Mandatory Dematerialization of Shares in Polish Private Companies: A Missed Opportunity to Do Things Right

On 1 March 2021, Polish company law underwent a profound change when the reform introducing the mandatory dematerialization of shares in non-listed companies entered into force. On that day, share certificates became ex lege invalid and were replaced by entries into electronic share registers or securities accounts held by investment firms. With this step, the legislator dealt the nearly-final blow to document securities in Poland, given that the publicly-traded shares have already been subject to dematerialization since 1997 and most of other securities, both listed and non-listed, followed suit in recent years. Like in various jurisdictions which had gone through this process before, the Polish legislator had several options regarding the electronic securities regulation. The article analyses the essential features of the reform and puts it in a broader, comparative context. It also aims to assess whether the new law responds to theoretical and practical challenges inherent to electronic securities in times of innovative financial technologies and fast-changing legislation. The authors argue that an electronically registered share is de facto a new type of a dematerialized security that the reform added to the current catalogue, but its normative design is incomplete and far from what should be expected given the importance of its regulation in company law.