From 1 January 2019, the Polish act on amending certain acts in connection with the strengthening of supervision over the financial market and investor protection in this market will become effective (with a few exceptions).

One of its goals is to increase the security of individual investors. Time will tell if expectations will be met. However, some practitioners in the debt securities market remain skeptical about the proposed solutions.

The main changes concerning bonds, covered bonds and investment certificates will come into force on 1 July 2019:

Mandatory registration at the National Depository for Securities ("KDPW")

Bonds, covered bonds and investment certificates issued after 1 July 2019 will no longer be able to take the form of a physical document, and will be subject to mandatory registration at KDPW.

The dematerialized form will always be obligatory, regardless of the type of offer or introduction to the market.

Mandatory agreement with the issue agent

Starting from 1 July 2019, issuers may be required to enter into agreements with an issue agent before commencing the offers. 

The agreement will be obligatory for all non-public offers of bonds or covered bonds that will not be admitted to trading on a regulated market or at alternative trading market, as well as for certificates issued by non-public closed-end funds. In other cases, the agreement will be optional.

The duties of the issue agent (which can only be an investment company authorized to keep securities accounts or a custodian bank) include: (i) verification of compliance with the legal requirements applicable to issuance and offering of securities and their ability to be registered at KDPW, (ii) the creation of a record of entitled persons (from the moment of registering securities at KDPW, all entries in the record will have the effect of a record on securities accounts, and as a result the opening of separate accounts by investors will be unnecessary) and (iii) assistance during the process of registering securities at KDPW.

New information duties (concerning also "old" bonds)

By 31 March 2020 at the latest, issuers of bonds, covered bonds and investment certificates issued in documentary form and not redeemed before 1 July 2019, and in case of securities registered outside KDPW in the records kept pursuant to the existing regulations - the entities keeping these records, will be obliged to submit to KDPW and later update information on the parameters of the conducted issuances and timely performance of the obligations arising therefrom.

Failure to comply or improper performance of information obligations will be liable to a fine of up to PLN 2 million.

KDPW will make information on issuances and the meeting of obligations by each issuer available to the public.

Obligation to have a LEI code

By 31 March 2020 at the latest, each issuer of bonds, covered bonds and investment certificates issued and not purchased before 1 July 2019, which are in the form of a document (e.g. intragroup bonds in a material form) or which are not registered at KDPW, will be required to obtain a LEI code and keep it until the date on which it informs KDPW that all of its obligations under these securities have expired.

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