PRIVATISATION IN POLAND 25 Years of Experiences. Ownership transformation in Poland – legal basis Basic legislation related to the regulation of privatisation processes: Act of 30 August 1996 on Commercialisation and Privatisation Act of 25 September 1981 on State-owned Enterprises Act of 29 July 2005 on Public Offering, Conditions for Introducing Financial Instruments to an Organised Trading System, and on Public Companies Act of 29 July 2005 on Trading in Financial Instruments Regulation of the Council of Ministers of 30 May 2011 on detailed procedure for selling State Treasury shares Regulation of the Council of Ministers of 30 May 2011 on the company analysis carried out before the shares held by the Treasury are offered for sale Commercial Companies Code Objectives of privatisation Privatisation objectives are multidimensional and multifaceted • improvement of management effectiveness in business entities • reduction of public sector involvement in the economy - development of effective and flexible private sector • increase of possibilities for companies to raise capital using capital market instruments, capital market development • increase of market competitiveness • assurance of state budget revenues and provision of funds for separate earmarked funds • creation of an atmosphere of encouragement, as well as conditions for the development of employee share ownership plan • attraction of new investment, support of new ventures Types of privatisation Indirect privatisation Direct privatisation involves sale of shares held by the Treasury involves disposal of all assets of a state-owned enterprise Assumes earlier commercialisation, i.e. the transformation of a state-owned enterprise into a company wholly owned by the Treasury (sole shareholder) The direct nature of the privatisation results from implementation of the process without the commercialisation stage (used mainly in period 1990-2000) Indirect privatisation - the most common modes publicly announced auction public tender negotiations undertaken on the basis of a public invitation public offering Indirect privatisation - mode selection Selection of the disposal mode of shares held by the Treasury is made by the minister of Treasury Main criteria for mode selection • size; economic and financial standing of the entity • situation on the financial market • significance of the entity to the national economy • optimisation of cost and duration of privatisation processes • adjustment to the investment needs • recommendation of privatisation advisor Indirect privatisation - provision of shares The Treasury may dispose of up to 85% of state-owned shares Entitled employees of commercialised state-owned enterprises and companies established in result of commercialisation may acquire free of charge up to 15% of shares held by the Treasury Persons entitled to acquire shares: 1. individuals who were employees of the commercialised state-owned enterprise on the date when it was struck from the Register of Entrepreneurs or on the date of when the agreement was concluded to dispose of the enterprise by way of its contribution to the company 2. individuals who were party to a management agreement on the date when the commercialised stateowned enterprise was struck from the Register of Entrepreneurs or on the date of when the agreement was concluded to dispose of the enterprise by way of its contribution to the company 3. employees with at least a 10-year work experience in the commercialised state-owned enterprise or in a company that was privatised by being contributed to the company 4. individuals who, having worked 10 years in the state-owned enterprise subjected to privatisation, have been taken over by other work enterprise 5. farmers or fishermen - individuals engaged in farming or fishing Indirect privatisations - key transactions to date IPO of a leading energy group ($830m), despite challenging market conditions IPO of the largest Polish energy group ($2.1bn). Ranked as the largest IPO in Europe for 2009 ABB of the leading Second stage of IPO of Poland’s A 63.8% stake global copper privatisation. leading insurance sold by the product: 10% of Sale of 16.05% company ($2.7bn). government into MoT shares MoT shares on The largest IPO in the market for ($723m). It was the WSE through Europe since 2007. $422m the largest ever Fully Marketed Largest ever IPO in ABB in CEE region Offer ($379m) CEE region Nov '08 Jun '09 Nov '09 Jan '10 IPO of the leading thermal coal miner ($166m). Reopening of IPO market in Europe Rights issue of PKO BP , the largest Polish bank by assets ($1.6bn). Opening of rights issue market for financial institutions in Poland 11.9% stake offered by the Government in a $449m ABO Feb '10 Mar '10 Apr '10 May '10 Jun '10 Aug '10 Oct '10 Sale of 10% of shares of leading oil &gas company through ABB on WSE ($142m) Completion of privatisation through sale of 46.7% shares through ABB ($395m) ABB of a 42% stake sold by the MoT and state bank BGK ($119m) A 51.6% stake of the second largest utility company in Poland was floated on the WSE on 30 June ($1.3bn) 12.1% stake offered by the Government in a $112m IPO. Mar '11 May '11 Jun '11 The remaining stake in TP S.A., telecom company was sold on the WSE on 5 August 2010 ($292m) 10.8% stake offered by the Government in a $1.3 bn ABO 34.3% stake sold by the MoT in a $1.9bn IPO. Largest CEEMEA IPO since April 2010, 5th largest CEEMEA equity offering ever Feb '12 10% stake sold by the Government in $1.2bn ABO 11.75% stake offered by the Government and BGK in a $1.6bn ABO 7.0% stake offered by the Government in a $940m ABO Jul '12 7.0% stake offered by the Government in a $799m ABO Nov '12 Jan '13 50% stake sold by the Government in a $220m IPO on the WSE Feb '13 IPO of Polski Holding Nieruchomości, one of the leading real estate company in Poland (PLN239m) Direct privatisation 1. sale of an enterprise 2. contribution of an enterprise to a company 3. transferring an enterprise for use against payment Direct privatisation allows to make quick ownership changes in small and medium-sized state-owned enterprises Both individuals or legal persons may participate in the privatisation process Direct privatisation is carried out by the founder body of state-owned enterprises on behalf of the Treasury, with the consent of the Minister of Treasury Revenues from privatisation 2011 – 2014 - disposals Budgetary net revenues Funds 6 267,6 mln zł (48,0%) 2011 6 791,1 mln zł (52,0%) 3 490,8 mln zł (38,1%) 2012 5 667,4 mln zł (61,9%) 1 662,4 mln zł (37,8%) 2013 2 734,0 mln zł (62,2%) 351,4 mln zł (37,8%) 2014 652,3 mln zł (65,0%) 40% Demographic Reserve Fund 15% Fund for Entrepreneurs' Restructuring 5% Restitution Fund 2% Treasury Fund 2% Fund for Polish Science and Technology Ownership transformation 8 453 state owned enterprises 1990 815 companies 2011 639 companies 2012 2013 2014 718 companies 568 companies Ownership transformation 56 not active 103 In liquidation 568 72 Entities in supervision In bankrupcy procedures 97 187 Other active entieties Employees shares only 6 of march 2015 Supervision of financial and economic activities of companies with Treasury shareholding The Minister of Treasury's duties - in the area of supervision of joint stock companies and limited liability companies - resulting from the ownership governance powers and exercising rights from shares in companies with Treasury shareholding include, among others, analysis of the management board requests for consideration and approval of: financial statements, management board reports on company activity, distribution of profit or net loss coverage, giving a vote of approval to members of management board and supervisory board for the performance of their duties. THANK YOU FOR YOUR ATTENTION! Ministry of Treasury Republic of Poland www.msp.gov.pl