Abstract

Under the Polish Commercial Companies Code both independent and affiliated companies are allowed to merge. The case of a parent company taking over its subsidiary (upstream merger) does not give rise to major controversies. The legislator has provided for a number of legal facilitations for this type of intra-group restructuring. However, doubts arise in the opposite scenario, in which a subsidiary is to acquire its parent company (reverse merger, or downstream merger) and in which domination results from holding of a controlling interest in the company. A reverse merger involving acquisition by a limited liability company appears to be particularly ambiguous and problematic. It may be used as an example of how seemingly minor unclear points in the provisions of the Commercial Companies Code can cause serious transactional risk. This risk is a consequence of the divergent positions of the legal doctrine and registry courts regarding the downstream merger procedure. This issue is a further contribution to the debate about the development of legal instruments to ensure unification of the judicial practice of Polish registry courts.