The electronic revolution or how the National Court Register is moving with the times

Anna LEHMANN
Corporate Advisory Partner at RSM Poland

Karolina HAHN
Corporate Advisory Senior at RSM Poland

Each of us - both privately and professionally - uses the Internet more and more. According to surveys from 2017, Poles spend almost 6 hours a day on the Internet on average. From March 15, 2018, entrepreneurs will have the opportunity to stay on the Internet even longer due to the possibility of establishing direct contact with Economic Courts through electronic access to the National Court Register (NCR). The Act of January 26, 2018 Amending the Act on the National Court Register and Certain Other Acts (hereinafter referred to as the Act on Changing the National Court Register) is in force, and is currently awaiting publication in the Journal of Laws of Poland and which will come into force from March 15, 2018.

The revolution presented by the Ministry of Justice will take place in stages, but due to the speed of introducing some of the changes, they cannot be deemed evolutionary. Let's take a closer look at the proposed facilitations for entrepreneurs.

The financial statements are up first

The obligation to prepare financial statements only in electronic format will be provided as of October 1, 2018. However, as of March 15, 2018, financial statements prepared in paper format must be submitted to the National Court Register using the ICT system. In practice, this means a certain "welcome" inconvenience to the entrepreneur, who will be required to equip himself with a qualified electronic signature or signature confirmed by the trusted ePUAP profile, in order to be able to sign documents submitted to the National Court Register.

The mere use of a judicial ICT system means the necessity to create an account in the S24 portal, which is used to file procedural writs in the registration proceedings. The Ministry of Justice assures that the use of the e-NCR system will be possible for both Polish citizens and foreigners - however, it is not known in what language.

The amended regulations abolish the obligation to submit a company's financial statements separately to the tax office, because these documents will be transferred via the ICT system to the Central Tax Data Registry.

Digitization in European style

In implementing the Directive of the European Parliament and of the Council (EU) 2017/1132 of June 14, 2017, on certain aspects of company law, the so-called BRIS directive (Business Registers Interconnection System) into the Polish legal system, the legislator is gradually guiding Polish entrepreneurs from the analog world into the digital world. This means such useful novelties for them as:

• keeping registration files of the companies in an electronic version, making them publicly available only in electronic format. Although this change will come into force as of March 1, 2020, today entrepreneurs can enjoy the prospect of obtaining access to all registration documents of their contractors without the need of visiting the reading room of the National Court Register;
• electronic delivery of pleadings by the courts and ongoing monitoring of the proceedings in the ICT system;
• providing full data about companies, i.e. the possibility of obtaining an online full excerpt, not just a current excerpt;
• creation of the Central Repository of Electronic Copies of Notarial Deeds, which will appear as early as April 9, 2018. Electronic copies and extracts of all notarial deeds that are subject to the disclosure obligation in the Register of Entrepreneurs of the National Court Register will be stored there. Although these resources will not be made available to the public, they will be accessible to notaries, courts and other state bodies, which may contribute to reducing the number of documents that the entrepreneur must obtain and submit for each activity.

Every rose has its thorn

In order for these changes to take place, entrepreneurs must also have their contribution to digitization. Therefore, the legislator will replace the traditional paper method of contacting entrepreneurs with the National Court Register with a fully digital contact, starting from March 1, 2020. Only associations, foundations and public healthcare institutions will have a choice as to how to communicate with the court (electronically or in paper format). Entrepreneurs will have to face some technical disadvantages, such as the creation of electronic signatures and the handling of a judicial ICT system from personalized accounts on the S24 portal. What remains is the hope that the planned digitization will have the effect the Ministry of Justice is hoping for, that is the facilitation of communication between the entrepreneur and the court and, above all, speeding up the pace at which individual cases are dealt with.

No less important, though not digital

In addition to changes related to the electronic revolution, the Act on Amending the National Court Register also provides for other important innovations, including:

• a ban on performing functions in a company by persons validly convicted of the so-called economic crimes, including not only the members of the company bodies and liquidators, but also proxies. This prohibition will be extended to proxies on October 1, 2018, which will mean the refusal to enter such a person by the court and an automatic loss of rights for existing proxies who are convicted persons;
• the possibility for the court to effectively establish the representatives of the entrepreneur by imposing a fine in the total amount of PLN 1,000,000 (the sum of individual fines), also on the company's shareholders in the absence of its management board;
• liquidation of the Insolvent Debtors Register and its replacement with the Central Register of Restructuring and Bankruptcy starting from February 1, 2019.

A story with a happy ending?

For the 17 years of operation of the National Court Register, entrepreneurs have struggled with the registration bureaucracy to set up a new company, carry out any changes in it, even when they wanted to liquidate their company. Now the promise of an efficient, electronic service by the courts is whetting the appetite for short-term and simple registrations without the loss of valuable time, which is what we are accustomed to in our entire digital reality. Admittedly, there are certain doubts on the back of the practitioners' minds: will the ICT system be as simple as promised by the Ministry of Justice and will the judges working in the National Court Register be able to navigate it efficiently, how will services be provided to entrepreneurs with foreign capital, whose board members do not speak Polish, will entrepreneurs endure the inconvenience of having to obtain electronic signatures and renew them every two years, of course, for a fee? There are many questions, and the doubts will be dispelled in the immediate future. It is to be hoped that the bureaucracy accompanying the entrepreneur so far in all the registry proceedings will not move from the analog world into the digital world along with the migration of files.