Red flags in Polish M&A – what Netherlands buyers

A Dutch holding company agrees heads of terms on a Warsaw-based logistics target. The share price looks attractive. The seller is motivated. Due diligence begins – and within two weeks, the acquisition team flags three issues that were invisible at term-sheet stage: undisclosed pledges on key assets, a gap in the National Court Register (KRS) filing history, and a management board member whose authority to bind the company expired six months earlier. Any one of those issues could kill the deal or shift liability to the buyer.

Polish M&A transactions carry specific legal risks that Netherlands buyers frequently underestimate. Under Polish corporate legislation, a spółka z ograniczoną odpowiedzialnością (private limited liability company, sp. z o.o.) is governed by the Kodeks spółek handlowych (Commercial Companies Code, KSH), which creates disclosure obligations, representation rules, and encumbrance registries that differ materially from Dutch BV law. Buyers who skip a structured red-flag review before signing a letter of intent risk inheriting undisclosed liabilities, invalid title, or unenforceable transaction documents. A thorough due diligence process – typically completed within 30 to 60 days – is the primary safeguard.

This guide walks through the four most consequential red-flag categories for Netherlands buyers: corporate and title issues, financial and tax exposures, employment and regulatory compliance, and cross-border structuring pitfalls. Each section identifies the warning sign, explains the legal consequence, and suggests a practical response. A checklist and FAQ close the guide.

What corporate and title red flags appear first in Polish due diligence?

The KRS is the starting point. Every Polish company is registered there, and the register is publicly accessible. Gaps in the filing history – missed annual financial statement deposits, stale board appointments, or unregistered amendments to the articles of association – signal governance failures that may affect the validity of past resolutions. Under Polish corporate legislation, a resolution passed without a quorum or outside the scope of the articles is voidable, sometimes void. Discovery after closing forfeits the buyer's ability to seek price adjustment.

Pledge registries deserve equal attention. The Rejestr Zastawów (Pledge Registry) records registered pledges over movable assets and receivables. A buyer who acquires shares without checking this registry may inherit encumbered assets. Separately, the Land and Mortgage Register (Księga Wieczysta) covers real property. Both registries are searchable online, but the searches must be conducted systematically – not just for the target company but for any subsidiaries and key operating assets. Missing one subsidiary is a common mistake.

Management board authority is a third pressure point. Under KSH, each board member's mandate has a defined term. If the mandate expired and was not renewed by a shareholders' resolution, contracts signed by that board member after expiry are potentially unenforceable. We secured a reversal of a transaction challenge for a manufacturing client in the Mazowieckie region (autumn 2025) precisely because our team identified an expired mandate before the share purchase agreement was signed – allowing the seller to regularise the position before closing.

Verify KRS entries against the actual articles of association – discrepancies are common
Check the Pledge Registry for every entity in the target group
Confirm each board member's mandate term and renewal resolution
Review shareholders' register for undisclosed pledges over shares
Confirm that any required shareholders' approval for major disposals was obtained

Which financial and tax exposures carry the highest risk for Netherlands buyers?

Tax liability is the single largest financial risk in Polish acquisitions. The Polish tax authority – the Krajowa Administracja Skarbowa (National Revenue Administration, KAS) – has a five-year limitation period for assessing corporate income tax (CIT) liabilities. A buyer who acquires 100% of the shares inherits the target's full tax history. Undisclosed transfer-pricing adjustments, VAT reclassifications, or withholding-tax exposures from prior years can surface as assessments exceeding PLN 5m on mid-market targets. Tax indemnities in the share purchase agreement are the contractual response – but they are worthless if the seller is a special-purpose vehicle that will be wound up post-closing.

JPK (Jednolity Plik Kontrolny – Standard Audit File) data is now a practical due diligence tool. KAS can cross-reference a target's VAT returns against its JPK_VAT files. Buyers should request JPK extracts for the last three fiscal years and have a Polish tax adviser review them for anomalies. Mismatches between reported revenue and JPK data are a direct red flag for VAT fraud exposure – which, under Polish tax law, can result in joint and several liability for the acquirer in certain scenarios.

For Netherlands buyers specifically, the Dutch-Polish double taxation treaty affects post-acquisition dividend flows. Withholding tax on dividends paid from a Polish sp. z o.o. to a Dutch parent is reduced under the treaty, but the reduction requires meeting beneficial ownership conditions. If the Dutch entity is a pure holding vehicle with no substance, the Dyrektor Krajowej Informacji Skarbowej (Director of the National Revenue Information Service, DKIS) may challenge the treaty benefit. Structuring the Dutch holding with real economic substance – at least one full-time employee and genuine management functions – is essential before the first dividend is declared.

To receive an expert assessment of your target's tax exposure before signing, contact info@kordeckipartners.com.

How do employment and regulatory issues create deal-breakers in Poland?

Polish employment law sits within a framework that is materially more protective of employees than Dutch law. The Kodeks pracy (Labour Code) limits the grounds for termination, mandates notice periods of up to three months for employees with more than three years of service, and requires consultation with trade unions before collective redundancies. A target with 50 or more employees and an active trade union carries a compliance burden that Netherlands buyers often discover only in due diligence. Undisclosed collective agreements (układy zbiorowe) can contain salary indexation clauses that materially affect post-acquisition wage costs.

Regulatory licences are a second category. Targets operating in regulated sectors – financial services supervised by the Polska Komisja Nadzoru Finansowego (Polish Financial Supervision Authority, KNF), or transport companies licensed by the Urząd Transportu Kolejowego (Office of Rail Transport, UTK) – hold licences that may not transfer automatically on a share acquisition. Some licences require prior regulatory approval for a change of indirect control. Missing this approval window – which can be 60 to 90 days – delays closing and may expose the buyer to operating without a valid licence.

We obtained interim protection for the licence position of a German investor's logistics subsidiary in Lower Silesia (spring 2026) by filing a precautionary notification to the relevant authority six weeks before the anticipated closing date. That approach preserved the licence and kept the transaction on schedule.

What cross-border structuring pitfalls should Netherlands buyers avoid?

Netherlands buyers typically enter Poland through a Dutch holding company that owns a newly incorporated Polish sp. z o.o. or acquires an existing one. The structure looks clean on paper. In practice, three issues consistently arise. First, the Polish target's articles of association may contain consent requirements for share transfers that were drafted for a purely domestic ownership chain. A Dutch parent that restructures internally – for example, inserting a Luxembourg intermediate – may inadvertently trigger a consent obligation requiring a Polish shareholders' meeting with a qualified majority.

Second, real estate held by the target may require a permit from the Ministerstwo Spraw Wewnętrznych i Administracji (Ministry of Interior and Administration, MSWiA) if the buyer qualifies as a foreign entity acquiring agricultural or border-zone land. The permit process takes up to two months. Buyers who miss this requirement risk a transaction that is valid under share-purchase law but unenforceable as to the underlying real property rights.

Third, merger control. The Urząd Ochrony Konkurencji i Konsumentów (Office of Competition and Consumer Protection, UOKiK) has jurisdiction when the combined Polish turnover of the parties exceeds PLN 1bn, or when the target's Polish turnover exceeds PLN 10m and at least one party has global turnover above EUR 1bn. Netherlands buyers with significant European operations must check UOKiK thresholds independently of any European Commission filing. Failure to notify UOKiK when required is a personal liability risk for board members of the acquiring entity. For a detailed view of our M&A practice, see our corporate M&A practice page.

For a tailored strategy on cross-border acquisition structuring in Poland, reach out to info@kordeckipartners.com.

What should Netherlands buyers prepare before signing a letter of intent?

A structured pre-LOI checklist reduces the risk of committing to a price before the most material risks are quantified. The items below reflect the issues most frequently encountered in Polish targets acquired by Netherlands buyers. Completing them before the letter of intent is signed – not during due diligence – preserves negotiating leverage.

Obtain a current KRS extract and compare it against the articles of association and all shareholder resolutions from the last five years
Run Pledge Registry and Land and Mortgage Register searches for the target and all subsidiaries
Request three years of JPK_VAT files and have a Polish tax adviser review them for VAT anomalies
Confirm that all regulatory licences are current and identify any change-of-control notification obligations

Three business scenarios illustrate where the checklist pays off. A Dutch manufacturing group acquiring a Polish component supplier found, during pre-LOI review, that the target's main production facility was subject to an unregistered usufruct right held by the seller's parent. Removing that right required a six-week negotiation and a price reduction of approximately 8%. An IT company based in Amsterdam targeting a Warsaw software house discovered that four key developers held options convertible into equity – dilution not reflected in the agreed valuation. A private equity fund in Rotterdam buying a retail chain identified a pending KAS audit covering two fiscal years. The fund restructured the deal as an asset purchase rather than a share purchase, avoiding inherited tax liability entirely.

The decision between share purchase and asset purchase is itself a red-flag response mechanism. Share purchases are faster – typically 60 to 90 days from LOI to closing – and preserve contractual relationships with customers and suppliers. Asset purchases take longer but allow the buyer to cherry-pick assets and leave liabilities behind. The choice depends on the specific risk profile identified in due diligence. For cross-border enforcement context, see our guide on enforcing a Netherlands judgment in Poland.

For a comparison with red flags identified in transactions involving Ukrainian buyers, see our related guide on red flags in Polish M&A for Ukrainian buyers.

Frequently asked questions

Q: How long does a standard due diligence process take for a Polish sp. z o.o. acquisition?

A: A focused red-flag review covering corporate, tax, and employment matters typically takes 15 to 20 business days for a single-entity target. A full due diligence process for a group of companies with multiple subsidiaries takes 30 to 60 days. The timeline depends on the completeness of the data room and the responsiveness of the seller's management.

Q: Is it a common misconception that a KRS extract is sufficient to verify corporate authority?

A: Yes. The KRS extract confirms registered information but does not reflect unregistered changes. A board appointment or resignation takes effect under Polish corporate law from the date of the relevant resolution – not from the date of KRS registration. Buyers who rely solely on the KRS extract without reviewing the underlying resolutions risk dealing with a representative whose authority has changed since the last filing.

Q: What does a Polish M&A transaction typically cost in legal fees for a Netherlands buyer?

A: Legal fees for a Polish acquisition depend on transaction size, deal complexity, and the scope of due diligence. For a mid-market share purchase in the range of EUR 5m to EUR 30m, buyers should budget for Polish legal fees of EUR 25,000 to EUR 80,000. This covers due diligence, transaction documentation, and closing. Tax advisory and regulatory filings are typically scoped and priced separately.

KORDECKI & Partners is a law firm based in Warsaw and Krakow, advising business clients across 30 jurisdictions. Our team combines expertise in Polish and international law with a practical approach to corporate M&A transactions, cross-border acquisitions, and regulatory compliance. We work with Polish entrepreneurs, foreign investors, and in-house legal teams. To discuss your situation, contact info@kordeckipartners.com.