| In Principle

The automotive industry is one of the pillars of the European economy, with a long tradition and a significant contribution to job creation and industrial activity. But the sector is facing difficulties, impacting even leading manufacturers. As the automotive industry is an important part of the energy transition, a question increasingly being asked is whether the industry can count on public financial support in the transition, and if so, what the funds are earmarked for.

Convertible loans are still a relatively rare debt financing instrument in Polish practice, but have recently gained popularity among startups and in venture capital. In essence, a convertible loan involves granting a loan that may be repaid by converting the debt into equity in the borrower. But depending on the expectations, circumstances and identified risks, the loan provisions can differ widely, with flexibility to modify the positions of the parties. This means it is worth paying attention to a number of financial and legal parameters, including obvious ones that can affect the feasibility of the undertaking.

EU regulations banning certain AI practices go into effect on 2 February 2025. Some institutions may assume that the bans only apply to extreme practices, which they would never be involved in. But the ban on using AI systems to assess the risk of that someone has committed a crime, or will commit a crime, shows that this is not the correct approach. A more in-depth analysis reveals that some market practices now considered standard, especially in financial services, may prove questionable once the bans enter into force. This is particularly true for monitoring of money-laundering risk and more broadly the risk of fraud.

The act introducing the deposit-refund scheme in Poland came into force on 13 October 2023. Companies were given a little more than a year to prepare for their new obligations, as the scheme is set to go live on 1 January 2025. But for several months the new government has been announcing changes to the act. The final wording the provisions when the scheme is launched remains an open question.

In the face of the elements and their destructive impact, the priority is quick reconstruction and renovation of structures. Thus an act was introduced into the Polish legal system in 2001 allowing such work to be carried out in a simplified manner. It is likely that persons affected by the September 2024 floods in southwestern Poland will soon be able to take advantage of these provisions.

Court of Justice clarifies the notion of “legal advisory services” under EU sanctions law and throws into doubt the Commission’s interpretation.

Through a fraudulent transfer claim against a third party, a creditor impacted by the debtor’s dishonest behaviour can enforce its rights against property transferred by the debtor to a third party. This allows the creditor to challenge the effectiveness of a transaction carried out with a third party to the creditor’s detriment.

Poland’s Office of Competition and Consumer Protection often accuses businesses of using misleading advertising content, violating consumers’ collective interests. This can attract a fines of up to 10% of the company’s annual turnover. One reason for fines can be improper wording or appearance of disclaimers.

This latest edition covers the important topic of a new law on whistleblowers and difficulties that businesses may face once it comes into force. They challenges include the introduction or adjustment of relevant reporting procedures, course of proceedings related to reports, and mitigation of risks associated with the abuse of whistleblower rights.

The newest episode of news from Poland explains what the effects of bankruptcy will be on the Polish assets of a company and on its Polish creditors and, above all, what recognition of foreign bankruptcy is, what it is needed for and what it consists of.

Company shares are seen as an important element of the overall remuneration for professionals in the IT industry. This is also the case in companies developing video games. Prospective employees or contractors expect to be able to take a stake in the rapidly growing company as part of their remuneration package.

According to analysts, only 10% of startups are successful. Almost 90% of them fail—20% in their first year. On the record, such failures are often attributed to the founders’ failure to identify the customers’ needs, i.e. a real gap in the market, or blamed on competition and the uniqueness of the service or product. In less guarded moments, e.g. in online forums, much heavier accusations have been levelled against founders, such as the claim that most startups are designed to defraud investors or launder money.