Under the Polish Public Trading in Securities Law Act of 1997, the issue of stocks to more than 300 employees is treated as a public offer. According to Article 2 of this Act, public trading in securities consists of offering for purchase, or purchasing securities issued in series, executed through mass media communication or otherwise, where the offer is addressed to more than 300 people or to unspecified addressees. The same provision provides for exceptions from the public trading, which do not yet encompass issues pertaining to employees.
This regulation compels unlisted companies at the Warsaw Stock Exchange to start administrative procedures before the Polish SEC Board in order to be admitted to public trading. The admission is received through a decision, which should be given by the SEC within two months from the date of submission of the application. However, since the investor is obliged to prepare very detailed documentation, which constitutes an integral part of the application, it may take six months. This time-consuming procedure, combined with the broad legal requirements and restrictions imposed, often discourages companies from carrying out Employee Stock Option Plans.
The situation will radically change from January 1 2001 with the expected entry into force of amendments to the Public Trading in Securities Law Act. This provides for an exception from SEC requirements in cases of issues addressed to employees of companies registered under Polish law, whose parent companies are seated abroad.