Explanatory Memorandum to COM(2011)79 - Amendment of Directives 89/666/EEC, 2005/56/EC and 2009/101/EC as regards the interconnection of central, commercial and companies registers - Main contents
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| dossier | COM(2011)79 - Amendment of Directives 89/666/EEC, 2005/56/EC and 2009/101/EC as regards the interconnection of central, commercial and ... |
|---|---|
| source | COM(2011)79  |
| date | 24-02-2011 |
The financial crisis has highlighted once again the importance of transparency across the financial markets, including on companies governance and business activities. The Competitiveness Council Conclusions of 25 May 2010 confirmed that improving access to up-to-date and trustworthy information on companies could encourage greater confidence in the market, help recovery and increase the competitiveness of European business i. Business registers i play an essential role in this regard; they register, examine and store company information, such as information on a company's legal form, its seat, capital, legal representatives and annual accounts, and they make this information available to the public.
Businesses increasingly expand beyond national borders using the opportunities offered by the single market. Progress in the field of information technology makes it easier for citizens and companies to purchase and sell goods and services abroad. Cross-border groups as well as many restructuring operations, such as mergers and divisions involve companies from different Member States of the EU. Accordingly, there is an increasing demand for access to information on companies in a cross-border context, either for commercial purposes or to facilitate access to justice.
Cross-border access to business information requires the cross-border cooperation among business registers. Some cooperation between them already exists but it is limited to certain types of information and does not cover all Member States. It is therefore not sufficient to satisfy the information needs induced by the business activity in the single market. But efficient cross-border cooperation between business registers is not only essential for the smooth functioning of the single market. It also reduces costs for companies operating cross-border.
In 2007, the Commission launched an Action Programme for reducing administrative burdens in order to improve the business environment for EU companies i that was endorsed by the Spring European Council in March 2007 i. In 2008, a large-scale administrative cost measurement exercise was carried out in which company law was considered a priority area i. The High Level Group of Independent Stakeholders on Administrative Burdens was fully in support of achieving interoperability between trade registers throughout Europe i.
The interconnection of business registers is one of the proposals in the Communication on the Single Market Act i that aim to create a more business-friendly legal and fiscal environment and can also contribute to the agenda Europe 2020 i by improving confidence in the single market.
Contents
- OBJECTIVES OF THE PROPOSAL
- LEGAL BASIS
- Subsidiarity and proportionality
- CONSULTATION OF INTERESTED PARTIES
- IMPACT ASSESSMENT
- Lack of up-to-date business information in the register of foreign branches
- Difficulties of cooperation between registers in cross-border merger and seat transfer procedures
- Difficult cross-border access to business information
- EXPLANATION OF THE PROPOSAL
- Article 3: Amendment of Directive 2009/101/EC
The objectives of this initiative are to increase confidence in the European single market by ensuring a safer business environment for consumers, creditors and other business partners, to foster the competitiveness of European business by reducing administrative burdens and increasing legal certainty and to improve the performance of public administration by promoting cooperation between business registers in Europe in procedures for cross-border mergers, seat transfers and updating the registration of foreign branches where cooperation mechanisms are lacking or limited.
The amendments to Directive 2009/101/EC therefore aim at facilitating cross-border access to official business information by setting up an electronic network of registers and determining a common minimum set of up-to-date information to be made available to third parties by electronic means in every Member State.
The amendments to Directive 89/666/EEC i are intended to ensure that the business register of a company provides up-to-date information on the status of the company to the business register of foreign branches all across Europe.
The amendments to Directive 2005/56/EC i aim to improve a cooperation framework between business registers in cross-border merger procedures. While Regulations 2157/2001 i and 1435/2003 i require cross-border cooperation between business registers in relation to the transfer of the registered office of European Companies (SEs) and European Cooperative Societies (SCEs), it might be more appropriate to amend these legal instruments as part of the upcoming review of the Regulations.
It is to note that the European e-Justice portal i is to become the key point of access to legal information, legal and administrative institutions, registers, databases and other services in the EU. This proposal is complementary to the e-Justice project and should contribute to easier access to business information through the portal.
THE LEGAL BAS is for the proposal is Article 50(2)(g) of the Treaty on the Functioning of the European Union.
Nearly two decades of experience with the voluntary cooperation of European business registers shows that self-regulation is not sufficient to achieve the objectives of this initiative. Neither can those objectives be achieved by the Member States as a common set of rules and conditions for cross-border cooperation between the registers needs to be established. If such provisions were determined at national level, they could be incompatible with each other and not suitable to achieve the objectives set.
The proposed amendments are limited to what is necessary to establish functioning communication mechanisms between business registers in the areas concerned and are proportionate to this objective. Action at EU level is therefore necessary and justified.
On 5 November 2009, the European Commission adopted a Green Paper i accompanied by a progress report i on the interconnection of business registers. The progress report presented the state of play as regards the existing cooperation mechanisms between business registers and other authorities. The Green Paper complemented the report by considering different policy options for the future.
The Green Paper formed the basis of a public consultation that was conducted between 5 November 2009 and 31 January 2010. Almost all respondents expressed their support for improving of the interconnection of business registers in the EU. There was a broad agreement that such a network would only have real added value with respect to market transparency if it linked the business registers of all 27 Member States. As regards facilitating communication between registers in cross-border procedures (mergers, seat transfers, foreign branch registration), most respondents were in favour of a solution that would make automated data transmission possible between business registers.
On 25 May 2010, the Competitiveness Council adopted conclusions welcoming the Commission's initiative to improve the interconnection of business registers i. The Council underlined that the initiative should ensure that all Member States take part in the network, reliable, up-to-date and standardised data is transmitted through it and that there should be a legal basis for cooperation between registers. Moreover, clear channels of communication between business registers should ensure that they cooperate smoothly in cross-border procedures. In the long term, the possibility to connect the enhanced network of business registers to the electronic network, set up under the Transparency Directive (2004/109/EC), storing regulated information on listed companies could be examined.
The European Parliament adopted a resolution on 7 September 2010 which expressed general support for the project and emphasised that the usefulness of the project for the further integration of the European Economic Area can only be exploited if all Member States take part in the network i.
The European Economic and Social Committee i and the Committee of Regions i adopted equally supportive opinions.
The Impact Assessment Board issued an opinion approving the report on 15 September 2010. Following the Board's comments, a number of improvements have been made in the impact assessment report, in particular with respect to the better incorporation of the technological solutions and the related costs in the analysis. The costs of the initiative, however, depend on the chosen ICT solution. This choice needs to be made in the implementation phase of the project.
The issues around the interconnection of business registers were grouped in three sections.
Directive 89/666/EEC requires companies to disclose some data and documents when they open a branch in another Member State. However, companies often fail to update this information. The omission may have critical consequences for the protection of consumers and business partners in particular when the register of the branch is not notified of the dissolution or the insolvency of the company. According to some surveys approximately 15% of the branches of foreign companies examined do not have an existing company behind them, i.e. potentially 16.800 branches could be in this situation today.
The lack of cooperation between business registers puts administrative burden on companies as they have to update the content of the register of the foreign branch. Providing a solution could entail possible savings of EUR 69 million.
The impact assessment concludes that EU legislation should lay down a legal requirement for registers to cooperate by electronic means with regard to updating the registration of foreign branches and the Commission should determine the technical details of such cooperation in a delegated act.
Difficulties of cooperation between registers in cross-border merger and seat transfer procedures
The cross-border cooperation of business registers in cross-border merger and seat transfer procedures is required explicitly by EU legislation. While these provisions have the potential to speed up registration procedures and increase legal certainty, there remain practical issues as regards their application as they do not provide guidance on the method of sending the notification or the question of translation. In practice, notifications between business registers are usually transmitted by regular mail in the language of the issuing authority.
The conclusion of the impact assessment is that EU legislation should delegate powers to the Commission to determine the technical details in cross-border merger and seat transfer procedures in a delegated act.
While business information on companies is easily available in the country of their registration, access to the same information from another Member State may be hindered by technical or language barriers. There is already a voluntary cooperation mechanism between register (European Business Register) but it does not cover all 27 Member States and the information that is accessible through the network varies from one country to another.
Furthermore, the lack of a unique company identifier makes identifying and tracking companies difficult in cross-border situations (e.g. mergers or groups). Moreover, the frequency of updating business information is currently not harmonised and there is no information available for the users of the data as regards its legal value (i.e. whether it can be relied on by third parties) in the different Member States.
The impact assessment concluded that the best option to improve the existing situation would be for EU law to lay down a requirement for Member States to participate in an electronic network of registers, determine the list of information to be transmitted through the network and the frequency of updating the registered information and that the Commission should determine the technical details of the cooperation in a delegated act.
Article 1: Amendment of Directive 89/666/EEC
Paragraph 1 ensures that branches (like companies) have a single European identifier that allows for their clear identification and connection to the company they belong to. Paragraph 2 makes it mandatory for the register of a foreign branch to send information by electronic means to the register of its company about the changes in the registered data. It should remain up for the Member States to decide how they act on such notification, i.e. whether they give legal value to it or consider it as a piece of information. In any case, they should ensure that branches of dissolved foreign companies are removed from the register as soon as possible. Paragraphs 3 and 4 contain the necessary rules on delegated acts and data protection.
Article 2: Amendment of Directive 2005/56/|EC
Paragraph 1 of the Article contains a smaller modification making clear that business registries send each other notifications by electronic means in cross-border merger procedures and empowers the Commission to determine in delegated acts the technical details of the communication between the registers. The details of the delegation and data protection are in paragraphs 2 and 3.
Paragraph 1 of the Article makes sure that the documents and particulars in the Member States' business registers are always up to date. They have to make sure that the registered data is updated within 15 calendar days after the underlying change occurs. In order to comply with this requirement, Member States have to ensure that the companies file the relevant changes on time and the change is registered without delay.
Paragraph 2 aims to introduce a unique identifier for all European limited-liability companies that would facilitate their identification at the European level and would allow for easier identification between companies and their foreign branches. Such an identifier could also be used by other registers identifying, for example, listed companies, financial institutions or multinational groups.
Paragraph 3 improves cross-border access to a common minimum set of registered business information by requiring Member States to make the documents and particulars listed in Article 2 and registered under the Directive's requirements available through a single European electronic platform, e.g. a central web-service that allows search in all EU business registers. As there are differences between the Member States in implementing paragraphs 5-7 of Article 3, in addition to the data listed in Article 2, a further piece of information should be attached to every data transmission explaining the provisions of the applicable national company law on the legal value of the registered business information, in particular to what extent third parties can rely on it ('public trust').
Paragraphs 4 and 6 require Member States to make their business registers interoperable and thus set up an electronic network. The details of this cooperation should be elaborated by experts and adopted in the form of a delegated act. Paragraph 5 determines the requirements for data protection.