Most groups that have been in Poland for a while end up with two companies that should be one. Not a parent and its subsidiary - those are the easy case - but two siblings that often have nothing to do with each other. One came in with an acquisition in 2016 and sits under the group’s US arm; the other is a leftover from a different deal, in a different industry, held through the Italian side of the house. On the structure chart a gulf of holdings separates them. What they share is a single ultimate owner at the top, and no good reason to stay two companies.

Nobody exchanges anything by merging them. The owner ends up with exactly what it had, in one company instead of two. So why, head office asks, should this look like a full merger with a share exchange at the centre of it?

Since 2023 it does not have to.

When can two Polish companies merge without a share exchange?

Art. 515¹ of the Commercial Companies Code (Kodeks spółek handlowych, “KSH”) lets a merger run without the acquiring company issuing any shares at all - a share-less merger (połączenie bezemisyjne) - in two situations: where one shareholder holds all the shares in the merging companies, directly or indirectly, or where the shareholders hold their shares in the same proportion in each of them. In the Code’s terms, the sibling that survives is the acquiring company and the one that disappears is the acquired company.

For a group, the first situation is the natural one, and it is broader than “sister companies” suggests. The shares need not be held directly. One shareholder can own 100 per cent of company A outright and 100 per cent of company B through three intermediate entities, and the test is still met. What matters is that the ownership of both companies traces back, without a gap, to the same shareholder - however many countries and holding levels sit in between.

Where that holds, Art. 516 § 6¹ KSH strips out the machinery that exists to protect a share exchange that is not happening: the examination of the plan by a court-appointed expert (biegły), the exchange ratio and allotment terms in the merger plan, and - towards the acquired company - its management board report and its shareholders’ resolution.

In plain terms: the acquiring company swallows its sibling, issues nothing, and the sibling does not hold a merger meeting.

How this differs from merging a subsidiary into its parent

If you have read my article on the simplified upstream merger, this route will feel familiar - with one part reflected in a mirror.

In the upstream case a parent absorbs a subsidiary it owns in full, and the simplification falls on the acquiring company: it need not pass a merger resolution at all. In a horizontal merger the statute puts the relief on the other side. The acquiring company does pass a resolution, and the acquired company is the one that passes no resolution and writes no board report.

Why the route sat unused at first

For its first two years Art. 515¹ was, in business terms, a dead letter - and the reason was tax, not company law.

When an acquiring company receives assets in a merger, their market value above the issue value (wartość emisyjna) of the shares it grants is income (Art. 12(1)(8d) of the Corporate Income Tax Act, “CIT Act”). The tax authorities applied that rule as written: with no shares issued, there was nothing to set against the assets, so the whole market value of what the acquiring company received was treated as its taxable income. Groups that wanted to consolidate siblings often did it the long way round instead - moving companies up and down the ownership chain first, through share sales and in-kind contributions of shares (aport), until the two siblings had become a parent and a subsidiary, and only then merging under the upstream route.

A September 2025 amendment to the CIT Act closed the gap: that charge now expressly does not arise in a merger under Art. 515¹ § 1 KSH. With that, the horizontal merger stopped being a paper option and became the obvious way to take a sibling out of the structure.

For precision: the amendment switched off one charge, not the whole tax analysis. The step-up on the assets received still has to be neutralised in the usual way - the acquiring company carries over their tax values and keeps them attached to activity in Poland (Art. 12(1)(8c) and 12(4)(3e) CIT Act) - and the merger needs a documented commercial reason.

I am an advocate, not a tax adviser, and the tax questions every merger raises have an article of their own. The point here is narrower: the specific obstacle that made this route pointless is gone. Put the rest to your Polish tax adviser before you sign the plan.

The “same proportion” version is not the automatic one

Watch the two limbs of Art. 515¹ § 1. Both let you merge without issuing shares. But only the first - one shareholder holding everything - carries the automatic relief of Art. 516 § 6¹. The second limb, where the shareholders merely hold their shares in the same proportion, does not switch those steps off by operation of law.

That is not the setback it sounds like. In a same-proportion structure the same people own both companies, so they can simply consent to drop the two heaviest items - the management board reports and the court-appointed expert’s examination of the plan - under Art. 503¹ KSH, which needs the agreement of all shareholders of each company. What they cannot remove by consent is a resolution in each company; that they pass anyway, and control. So the second limb is still a real simplification for a group. The difference is that it runs on shareholder consent rather than by operation of law - worth confirming which limb you are in before you build the timetable, because the paperwork is not identical.

The asset that moves for nothing

Here is the part that deserves a board’s attention, and it is easy to miss.

Because no shares are issued, in an indirect structure the group company that directly owns the acquired company loses that holding and receives nothing in return. Across the group the ultimate owner is no worse off; that one company, on its own, has given up an asset for no consideration. Its management board owes its duties to that company, not to the group.

The law does not even ask that company. Under the automatic route the acquired company passes no merger resolution (Art. 516 § 6¹ KSH), so the holding disappears without its direct owner ever voting on it - the intermediate company is not a party to the merger at all.

Polish law has an instrument built for exactly this conflict - a group of companies (grupa spółek) disclosed in the register, in which the parent may give the subsidiary a binding instruction (wiążące polecenie) justified by the group’s interest, and the subsidiary’s board members who carry it out are not liable for the damage it causes (Art. 21² and 21⁵ KSH). In practice it is barely used: by the end of 2023 only 16 groups had registered across the whole country. Boards proceed on the group interest, as they did before the regime existed, and do not reach for it.

So the takeaway is not to set up a formal group. It is to make sure someone has looked below the line before the plan is signed, wherever the company that loses the holding has creditors of its own.

What this means for you

For a group whose Polish companies all trace back to one owner, the horizontal merger is now nearly as light as the upstream one: no valuer, no court-appointed expert, no exchange ratio, and one fewer meeting than a standard merger. The real cost is professional - the legal and tax work of running the process cleanly - with notarial and administrative fees on top. The two things to settle before anything else are which limb of Art. 515¹ you are in, because it changes the paperwork, and the tax position, which is favourable since September 2025 but never automatic.

Watch out

  • Only the “one owner holds all” limb gets the relief automatically. The “same proportion” limb still needs the shareholders’ consent to drop the expert’s examination and the board reports (Art. 503¹ KSH) - easy when the same owners sit on both sides, but a step, not a default.
  • The acquiring company still passes a resolution. The relief here is the mirror of the upstream route, not a copy of it.
  • Tax neutrality is favourable but conditional. The September 2025 CIT change removed one charge; the step-up rule and the need for a documented commercial reason remain. Settle it before the plan is signed.
  • Indirect structures move an asset for no consideration. Harmless across the group, not always harmless for the company that loses the holding - check for creditors below the line.
  • If one of the sisters is a foreign company, the merger is cross-border. It runs under its own chapter of the Code, which has its own version of this relief (Art. 516¹⁵ § 1 KSH); my article on cross-border mergers covers the parent–subsidiary case.

Next steps

  1. Draw the ownership chain and confirm one shareholder holds 100 per cent of both companies, directly or indirectly.
  2. Establish which limb of Art. 515¹ § 1 you are in - “one owner holds all” or “same proportion” - because it sets the paperwork.
  3. Get the tax position confirmed in writing before the plan is signed.
  4. Have the two companies agree the merger plan in writing - in practice, signed by both management boards - without the exchange-ratio content.
  5. Publish the plan, and make the merger documents available to shareholders, at least one month before the acquiring company’s shareholders’ meeting.
  6. Pass the acquiring company’s resolution before a notary; under the automatic route the acquired company passes none.
  7. File to register, and plan the effective date backwards from the entry.