Considerations on COM(2023)177 - Amendment of Directives 2009/102/EC and (EU) 2017/1132 as regards further expanding and upgrading the use of digital tools and processes in company law - Main contents
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| dossier | COM(2023)177 - Amendment of Directives 2009/102/EC and (EU) 2017/1132 as regards further expanding and upgrading the use of digital tools ... |
|---|---|
| document | COM(2023)177 |
| date | March 29, 2023 |
(2) In an increasingly digitalised world, digital tools are essential to ensure the continuity of business operations and companies’ interactions with business registers and authorities. In order to increase trust and transparency in the business environment and facilitate companies’ operations and activities in the single market, in particular in relation to micro, small and medium-sized enterprises (‘SMEs’), as specified in Commission Recommendation 2003/361/EC10, it is crucial that companies, authorities and other stakeholders have access to reliable information about companies that can be used without burdensome formalities in a cross-border context.
(3) This Directive responds to the digitalisation objectives set out by the Communications “2030 Digital Compass”11 and “Digitalisation of justice in the European Union”12, and to the need to facilitate the cross-border expansion of SMEs underlined in the Communications “Updating the 2020 New Industrial Strategy”13 and “SME Strategy for a sustainable and digital Europe”14.
(4) Access to, and use of, reliable company information from the registers are still hindered by barriers in cross-border situations. Firstly, company information that users, including companies and authorities, are looking for is not yet sufficiently available in national registers and/or cross-border through the system of interconnection of registers. Secondly, the use of such company information in cross-border situations, including administrative procedures before national authorities or EU institutions and bodies, court proceedings or the setting-up of cross-border subsidiaries or branches, is still hindered by time-consuming and costly procedures and requirements, including the need for apostille or translation of company documents.
(5) All stakeholders, including companies themselves, authorities and the public at large need to be able to rely on information about companies for their business purposes or in administrative procedures or court proceedings. Therefore, it is necessary that company data, which is entered into business registers and accessible through the system of interconnection of registers, is accurate, up-to-date and reliable.
(6) The introduction, by Directive (EU) 2019/1151, of standards for controls on the identity and legal capacity of persons that form a company, register a branch or file documents or information online was an important first step. It is now essential to take further steps to improve the reliability and trustworthiness of company information in registers in order to facilitate its use in cross-border administrative procedures and court proceedings.
(7) While all Member States carry out, to a certain extent, an ex-ante scrutiny of company documents and information before they are entered in the business register, there are different approaches in Member States as regards the intensity of checks, applicable procedures or also the person or body in charge of verifying the information. This results in insufficient trust in company documents or information on a cross-border basis and in situations where company documents or information from a business register in one Member State are sometimes not accepted as evidence in another Member State.
(8) Therefore, while respecting Member State traditions, it is important to ensure that certain checks are carried out in all Member States according to the same standards that guarantee a high level of accuracy and reliability of the information. For this purpose, it is necessary to extend the current standards by making them mandatory in general, not only for fully online formation of companies, but also for any other forms of formation of companies. Similarly, where Member States still allow other filing methods in addition to online filing, the same standards should apply in order to subject all information entered into the register to the same standard.
(9) A preventive administrative or judicial control, respecting Member States traditions including the possible involvement of notaries, should be ensured in all Member States in order to ensure reliability of cross-border company data. A legality check of the company’s instrument of constitution, the company statutes if contained in a separate instrument, and of any amendment of such instruments and statutes, should be carried out, given that these are the most important documents concerning the company.
(10) In order to further cut costs and reduce administrative burdens relating to the formation of companies, including the length of procedures, and to facilitate the expansion of companies in the single market, in particular SMEs, the use of the ‘once-only’ principle should be further extended in the area of company law. This principle is already well recognised in the Union, including under the 2030 Digital Compass Communication as a means to allow public administrations to exchange data and evidence across borders, and used in different areas, such as for instance the once-only technical system for cross-border automated exchange of evidence under the Single Digital Gateway15.
(11) Applying the ‘once-only’ principle entails that companies are not asked to submit the same information to public authorities more than once. For example, companies should not have to resubmit the company documents or information already submitted to the register where the company is registered when creating a subsidiary in another Member State. Instead, information about the company should be exchanged electronically, between the register where the company is registered and the register where a subsidiary is to be registered, using the system of interconnection of registers. Such information should be made available by the business register to any authority, body or person mandated under national law to deal with any aspect of the formation of a company.
(12) In order to increase transparency and trust with respect to companies in the single market, and to facilitate companies’ cross-border operations and activities, it is essential to make more company information available across the Union and to ensure that it is comparable and more easily accessible. This should be done by building on the company information that already exists in national registers and making it available at Union level through the system of interconnection of registers, as well as by providing access to more information both in the national registers and through the system of interconnection of registers.
(13) Information about the place of central administration and the principal place of business is important to increase transparency, and thus reinforce legal certainty with respect to the business relationships of Union companies, including when investing in those companies. This information is also relevant in different contexts such as in cases of insolvency or restructuring, competition law, tax or social security purposes, or for authorities when tackling fraud or abuse, as it can contribute to the identification of fraudulent or abusive letterbox companies. These elements may provide useful information on how companies are conducting business and to what extent companies are connected to the Union.
(14) Article 54 of the Treaty on the Functioning of the European Union refers to the central administration and the principal place of business together with the registered office as decisive links with the Union, and it is common that they are located in the same Member State. However, freedom of establishment, as clarified by the Court of Justice of the European Union, entails the right of a company to have its central administration or principal place of business in a different Member State than the Member State where the registered office is located. In this case, stakeholders should have access to this information in order to take informed decisions and protect their interests. Therefore, in order to provide easier access to this information and reduce administrative burdens for companies and authorities, information about the Member State or third country where the central administration or the principal place of business is situated, when it is not in the Member State of the registered office, should be disclosed in national business registers and made publicly available through the system of interconnection of registers.
(15) In order to protect the interests of third parties and enhance trust in business transactions with different types of companies in the single market, it is important to enhance transparency and provide easier access on a cross-border basis to information about so-called ‘commercial partnerships’. These play an important role in the economy of Member States and are registered in all national business registers, yet there are differences between the types of partnerships and types of information made available about them across the Union, which results in difficulties in the cross-border access to this information. To address this, the same basic information about ‘commercial partnerships’ should be disclosed in all Member States. The disclosure requirements for partnerships should mirror the existing disclosure requirements for limited liability companies but be adapted to the specific characteristics of partnerships. For instance, the disclosure requirements should also cover information about partners, including those that are authorised to represent the partnership. As in the case of limited liability companies, Member States should be allowed to require that partnerships disclose documents or information beyond what is required by this Directive. Where such additional documents or information contain personal data, Member States should process such personal data in accordance with Regulation (EU) 2016/679 of the European Parliament and of the Council16.
(16) Information about ‘commercial partnerships’ should also be accessible at Union level through the system of interconnection of registers in the same way as for limited liability companies, with certain information to be made available free of charge, and they should be unequivocally identified through the European unique identifier (“EUID”).
(17) Shareholders, potential investors, creditors, authorities, employees and civil society associations have a legitimate interest in having access to information related to the structure of the group to which a company belongs. Information about company groups is important to promote transparency and enhance trust in the business environment as well as to contribute to the effective detection of fraudulent or abusive schemes that could affect public revenues and the credibility of the single market. Therefore, information about group structures should be disclosed in business registers and through the system of interconnection of registers for both domestic and cross-border groups.
(18) Ultimate parent companies governed by the law of a Member State should disclose to their national registers basic information about all their subsidiary companies as they are in the best position to provide such information. Where the ultimate parent company is governed by the law of a third country, this disclosure obligation should be met by the subsidiary company closest to the ultimate parent company in the chain of control but established in the Union and governed by the law of a Member State. Where such a subsidiary company is an intermediate parent company, this intermediate parent company should provide information about the entire group, i.e. the ultimate parent company and all its subsidiary companies. Where the group includes several intermediate parent companies established in the Union, the group should select which intermediate parent company should fulfil the disclosure requirement. Where no intermediate parent company is governed by the law of a Member State, the group should select a subsidiary company governed by the law of a Member State to fulfil this disclosure requirement.
(19) In order to provide enhanced transparency about the subsidiaries belonging to a group, the group information and in particular the information about the ultimate parent company and any intermediate parent company governed by the law of a Member State should also be available in the registers of the subsidiaries and, to that end, should be shared with the registers of the subsidiary companies through the system of the interconnection of registers. In addition, Member States where business registers are based on a decentralised structure may also decide to transfer the necessary information between national registers through the system of interconnection of registers.
(20) In order to avoid unnecessary burden, the obligation to update the group information, at least once per year, should be on the ultimate parent or, where applicable, on the intermediate parent or on the subsidiary company governed by the law of a Member State. If no change has occurred within a year, such parent company or subsidiary company should confirm this to its register, which should record and make this information publicly available. In addition, each subsidiary company should be responsible for keeping the information related to its affiliation to the group in its register up to date. In this regard, the ultimate parent or, where applicable, the intermediate parent or the subsidiary company governed by the law of a Member State should provide any changes in the group information to the (other) subsidiaries without delay in order for the subsidiaries to fulfil in time the obligation to keep the group-related information in their register up to date.
(21) Groups of companies may have complex structures. Therefore, a visualisation of the group structure based on the chain of control should be made available through the system of interconnection of registers to provide a comprehensive overview of the group and facilitate a better understanding of the group’s method of operation. This would be drawn up based on information about the position of each subsidiary in the group structure submitted by the ultimate or, where applicable, the intermediate parent or the subsidiary company governed by the law of a Member State.
(22) In addition to common standards for checking company information before it is entered into the register, it is necessary to ensure that the information in the register is kept up to date. The Financial Action Task Force recommendation 24 ‘Transparency and beneficial ownership of legal persons’, as revised in March 2022, includes requirements that company information in business registers be kept accurate and up to date. It is also in companies’ interest to make sure that their information is updated in the register because this information, including the EU Company Certificate, can be relied on by third parties. Therefore, companies should be required to disclose changes to company information without unnecessary delay and the registers should record and make available such changes in a timely manner. While the deadline for the publication of accounting documents is regulated by Directive 2013/34/EU of the European Parliament and of the Council17, the registers should also make them publicly available without unnecessary delay. In addition, in order to further enhance the reliability of company data, companies should confirm once per calendar year that their information in the business register is up to date, including when no change occurred. Companies may do this together with the filing of other changes or when filing accounting documents.
(23) In order to keep company information in registers updated, it is also important to identify companies which no longer fulfil the requirements to continue to be registered in the business register. Member States should have transparent procedures in place to verify, where doubts exists, the status of such companies. While companies may temporarily suspend their activity for valid reasons, it is important that their status in the business register is updated accordingly. For example, indicators could be the fact that a company does not have a functioning board of directors as required by national law, has not filed accounting documents, or lack of any economic activity for some years. Similarly, the fact that a large number of companies are registered at the same address could indicate that some of these companies may have been set up for abusive purposes. Such procedures should include the possibility for companies to explain their situation and provide the necessary data, within reasonable deadlines, and should ensure that the status of the company, for example whether it is closed, wound up, dissolved, economically active or inactive, is updated accordingly. The procedures should also include a possibility, as a last resort, to strike off a company from the register in accordance with the procedures set by national law. Information about these procedures should be publicly available in accordance with this Directive.
(24) In the single market, companies should be able to prove that their company is legally incorporated in a Member State through simple and reliable means, which are recognised cross-border by other Member States. Therefore, a harmonised EU Company Certificate should be established. Companies could apply for such an EU Company Certificate to use it for different purposes, including for administrative procedures before national authorities and court proceedings in other Member States or before EU institutions and bodies. Such EU Company Certificate should be issued and certified by the national business registers, should include essential company information used by companies in cross-border situations, including the company name, its registered office and legal representatives, and should be available in all official languages of the Union. The electronic EU Company Certificate should be authenticated by using trust services as referred to in Regulation (EU) No 910/201418. This EU Company Certificate would also be accessible to third parties, including authorities, which need reliable essential information about companies. While Member States should be allowed to charge a fee for obtaining an EU Company Certificate, registers should be required to provide, upon request, each company registered in that register with its own EU Company Certificate free of charge at least once a year. Registers and authorities in other Member States should accept an EU Company Certificate in accordance with this Directive.
(25) In order to further facilitate cross-border procedures for companies and simplify and reduce formalities, such as apostille or translation, a digital EU power of attorney should be established. The digital EU power of attorney will be a multilingual standard model based on a common European template which companies may choose to use in cross-border situations. It should have a minimum mandatory content, while it would be drawn up in accordance with national legal and formal requirements. The standard digital EU power of attorney would only exist in digital form and it should be authenticated by using trust services as referred to in Regulation (EU) No 910/2014. In addition, in order to contribute to higher security of transactions, the digital EU power of attorney should be filed in the register of the company where third parties that can demonstrate legitimate interest can consult it. In particular, third parties, such as lawyers, notaries, credit and financial institutions or competent authorities to whom the digital EU power of attorney is presented, could thus verify the existence of these powers in the register of the company. Member States may also require that the digital EU power of attorney is filed, in addition, in another register in accordance with national law. In order to overcome language barriers and facilitate their use, the template for an EU Company Certificate and a standard model of the digital EU power of attorney should be available on the E-justice portal in all Union languages.
(26) Companies often face difficulties and administrative barriers to use company information, which is already available in their national business register, in cross-border situations, including when dealing with competent authorities or in court proceedings in another Member State. The company data available in the business register of one Member State is often not accepted in another Member State without burdensome formalities that generate costs and delays. Therefore, in order to facilitate cross-border activities in the single market, Member States should ensure that no legalisation or similar formality, such as apostille, be required in respect of certified copies of documents and information related to companies obtained from registers. The same approach should also be applied for documents and information exchanged through the system of interconnection of registers (for example, pre-operation certificates) as well as for notarial acts or administrative documents in the context of the procedures under this Directive which are used in cross-border context. Such procedures include the formation of companies and the registration of branches in another Member State, cross-border conversions, mergers and divisions.
(27) At the same time, in order to prevent fraud or forgery, it should be possible for the authorities of the Member State in which the company document or information is presented, where they have a reasonable doubt as to its authenticity, to verify the document or information via the issuing register or the register in its own Member State, which could exchange information about the authenticity of the document through the system of interconnection of registers. Such exchange of information should contribute to the mutual trust and cooperation between Member States within the single market.
(28) The companies’ instruments of constitution are sometimes drawn up in two or more languages, one of them often being an official Union language broadly understood by the largest possible number of cross-border users. Companies also often voluntarily publish a translation of their instrument of constitution into such a language on their websites. In addition, an increasing amount of company information contained in the instrument of constitution is separately available and easily identifiable with the assistance of multilingual labels through the system of interconnection of registers. Company information will also need to be stored in business registers in a machine-readable and searchable format or as structured data, in line with Directive (EU) 2019/1151, which will facilitate machine translation of such data. These developments make it easier to consult and use such company information in cross-border situations without the need for official translation. Therefore, legal requirements for certified translations of the instrument of constitution and, similarly, of other documents provided by the business register should be limited to what is strictly necessary and their imposition should be allowed only in specific cases such as where there is a requirement for certified translations of the documents to be disclosed or where certified translation is required by other areas of law, such as in the context of judicial proceedings.
(29) In order to increase transparency, facilitate access to company information and create more connected public administrations on a cross-border basis in the single market, it is important to connect the already functioning Union level systems of interconnection that hold important information about companies. Therefore, the system of interconnection of registers (BRIS) should be connected with the EU Beneficial Ownership Registers Interconnection System (BORIS), established by Directive (EU) 2015/84919 as amended by Directive (EU) 2018/84320, which links national central registers containing information on the beneficial owners of companies and other legal entities, trusts and other types of legal arrangements, and with the EU Insolvency Registers Interconnection system (IRI) established in accordance with Regulation (EU) 2015/84821. The EUID should be used to link the information about a particular company across these systems. However, such connection between the systems should not affect the rules and requirements regarding the access to information set out under the relevant frameworks establishing those registers and interconnections. For example, this means that a user of BRIS should only be able to access BORIS if that user is entitled to access BORIS under its respective rules and requirements.
(30) In order to help companies, and in particular SMEs, to expand their business activities cross-border more easily, the ‘once-only’ principle should be further developed in cases where companies register branches in another Member State. The information about the company registering the cross-border branch should be retrieved electronically from the register of the company by the register of the branch through the system of interconnection of registers. This exchange of information, as any other exchange of information between registers through the system of interconnection of registers, will be carried out via secure transmission between national registers, which ensures that the information can be trusted and should not be required to be certified or subject to any legalisation or similar formality.
(31) While information about cross-border branches of EU limited liability companies is already available through the system of interconnection of registers, information about branches of non-EU companies is not, even if it is already disclosed in national registers in line with Directive (EU) 2017/1132. In order to facilitate access to this information at Union level for stakeholders, information about such third country company branches should be made available through the system of interconnection of registers and some of this information should be free of charge, as is already the case for cross-border branches of EU limited liability companies.
(32) The documents and information about the company, including information about legal representatives, partners in partnerships and other persons that can lawfully represent a company, should be made publicly available in business registers in order to ensure legal certainty in dealings between companies and third parties. In particular, third parties, such as creditors, investors and business partners, but also authorities and courts, should have full legal certainty about the person that is appointed to act on behalf of the company and has the power to enter into contracts or conduct business on behalf of the company. In a partnership, partners are often authorised to represent the partnership in dealings with third parties and in legal proceedings. Similarly, with a view to protecting third parties, it is necessary that, where all the shares of a private limited liability company are held by a single shareholder, the identity of that single shareholder, which may be a natural or legal person, is made accessible to the public in the business register. Given that a single shareholder may for example exercise the powers of the general meeting of the company or conclude contracts between him or herself and the company as represented by him or her, third parties should be able to identify the sole member in order to know the identity of the person exercising control of the company or representing the company.. Therefore, such persons should be unequivocally identified.
(33) In order to enhance the functioning of the single market, third parties do not only need to have access to information about companies in their own Member State, but also about companies in another Member State. Similarly to a domestic situation, third parties need to have legal certainty about the legal representatives, partners in partnerships and other persons that can lawfully represent a company, and about the single shareholders of companies in other Member State. Therefore, such information should be made available at Union level through the system of interconnection of registers which provides access to such information in a multilingual and comparable way, thereby ensuring the same level of protection of third parties in cross-border situations. In order to ensure legal certainty as to the identity of the legal representatives, partners in partnerships, and other persons that can lawfully represent a company, as well as single shareholders, it is necessary that such persons can be unequivocally identified. The need for ensuring certainty about the exact identity of such persons is particularly high in cross-border situations where the system of interconnection of registers provides access to such information on all limited liability companies and “commercial partnerships”. Given that national systems have divergent approaches to the identification of such persons, it is necessary to harmonise the personal data categories that can be accessed at Union level. While the name and surname of such persons constitute personal data that serve to identify them, the name and surname do not guarantee unique identification in all cases and thus need to be complemented by additional information. Nor would adding only the year of birth be sufficient in this regard given the prevalence of certain names, both first name and surname and their combination, in Member States and the fact that popular names often follow yearly cycles, with the effect that many persons with identical names are born in the same year. It is therefore necessary and proportionate to require registers to make available the full date of birth of legal representatives, partners in partnerships, and other persons that can lawfully represent a company, as well as single shareholders.
(34) Member States should process any personal data about legal representatives, partners in partnerships and other persons that can lawfully represent a company, and about single shareholders, including the personal data which is to be made publicly available in the registers, in accordance with Regulation (EU) 2016/679. The Commission should process personal data in the context of this Directive in accordance with Regulation (EU) 2018/1725 of the European Parliament and of the Council22. In particular, Member States and the Commission should implement appropriate data protection safeguards in order to ensure that the processing of personal data for the purposes of this Directive is limited to what is necessary to achieve its objectives.
(35) To ensure that all Union citizens can enjoy the benefits of making more company information available in business registers, it is essential that such information is provided to persons with disabilities in accessible formats. According to Article 9 of the UN Convention on the Rights of Persons with Disabilities, State parties are to take appropriate measures to ensure that persons with disabilities can access, on an equal basis with others, inter alia information and communications, including information and communications technologies and systems, and to other facilities and services open or provided to the public. In this regard, the Directive (EU) 2016/2102 of the European Parliament and of the Council23 sets out general accessibility requirements for websites and mobile applications of public sector bodies with a view to make them more accessible to users, in particular persons with disabilities, and to foster interoperability. Directive (EU) 2016/2102 encourages Member States to extend its application to private entities offering facilities and services that are open or provided to the public. Furthermore, Directive (EU) 2019/882 of the European Parliament and of the Council24 contains accessibility requirements for certain products and services including their websites and related information. Given the diversity of bodies responsible for the management of business registers, ranging from courts and administrative authorities to private entities, and the diverse activities performed by business registers, it should be assessed whether specific measures are needed to ensure that persons with disabilities are able to access company information provided by the business registers in all the Member States on an equal basis with other users.
(36) The objectives of this Directive, namely to increase the amount and improve the reliability of company data available in business registers or through the system of interconnection of registers, and to enable direct use of company data available in business registers when setting up cross-border branches and subsidiaries and in other cross-border activities and situations, cannot be sufficiently achieved by Member States, but can rather, by reason of their scale and effects, be better achieved at Union level. Therefore, the Union may adopt measures, in accordance with the principle of subsidiarity as set out in Article 5 of the Treaty on European Union. In accordance with the principle of proportionality, as set out in that Article, this Directive does not go beyond what is necessary to achieve those objectives.
(37) In accordance with the Joint Political Declaration of 28 September 2011 of Member States and the Commission on explanatory documents25, Member States have undertaken to accompany, in justified cases, the notification of their transposition measures with one or more documents explaining the relationship between the components of a directive and the corresponding parts of national transposition instruments. With regard to this Directive, the legislator considers the transmission of such documents to be justified.
(38) The Commission should carry out an evaluation of this Directive. Pursuant to paragraph 22 of the Interinstitutional Agreement of 13 April 2016 on Better Law-Making, that evaluation should be based on the five criteria of efficiency, effectiveness, relevance, coherence and value added and should provide the basis for impact assessments of possible further measures. The evaluation should cover the practical experience with the EU Company Certificate, digital EU power of attorney and the reduced formalities in cross-border situations for companies. In addition, the Commission should assess the potential for cross-sector interoperability between the system of interconnection of registers (BRIS) and other systems providing mechanisms for cooperation between competent authorities, such as in the areas of taxation or social security or the Once-only Technical System established under Regulation (EU) 2018/1724 of the European Parliament and of the Council26, with the aim of creating more connected public administrations cross-border in the single market27. Finally, the Commission should also assess the need to introduce additional measures to fully address the needs of persons with disabilities when they access company information provided by the business registers.
(39) The European Data Protection Supervisor was consulted in accordance with Article 42(1) of Regulation (EU) 2018/1725 and delivered an opinion on [XX XX 2022/2023]28.
(40) Directives 2009/102/EC and (EU) 2017/1132 should therefore be amended accordingly.