/12/2018, the President of the OCCP is authorized to impose a fine on managers (up to PLN 5 million) if it is detected that a manager has intentionally contributed to the violation of collective consumer interests or the use of prohibited clauses in commercial contracts;
• Anti-Corruption Code. The law on openness in public life has been "frozen." In 2019, the further fate of this bill should become clear. We wrote about the bill HERE.

# LABOR AND SOCIAL SECURITY LAW

• Minimum wage will amount to PLN 2,250 gross;
• Minimum hourly rate for contractors or service providers will be PLN 14.70;
• Elimination of the obligation of periodic safety training For the least accident-prone industries, especially administrative and office workers, employed by the employer up to max. 3 risk categories;
• No obligation to hire a health and safety specialist For an employer up to risk category 3 with no more than 50 employees (previously: 20);
• Reducing time storage of employee records from 50 to 10 years; Employee records will be able to be stored electronically;
• Work pay will be paid to the employee's account, in one's own hands only upon request (Article 86 § 3 of the Labor Code); If an employee does not have a bank account and, at the same time, has not submitted a request for payment of wages in one's own hands, then his salary will be transferred to a so-called basic bank account (opening and maintaining such an account, used only for receiving wages, is free of charge);
• Obligation of the employer to communicate to the employee upon termination of the employment contract new information in addition to the labor certificate (concerning, among other things, the storage of employee files).

# COMMERCIAL COMPANIES LAW

• Shareholders' Assembly: (1) the possibility of cancellation of the AGM by a shareholder requesting its convening (Article 236 § 3 of the Code of Commercial Companies), (2) the obligation to attach a power of attorney to represent a shareholder at the AGM to the minute book, (3) it will be possible to vote remotely also on the resolutions of the AGM, except those adopted by secret ballot.
• Impediments to the resignation of the "last" member of a limited liability company / S.A. body. A resigning member of the board of directors of a limited liability company, who is the only member of the body, is obliged to submit his resignation to the shareholders by simultaneously convening a shareholders' meeting. Such resignation will not be effective until the day following the day for which the shareholders' meeting was convened (Article 202 § 6 of the Code of Commercial Companies). This solution serves to prevent companies from being left with an unfilled board of directors, unable to act, including taking part in judicial and enforcement proceedings. This also applies to the supervisory board (if appointed). The change is controversial, because of the possibility of being forced to temporarily perform an unwanted function. In my opinion, it is a necessary change;
• Amendment of the contract of a limited liability company in organization in the form of a shareholders' agreement. (Article 161 § 4 of the CCC) - a provision in line with the previous line of case law of the Supreme Court was introduced (post of 25.02.2009, ref. II CSK 489/08);
• Dividend day - in the absence of a stipulation to the contrary, it is to be the date of adoption of the resolution on profit distribution;
• Reimbursement of advance dividends (Article 195 § 11 of the Companies Act) - new rules for reimbursement in the event of a loss or less profit than the advances paid;
• A non-partner may become a member of the board of directors of a partnership (Article 97 § 3 of the Companies Act);
• Termination of the articles of association of an SKA by a general partner and his withdrawal from the company is permissible regardless of the content of the articles of association (Article 149 § 1 of the Companies Act);
• New consequences of exceeding the Board's authority. The position of a "purported proxy" (a person acting in excess of a mandate or after its expiration) was equated to that of a member of a body of a legal entity (e.g., a member of the board of directors) whose mandate has already expired, or who has exceeded the scope of the mandate. The amended provision of Article 39 of the Civil Code makes the validity of a contract concluded by such a person contingent on its confirmation by the legal person on whose behalf it was concluded (so-called suspended ineffectiveness). In the case of unilateral legal actions (e.g., declaration / termination) - they will be absolutely invalid.

Entry into force of all the above-mentioned changes: January 1, 2019.

# EXECUTION

On 1.01.2019, new laws on judicial officers and bailiffs' fees came into force, revolutionizing enforcement. New duties and restrictions are imposed on bailiffs (such as the requirement to film many actions), but most importantly, the territorial selection of bailiffs has been limited to the nearest revir. The changes may negatively affect the effectiveness of enforcement for creditors. I wrote about the change in detail on the blog HERE.

# INDUSTRIAL PROPERTY LAW

Work is underway to amend the Industrial Property Law to comply with Directive 2015/2436 of December 16, 2015. The definition of a trademark is to be changed (no requirement for a graphic representation of the mark). Renewal of the protective right is to be possible by just paying a fee (no application required). Each licensee is to be given the right to direct claims for trademark infringement (e.g., a franchisee that is a restaurant licensee will be able to sue a third party for trademark infringement on its own, as will a company that is an exclusive distributor of a foreign company's equipment in Poland).  Entry into force: probably in 2019. (no date).

# TAX LAW

• VAT bad debt relief for the creditor after just 90 days (instead of 150);
• Status of "small taxpayer" up to EUR 2,000,000 income (previously EUR 1,200,000) as of 1.01.2020, which means favorable CIT taxation for such entities, preferences in depreciation, the possibility of paying quarterly advances to PIT and CIT.
• Preferential rate of CIT (9%). will be available to small taxpayers and taxpayers starting a business when revenues generated in the current tax year (earlier in the preceding year) did not exceed the PLN equivalent of EUR 1,200,000;
• The possibility of a one-time tax loss settlement of up to PLN 5 million;
• Exemption of income tax paid from the insurer amounts of compensation intended for the restoration of destroyed fixed assets, except for a passenger car.
• Standardize tax return forms for local taxes (real estate tax or forestry tax) and allow for electronic filing;
• Exit tax - tax on unrealized gains - the rates are known (for CIT taxpayers, it will amount to 19% of the value of the assets; for PIT taxpayers, rates of 19% and 3% are provided for when the value of the transferred assets exceeds PLN 4,000,000) and the rules for its collection;
• IP BOX - preferential taxation of income from qualified intellectual property rights at the rate of 5%, as long as the taxpayer carries out activities directly related to the creation, development or improvement of the intellectual property right;
• MDR - obligation to report electronically to the head of KAS within 30 days tax schemes by "promoters" who create, share, implement tax schemes. "Promoter" is defined as a tax advisor, lawyer, legal counsel or bank employee, among others. Failure to communicate the scheme is subject to a fine of 720 daily rates, i.e. up to a maximum of PLN 21.6 million;
• When issuing tax decisions, KAS authorities will be able to "incidentally" determine additional tax liability under, among other things, tax avoidance clauses (in there small clauses), transfer pricing provisions, withholding tax, within the framework provided by the Tax Code (value limitations);
• New fiscal crimes and offenses: failure to comply with the obligation to file information on the preparation of transfer pricing documentation, submission of transfer pricing documentation; failure to report tax schemes, submission of an untrue statement conditioning exemption from WHT or reduction of the tax rate.

# CONCLUSIONS.

No entrepreneur should pass by the above-mentioned changes indifferently. The changes being introduced are in large part a continuation of the 2018 changes building the compliance system in corporations. The trend of directing financial responsibility towards managers is emerging. Thus, there is no escape from compliance. There are also quite a few changes requiring adjustments to employee documentation. It is also necessary to prepare for completely electronic filing of accounting records with the National Court Register. Those who do not yet have a qualified signature or ePAUP should set one up immediately. On the plus side, there is a package of simplifications for SMEs, especially regarding employee issues, including health and safety, as well as an amendment to the Commercial Companies Code removing several discrepancies. Unfortunately, the tax system remains unreadable and opaque, and the powers of the KAS authorities are gradually increasing.