Sale of an Organized Part of an Enterprise (OPE). Key legal aspects

I. Introduction.

The sale of an organized part of an enterprise (OPE) is one of the most frequently used forms of restructuring and asset disposal in Polish business practice. This transaction, although seemingly similar to the sale of individual assets, differs fundamentally and carries different legal and tax consequences. Correctly classifying the subject of the transaction is crucial, as this determines the obligations of the parties to the transaction.

II. Definition of an Organized Part of an Enterprise (OPE).

An OPE is a set of tangible and intangible assets (including liabilities) that is organizationally and financially separated within an existing enterprise, intended to carry out specific business tasks, and most importantly, could constitute an independent enterprise independently carrying out these tasks. The Polish Civil Code does not provide a legal definition of an OPE, however, in practice, it is assumed that an OPE corresponds to the essence of an enterprise in the objective sense referred to in Art. 55 (1) of the Polish Civil Code.

Key criteria for separating an OPE:

* Functional separation: the set of components must enable to conduct independent operation and to conduct business activities. These cannot be randomly selected elements, but a precisely defined and completed set.

* Organizational separation: the OPE must be formally separated within the company structure (e.g., as a branch).

* Financial separation: it should be possible to allocate revenues, costs, receivables, and liabilities to this specific - to an OPE.

If the above criteria are not met, the transaction will be treated as a sale of individual assets, which will consequently change its legal and tax regime.

III. Legal aspects of the sale of an OPE.

The sale of an OPE must be in writing with notarized signatures, in accordance with Article 75 (1) of the Polish Civil Code. If the OPE includes real estate, the sale agreement must be concluded in the form of a notarial deed.

IV. Liability of the acquirer of an OPE for obligations (succession).

The acquisition of an OPE results in the acquirer being jointly and severally liable with the seller for obligations related to the operation of this part of the enterprise. Pursuant to Article 55 (3) of the Polish Civil Code, "the acquirer of an enterprise or agricultural enterprise is jointly and severally liable with the seller for the acquirer's obligations related to the operation of the enterprise or agricultural enterprise, unless, despite exercising due diligence, the acquirer was unaware of these obligations at the time of acquisition. The acquirer's liability is limited to the value of the acquired enterprise or agricultural enterprise as at the time of acquisition, and at the prices at the time of satisfying the creditor. This liability cannot be excluded or limited without the creditor's consent."

The liability of the acquirer of an OPE is therefore limited to the value of the acquired OPE as at the time of acquisition, and at market prices. Furthermore, this liability does not apply to obligations arising before the acquisition, of which the acquirer was unaware (despite exercising due diligence).

V. Transfer of Employer's rights and obligations.

In the event of the transfer of an OPE, the provisions of Article 23 (1) of the Labor Code should be taken into account. Pursuant to § 1 of the Article 23 (1) of the Labor Code, if a workplace or part thereof is transferred to another employer, the latter becomes, by operation of law, a party to the existing employment relationships.

This means that the acquirer of the OPE becomes the new employer for the employees employed in the transferred part, and the employment relationships continue under the existing terms and conditions. It should be noted that the acquirer and seller have reporting obligations towards the employees of the transferred part of the enterprise.

VI. Summary.

The sale of OPE is an effective restructuring tool, allowing for the separation and disposal of a specific segment of the business. Its VAT neutrality is often a key decision-making factor. However, it is a complex transaction requiring in-depth legal analysis and the preparation of numerous documents to secure both parties to the transaction.

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