We were recently contacted by a client who is the CEO of a limited liability company (LLC) in which Ukrainian citizens hold 100% of the shares. The client had been under the impression that the company had owned the land for two years. As it turned out, he had been misled, and, moreover, as CEO, he faces criminal liability.
In 2023, the company acquired the land on which the production plant is located. At that time, unprofessional lawyers advised that the transaction be conducted by a newly established company, thus avoiding the need for a permit from the Ministry of Internal Affairs and Administration. The second company would then remain the owner of the production plant.
The transaction was carried out with a false statement in the notarial deed that the company purchasing the land was not a foreigner. This means that the client’s purchase of the property is legally invalid.
As a result of the invalid transaction, the seller who took the money remains the formal owner of the land to this day! An unintentionally false declaration resulted in the client’s production facility being located on the land of the previous owner!
Who needs a permit?
The acquisition of land by foreigners from outside the EU requires a permit from the Minister of Internal Affairs. A company is also considered a foreigner if its registered office is located outside Poland or if foreigners (individuals or other companies) control it, directly or indirectly holding more than 50% of the votes at the shareholders’ meeting or general meeting. Therefore, a company in which foreigners hold only 49% of the shares is not considered a foreigner, even if the foreigner is a member of the management board.
Fingrow Consulting Group offers Expert Support!
During a discussion regarding the client’s business structure, our advisors accidentally spotted this error. We know from experience that in such complex situations, unconventional and precise action is necessary. We face a serious challenge: we must eliminate the consequences of incompetent advice and protect the client’s interests.
Summary
This case clearly demonstrates how a seemingly straightforward real estate purchase transaction in Poland can become invalid due to improperly prepared documents by incompetent lawyers. The consequence is the absolute invalidity of the purchase, requiring immediate legal intervention and the adoption of corrective strategies.
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