A mid-size technology company based in California identified a Polish spółka z ograniczoną odpowiedzialnością (private limited liability company, sp. z o.o.) as a target for acquisition. The Polish business looked attractive on paper: growing revenues, a skilled engineering team, and an established client base in Central Europe. Due diligence, however, told a different story.

Polish M&A transactions carry jurisdiction-specific risks that standard United States due diligence frameworks do not automatically capture. The National Court Register (Krajowy Rejestr Sądowy, KRS) discloses structural and legal history that buyers must review before signing. Undisclosed encumbrances, incomplete corporate records, and employment liabilities can each trigger personal liability for the acquirer's management or reduce post-closing value by millions of zloty.

This case study draws on an anonymised matter involving a United States buyer acquiring a Polish sp. z o.o. It covers the background, the red flags our team identified, the strategy applied, and the lessons transferable to any cross-border deal in Poland. The structure follows four stages: background, risk identification, deal strategy, and takeaways.

What does the background of a Polish target reveal?

The target was a Warsaw-registered sp. z o.o. with three shareholders, two of whom were natural persons and one a holding vehicle registered in Cyprus. Annual turnover exceeded PLN 18m. The buyer's initial information memorandum showed clean financials and no disclosed litigation. That picture changed within the first week of formal due diligence.

A KRS extract revealed that the company had changed its management board three times in four years. Under Polish corporate legislation, each change in board composition triggers a re-registration obligation. Two of those changes had been registered late – one by more than 90 days. Late registration does not automatically invalidate board resolutions, but it creates uncertainty about the authority of persons who signed contracts during the gap period.

The Cypriot holding vehicle held 40% of shares. Polish law imposes disclosure obligations on beneficial owners through the Central Register of Beneficial Owners (Centralny Rejestr Beneficjentów Rzeczywistych, CRBR). The CRBR record was outdated by over 18 months. That gap can attract a fine of up to PLN 1m under anti-money-laundering legislation – a liability that transfers with the shares unless contractually addressed.

Which red flags emerged during due diligence in Poland?

Due diligence in Poland must cover at least five registers beyond the KRS: the CRBR, the land and mortgage register (for any real property), the pledge register, the tax authority's VAT register, and the Social Insurance Institution (Zakład Ubezpieczeń Społecznych, ZUS) clearance. Each register can surface a deal-blocking issue. In this matter, three registers produced red flags within the first two weeks.

First, the pledge register showed a financial pledge over the target's receivables portfolio, securing a loan from a Polish commercial bank. The pledge had not been disclosed in the seller's representations. The secured amount was approximately PLN 3.2m. Under Polish secured transactions law, a financial pledge survives a share transfer unless the secured creditor formally releases it. The buyer faced a choice: require release before closing or price in the liability.

Second, ZUS records indicated outstanding social insurance arrears of approximately PLN 420,000. Polish law makes the acquirer of a business jointly liable for pre-acquisition ZUS arrears in certain restructuring scenarios. Our team confirmed that the share deal structure limited that exposure – but only if the transaction was structured correctly and representations were tightly drafted.

Third, two former employees had filed claims before the Labour Court (Sąd Pracy) alleging unlawful termination. Each claim was below PLN 80,000, but the existence of pending litigation had not appeared in the seller's disclosure letter. For context on employment risk in Polish transactions, see our employment practice page for United States clients.

We also identified a dividend distribution that had been resolved by the shareholders' meeting but not yet paid out. That undistributed profit remained on the balance sheet and would have inflated the enterprise value calculation. On dividend mechanics in Polish companies, our separate guide on dividend distribution rules for Polish companies sets out the applicable framework.

How did the deal strategy address each risk?

The buyer's initial instinct was to walk away. That reaction is understandable but often premature. Polish M&A red flags are frequently curable – the question is who bears the cost and how the cure is documented. Our team prepared a risk matrix mapping each finding to a contractual remedy, a price adjustment, or a closing condition.

We secured a reversal of the undisclosed pledge risk for a technology sector client in the Mazowieckie region (winter 2025): the seller obtained a formal bank release within 21 days, documented in a notarial deed, and the release was made a condition precedent to closing. That structure is replicable in most Polish share deals where the secured creditor is a domestic bank.

The ZUS arrears were addressed through an escrow mechanism. PLN 420,000 was held in a Polish escrow account for 12 months post-closing. If ZUS issued a demand within that window, the escrow covered the payment. If not, the funds were released to the seller. Escrow periods of 12 to 24 months are standard in Polish mid-market transactions for tax and social insurance tail risk.

The Labour Court claims were disclosed in a specific indemnity clause. The seller agreed to indemnify the buyer for any award exceeding PLN 10,000 per claim, with a combined cap of PLN 250,000. That cap was set slightly above the aggregate claimed amount, giving the buyer full coverage without over-engineering the negotiation.

The undistributed dividend was excluded from the enterprise value calculation. A dividend waiver resolution was passed before signing, reducing the equity bridge adjustment and preventing a post-closing dispute over working capital normalisation.

What lessons should United States buyers take from this matter?

Polish due diligence is not a box-ticking exercise. It requires active register searches, not reliance on seller representations alone. The KRS, CRBR, pledge register, and ZUS clearance each require a separate request. No single document substitutes for all four. United States buyers accustomed to EDGAR filings or state UCC searches will find the Polish system more fragmented – but equally navigable with local counsel.

Our team obtained full contractual protection for a manufacturing client in Silesia (spring 2025) after identifying a late board re-registration that had allowed an unauthorised signatory to execute a supply agreement worth PLN 5.4m. The fix required a ratification resolution and a counterparty acknowledgment – both completed within 14 days of identification.

Three practical takeaways apply to most United States buyers entering the Polish market:

  • Request KRS extracts and CRBR records on day one – not after heads of terms are signed.
  • Treat ZUS and tax clearance certificates as closing conditions, not post-closing deliverables.
  • Structure indemnities around specific findings, not generic warranties – Polish courts interpret warranty clauses narrowly.

For buyers considering whether to acquire shares or assets, the branch-versus-subsidiary analysis is equally relevant at the structuring stage. Our guide on branch vs. subsidiary in Poland addresses that question in detail. The same structural logic applies when a United States group is deciding how to hold a Polish acquisition vehicle post-closing.

What to prepare before launching Polish M&A due diligence:

  • Certified KRS extract and full articles of association of the target sp. z o.o.
  • CRBR printout and verification against shareholder register.
  • ZUS and tax authority clearance certificates dated within 30 days of signing.
  • Pledge register search covering all registered collateral over company assets.
  • List of all pending and threatened litigation from the target's management board.

Specific risks in a Polish transaction demand specific contractual responses. A generic representations-and-warranties framework drafted under New York law will not map cleanly onto Polish corporate mechanics. Closing conditions, escrow structures, and indemnity caps must be calibrated to Polish statutory timelines and court practice – or the buyer forfeits protection that was entirely achievable.

To receive an expert assessment of your Polish acquisition target, contact info@kordeckipartners.com.

Frequently asked questions

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

A: A mid-market Polish due diligence process typically runs four to six weeks from data room access to report delivery. Register searches at the KRS and CRBR can be completed within two to three business days. ZUS and tax clearance certificates require a formal application and may take up to 30 days – making early submission a priority rather than a closing formality.

Q: Is it a misconception that share deals in Poland avoid all pre-acquisition liabilities?

A: Yes. A common misconception is that buying shares rather than assets insulates the buyer from the target's historical liabilities. In a share deal, the buyer acquires the legal entity with all its obligations intact. ZUS arrears, undisclosed pledges, and tax assessments issued after closing but covering pre-acquisition periods remain the company's liability. Contractual protections – escrow, indemnities, closing conditions – are the only practical mitigation.

Q: What is the cost of engaging local Polish counsel for M&A due diligence?

A: Fees vary with transaction size and complexity. For a mid-market Polish acquisition (enterprise value EUR 5m to EUR 30m), legal due diligence fees typically range from EUR 15,000 to EUR 50,000 depending on the number of registers searched, the volume of contracts reviewed, and whether employment or real estate work streams are included. Engaging counsel early reduces the risk of costly re-work after heads of terms are signed.

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 cross-border M&A and corporate transactions. We work with Polish entrepreneurs, foreign investors, and in-house legal teams. To discuss your situation, contact info@kordeckipartners.com.

Disclaimer: This publication is provided for informational purposes only and does not constitute legal advice. The information herein should not be relied upon as a substitute for professional legal counsel tailored to your specific circumstances. KORDECKI & Partners assumes no liability for actions taken or not taken based on the contents of this material. For advice regarding your particular situation, please contact info@kordeckipartners.com.