Pre-emptive right vs. the right of acquisition of shares or stocks by National Agricultural Support Cente (NASC) – key differences

There are various restrictions on the freedom to dispose of shares or stocks in commercial companies. One of such mechanisms is the pre-emptive right and the right of acquisition exercised by the National Agricultural Support Cente (NASC). Although both of these instruments interfere with the principle of freedom of trade, their nature and legal effects are significantly different.

 

The pre-emptive right – classic civil law construction

 

Pre-emptive right is a right vested in a certain person (the holder) to acquire a thing or a right under the terms of a contract concluded with a third party. In the context of shares and stocks, this means that after the conclusion of a conditional sale agreement, the entitled person may exercise the right of pre-emption, taking the place of the buyer.

The characteristics of the pre-emptive right are:

• conditional effectiveness – the pre-emptive right becomes effective only after the conclusion of a sales contract with a third party;
• procedure – the seller must notify the right holder of the content of the contract, while the right holder may exercise the pre-emptive right within a certain period of time;
• protective nature – this right is often intended to protect the interests of shareholders or the company from an uncontrolled change in ownership structure.

 

Right of acquisition by the NASC – specific statutory interference.

 

For certain transactions involving companies that own agricultural real estate, the NASC has a statutory right to acquire shares. This is based primarily on the Act of April 11, 2003 on the formation of the agricultural system.

The characteristics of the right of acquisition by the NASC are:

 

• effectiveness independent of the will of the parties – the right of acquisition is exercised by a unilateral statement of the NASC without the need for a prior agreement with a third party;
• unconditional nature – this right does not require conclusion of any conditional sale agreement or depend for its effectiveness on the will of the purchaser;
• public purpose – the main purpose of the acquisition right is to prevent speculative trading in agricultural real estate;
• notification obligation – sales of shares in companies holding agricultural real estate must be notified to the NASC, which then decides whether to exercise the right of acquisition.

The right of first refusal and the right of acquisition by the NASC, although seemingly similar, are in fact significantly different. In practice, entrepreneurs, shareholders and stockholders should be aware of these differences in order to properly prepare for planned transactions and take into account the potential risks associated with restrictions on the trading of shares.

If you are planning a transaction involving shares in a company that owns agricultural real estate, we recommend prior legal consultation to ensure a smooth process and avoid unexpected complications.