New legislation applying to UK entities operating in the Polish financial markets
Due to the possibility of a “hard” (no-deal) Brexit, the Polish government has taken tangible actions to regulate in the generally applicable law the rules of operation of certain entities of the financial market from the United Kingdom of Great Britain and Northern Ireland (the “Financial Markets Bill”).
The Financial Markets Bill developed very quickly, and was signed by the President and published in the Journal of Laws on April 2, 2019 (Journal of Laws of 2019, item 620).
However, the Bill’s entry into force is on the condition and on the same date as of the actual event of a “hard” Brexit.
Scope of the proposed Polish regulations
Of particular interest are the regulations concerning financial market entities based in the United Kingdom operating in Poland. In the Financial Markets Bill, the scope of these entities includes: (i) Banks, (ii) Payment Institutions, (iii) Participants in systems as understood under Directive 98/26/EC on settlement finality in payment and securities settlement systems, (iv) Insurance Companies, (v) Reinsurers, (vi) Investment firms regarding brokerage activities, and (vi) Investment funds (“UK Foreign Entities”).
These entities are regulated separately per type, although the common provisions are described in the paragraph below.
In the event of a “hard” Brexit, these UK Foreign Entities will become foreign legal entities conducting various regulated activities, established in the territory of a country other than a Member State of the European Union; thus, the “EU passporting/notification” regime will no longer apply.
With this in mind, the Financial Services Bill proposes grandfather clauses per type of entity, under which, in general, UK Foreign Entities operating in Poland at the moment of a “hard” Brexit, may continue to perform some of the previously concluded agreements (but neither extend them or conclude new ones) in the scope of activities previously undertaken for Polish clients for a period of up to 6-24 months (depending on the specific type of legal entity and activity), or until the approval of the Polish Financial Supervision Authority regarding establishment of a branch office of the Foreign Entity in Poland. The purpose of introducing this provision is to ensure the protection of interests of Polish clients of UK Foreign Entities.
Other Brexit-related bills and their scope
Apart from the Financial Services Bill, the Polish government has prepared two other bills anticipating “hard” Brexit.
One of them regulates the recognition of professional qualifications acquired by Polish and EU citizens in the UK (European Professional Card procedure).
The other regulates a number of other matters including: (i) the stay of UK citizens and their family members in Poland, (ii) granting and payment of social security benefits taking into account the periods of work and stay in the UK, (iii) the business activity of UK employment agencies in Poland, (iv) seconding employees from the UK to Poland, (v) employee claims in the event of insolvency of an employer being a UK entrepreneur, (vi) conducting business activity by UK citizens in Poland and their access to public health insurance in Poland, (vii) recognition of driving licenses issued in the UK, and (viii) enforcement proceedings conducted on the basis of UK court decisions.
These other Brexit-related bills contain the same conditional mechanism of entering into force as the Financial Markets Bill.
Jakub Lach, Associate, Czabański & Gałuszyński