Directive (EU) 2017/1132 of the European Parliament and of the Council (3) lays down inter alia rules on disclosure and interconnection of central, commercial and companies registers of Member States.
(2)
The use of digital tools and processes to more easily, rapidly and time- and cost-effectively initiate economic activity by setting up a company or by opening a branch of that company in another Member State, and to provide comprehensive and accessible information on companies, is one of the prerequisites for the effective functioning, modernisation and administrative streamlining of a competitive internal market and for ensuring the competitiveness and trustworthiness of companies.
(3)
Ensuring that a legal and administrative environment equal to the new social and economic challenges of globalisation and digitalisation exists is essential, on the one hand, in order to provide the necessary safeguards against abuse and fraud and, on the other, in order to pursue objectives such as promotion of economic growth, creation of jobs and attracting investment to the Union, all of which would bring economic and social benefits to society as a whole.
(4)
There are currently significant differences between Member States when it comes to the availability of online tools enabling entrepreneurs and companies to communicate with authorities on matters of company law. eGovernment services vary between Member States. Some Member States provide comprehensive and user-friendly services entirely online, while others are unable to provide online solutions at certain major stages of a company’s lifecycle. For example, some Member States only allow the formation of companies, or the filing of changes to documents and information with the register, to be done in person, some allow those actions to be done either in person or online, and in other Member States they can only be done online.
(5)
Furthermore, regarding access to company information, Union law stipulates that a minimum set of data always has to be provided free of charge. However, the scope of such information remains limited. Access to such information varies, with more information being made available free of charge in some Member States than in others, thus causing an imbalance in the Union.
(6)
The Commission, in its Communication ‘A Digital Single Market Strategy for Europe’ and in its Communication ‘EU e-Government Action Plan 2016-2020: Accelerating the digital transformation of government’, stressed the role of public administrations in helping businesses to easily start their activities, operate online and expand across borders. The EU e-Government Action Plan specifically recognised the importance of improving the use of digital tools when complying with company law-related requirements. Furthermore, in the ‘Tallinn declaration on eGovernment’ of 6 October 2017, Member States made a strong call to step up efforts for the provision of efficient, user-centric electronic procedures in the Union.
(7)
In June 2017, the interconnection of Member States’ central, commercial and companies registers became operational thereby greatly facilitating cross-border access to company information in the Union and allowing registers in Member States to communicate with each other electronically in relation to certain cross-border operations which affect companies.
(8)
In order to facilitate the formation of companies and the registration of branches and to reduce the costs, time and administrative burdens associated with those processes, in particular by micro, small and medium-sized enterprises (‘SMEs’) as defined in Commission Recommendation 2003/361/EC (4), procedures should be put in place to enable the formation of companies and registration of branches to be completed fully online. This Directive should not oblige companies to use such procedures. Member States should, however, be able to decide to make some or all online procedures mandatory. The current costs and burdens associated with formation and registration procedures derive not only from administrative fees charged for forming a company or registering a branch, but also from other requirements which make the overall process longer to complete, in particular when the physical presence of the applicant is required. In addition, information on such procedures should be made available online and free of charge.
(9)
Regulation (EU) 2018/1724 of the European Parliament and of the Council (5), which establishes the Single Digital Gateway, provides for general rules for online provision of information, procedures and assistance services relevant for the functioning of the internal market. This Directive establishes specific rules relating to the online formation of limited liability companies, registration of branches, and filing of documents and information by companies and branches (‘online procedures’), which are not covered by that Regulation. In particular, Member States should provide specific information about online procedures provided for in this Directive and models of instruments of constitution (‘templates’) on the websites accessible by means of the Single Digital Gateway.
(10)
Enabling the formation of companies, registration of branches and filing of documents and information to be done fully online would allow companies to use digital tools in their contacts with competent authorities of Member States. In order to enhance trust, Member States should ensure that secure electronic identification and the use of trust services is possible for national as well as cross-border users in accordance with Regulation (EU) No 910/2014 of the European Parliament and of the Council (6). Furthermore, in order to enable cross-border electronic identification, Member States should set up electronic identification schemes which provide for authorised electronic identification means. Such national schemes would be used as a basis for the recognition of electronic identification means issued in another Member State. In order to ensure that there is a high level of trust in cross-border situations, only electronic identification means which comply with Article 6 of Regulation (EU) No 910/2014 should be recognised. In any event, this Directive should only oblige Member States to enable online formation of companies, registration of branches and online filing of documents and information by applicants who are Union citizens, through the recognition of their electronic identification means. Member States should decide on the way in which the identification means that they recognise, including those not falling under Regulation (EU) No 910/2014, are made publicly available.
(11)
Member States should remain free to decide which person or persons are to be considered under national law as applicants with regard to online procedures, provided that that does not limit the scope and the objective of this Directive.
(12)
In order to facilitate online procedures for companies, Member States’ registers should ensure that the rules on fees applicable to the online procedures provided for in this Directive are transparent and applied in a non-discriminatory manner. However, the requirement of transparency of rules on fees should be without prejudice to contractual freedom, where applicable, between applicants and persons who assist them in any part of the online procedures, including the freedom to negotiate an appropriate price for such services.
(13)
Fees charged by the registers for online procedures should be calculated on the basis of the costs of the services in question. Such fees could also cover, inter alia, the costs of minor services performed without charge. In calculating their amount, Member States should be entitled to take account of all the costs related to carrying out the online procedures, including the proportion of the overheads which can be attributed thereto. Furthermore, Member States should be allowed to impose flat-rate charges and fix the amount of such charges for an indefinite period, provided that they check at regular intervals that such charges continue not to exceed the average cost of the services in question. Any fees for online procedures charged by the register in the Member States should not exceed the recovery cost of providing such services. Moreover, where the completion of the procedure requires a payment, it should be possible that the payment can be made by means of widely available cross-border payment services, such as credit cards and bank transfers.
(14)
Member States should assist persons seeking to form a company or register a branch by providing certain information through the Single Digital Gateway and, where applicable, on the e-Justice Portal, in a concise and user-friendly way, concerning the procedures and requirements on the formation of limited liability companies, registration of branches and filing of documents and information, rules relating to the disqualification of directors and an outline of the powers and responsibilities of the administrative, management and supervisory bodies of companies.
(15)
It should be possible to form companies fully online. However, Member States should be allowed to limit online formation to certain types of limited liability companies, as specified in this Directive, due to the complexity of the formation of other types of companies in national law. In any event, Member States should lay down detailed rules for online formation. It should be possible to carry out online formation with the submission of documents or information in electronic form, without prejudice to Member States’ material and procedural requirements, including those relating to legal procedures for drawing up instruments of constitution, and to the authenticity, accuracy, reliability, trustworthiness and appropriate legal form of documents or information that are submitted. However, those material and procedural requirements should not make online procedures, in particular those for the online formation of a company and online registration of a branch, impossible. Where obtaining electronic copies of documents satisfying the requirements of Member States is not technically possible, by way of exception, the documents in paper form could be required.
(16)
Where all formalities required for the online formation of a company are complied with, including the requirement for all documents and information to be correctly provided by the company, the online formation before any authorities or any persons or bodies mandated under national law to deal with any aspect of online procedures, should be fast. However, in cases where there are doubts about the fulfilment of necessary formalities, including concerning the identity of an applicant, the legality of the name of the company, the disqualification of a director or the compliance of any other information or document with legal requirements, or in cases of suspicion of fraud or abuse, the online formation might take longer and the deadline for the authorities should not commence until such formalities are complied with. In any event, where it is not possible to complete the procedure within the deadlines, Member States should ensure that the applicant is notified of the reasons for any delay.
(17)
In order to ensure the timely online formation of a company or online registration of a branch, Member States should not make that formation or registration conditional on obtaining any licence or authorisation before that formation or registration can be completed, unless national law so provides for the purpose of ensuring that there is a proper oversight of certain activities. After formation or registration, national law should govern the situations in which companies or branches are not allowed to carry out certain activities without obtaining a licence or authorisation.
(18)
In order to assist businesses, in particular, SMEs in setting-up, it should be possible to form a private limited liability company with the use of templates, which should be available online. Member States should ensure that such templates can be used for online formations, and should remain free to determine what their legal value is. Such templates could contain a pre-defined set of options in accordance with national law. The applicants should be able to choose between using templates or forming a company with bespoke instruments of constitution, and Member States should have the option of providing templates also for other types of companies.
(19)
In order to respect Member States’ existing traditions regarding company law, it is important to allow flexibility as regards the manner in which they provide a fully online system for formation of companies, registration of branches and filing of documents and information, including in relation to the role of notaries or lawyers in any part of such online procedures. Matters concerning online procedures which are not regulated in this Directive should continue to be governed by national law.
(20)
Furthermore, in order to tackle fraud and company hijacking and to provide safeguards for the reliability and trustworthiness of documents and information contained within national registers, provisions concerning online procedures provided for in this Directive should also include controls on the identity and legal capacity of persons seeking to form a company or register a branch or to file documents or information. Those controls could be a part of the legality check required by some Member States. The means and methods for carrying out those controls should be left to Member States to develop and adopt. To that effect, Member States should be able to require the involvement of notaries or lawyers in any part of the online procedures. However, such involvement should not prevent the completion of the procedure in its entirety online.
(21)
Where justified by reason of the public interest in preventing identity misuse or alteration, or in ensuring that the rules on legal capacity and on applicants’ authority to represent a company are complied with, Member States should be allowed to take measures, in accordance with national law, which could require the physical presence of the applicant before any authority or person or body mandated under national law to deal with any aspect of online procedures, of the Member State in which the company is to be formed or a branch is to be registered. However, such physical presence should not be required systematically, but only on a case-by-case basis where there are reasons to suspect identity falsification or non-compliance with the rules on legal capacity and on applicants’ authority to represent a company. Such suspicion should be based on information available to the authorities or persons or bodies mandated under national law to perform such kinds of controls. In the event that physical presence is required, Member States should ensure that any other steps of the procedure can be completed online. The concept of legal capacity should be understood to include the capacity to act.
(22)
Member States should be allowed also to enable their competent authorities, persons or bodies to verify, by complementary electronic controls of identity, legal capacity and legality, whether all the conditions required for the formation of companies are met. Such controls could include, inter alia, video-conferences or other online means that provide a real-time audio-visual connection.
(23)
In order to ensure that all persons interacting with companies are protected, Member States should be able to prevent fraudulent or other abusive behaviour by refusing the appointment of a person as a director of a company, taking into account not only the former conduct of that person in their own territory, but, where so provided under national law, also information provided by other Member States. Member States should, therefore, be allowed to request information from other Member States. The reply could either consist of information on a disqualification in force or other information which is relevant for disqualification in the Member State that received the request. Such requests for information should be possible by means of the system of interconnection of registers. In that regard, Member States should be free to choose how to best collect this information, such as by gathering the relevant information from any registers or other places where it is stored in accordance with their national law or by creating dedicated registers or dedicated sections in business registers. Where further information, such as on the period and grounds of disqualification, is needed, Member States should be allowed to provide it through all available systems of exchange of information, in accordance with national law. However, this Directive should not create an obligation to request such information in every case. Moreover, being allowed to take into account information on disqualification in another Member State should not oblige Member States to recognise disqualifications in force in other Member States.
(24)
To ensure that all persons interacting with companies or branches are protected and that fraudulent or other abusive behaviour is prevented, it is important that competent authorities in Member States are able to verify whether the person to be appointed as a director is not prohibited from performing the duties of a director. To that end, competent authorities should also know whether the given person is recorded in any of the registers relevant for disqualification of directors in other Member States by means of the system of interconnection of business registers. The registers, the authorities or persons or bodies mandated under national law to deal with any aspect of online procedures should not store such personal data longer than is necessary to assess the eligibility of the person to be appointed as a director. However, such entities might need to store such information for a longer period of time for the purpose of a possible review of a negative decision. In any case, the retention period should not exceed the period laid down in national rules for retention of any personal data related to the formation of a company or the registration of a branch or related filing of documents and information.
(25)
The obligations provided for in this Directive relating to the online formation of companies and registration of branches should be without prejudice to any other, non-company law related, formalities that a company has to fulfil to start activity in accordance with Union and national law.
(26)
As with online formation of companies and registration of branches, in order to reduce the costs and burdens on companies, it should also be possible throughout the companies’ lifecycle to submit documents and information fully online to national registers. At the same time, Member States should be free to allow documents and information to be filed by other means, including paper means. In addition, the disclosure of company information should be effected once that information is made publicly available in those national registers, since they are now interconnected and provide a comprehensive point of reference for users. In order to avoid disruption to existing means of disclosure, Member States should have the choice also of publishing either all or some company information in a national gazette, whilst at the same time ensuring that the information is sent electronically by the register to that national gazette. This Directive should not affect national rules relating to the legal value of the register and the role of a national gazette.
(27)
In order to facilitate the way in which the information stored by national registers can be searched for and exchanged with other systems, Member States should ensure that after the relevant transposition period has expired, all documents and information provided to any authority or person or body mandated under national law to deal with any aspect of the online procedures, as part of the online procedures provided for in this Directive, can be stored by the registers in a machine-readable and searchable format or as structured data. That means that the file format should be structured in such a way that software applications can easily identify, recognise and extract specific data and their internal structure. The requirement to ensure that the format of documents and information is searchable should not encompass scanned signatures or other data which are not suitable for machine-readability. As this could require changes to the existing information systems of Member States, there should be a longer transposition period for this requirement.
(28)
In order to cut costs and reduce administrative burden and the length of procedures for companies, Member States should apply the ‘once-only’ principle in the area of company law, which is established in the Union, as evidenced, inter alia, by Regulation (EU) 2018/1724, the European Commission eGovernment Action Plan or the Tallinn Declaration on eGovernment. 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 submit the same information both to the national register and to the national gazette. Instead, the register should provide the information already submitted directly to the national gazette. Similarly, where a company is formed in one Member State and wants to register a branch in another Member State, it should be possible for the company to make use of the documents or information previously submitted to a register. Furthermore, where a company is formed in one Member State but has a branch in another Member State, it should be possible for the company to submit certain changes to their company information only to the register where the company is registered, without the need to submit the same information to the register where the branch is registered. Instead, information such as a change of company name or change of registered office of the company should be exchanged electronically, between the register where the company is registered and the register where the branch is registered using the system of interconnection of registers.
(29)
In order to ensure that consistent and up-to-date information is available about companies in the Union and to further increase transparency, it should be possible to use the interconnection of registers to exchange information about any type of company registered in the Member States’ registers in accordance with national law. Member States should have the option of making electronic copies of the documents and information of those other types of companies available also through that system of interconnection of registers.
(30)
In the interest of transparency and protection of the interests of workers, creditors and minority shareholders, and to promote trust in business transactions, including those with a cross-border nature within the internal market, it is important that investors, stakeholders, business partners and authorities can easily access company information. To improve the accessibility of that information, more information should be available free of charge in all Member States. Such information should include the status of a company and information on its branches in other Member States, as well as information concerning the persons who, either as a body or as members of any such body, are authorised to represent the company. Furthermore, the price of obtaining a copy of all or part of the documents and information disclosed by the company, whether by paper or electronic means, should not exceed the administrative cost thereof, including the costs of development and maintenance of registers, provided that the price is not disproportionate with regard to the information sought.
(31)
It is currently possible for Member States to establish optional access points in relation to the system of interconnection of registers. However, it is not possible for the Commission to connect other stakeholders to the system of interconnection of registers. In order for other stakeholders to benefit from the interconnection of registers and ensure that their systems retain accurate, up-to-date and reliable information on companies, the Commission should be authorised to establish additional access points. Such access points should refer to systems developed and operated by the Commission or other Union institutions, bodies, offices or agencies in order to perform their administrative functions or to comply with provisions of Union law.
(32)
In order to help companies established in the internal market to expand their business activities cross-border more easily, it should be possible for them to open and register branches in another Member State online. Member States should, therefore, make possible, in a similar manner to companies, the online registration of branches and the online filing of documents and information, thereby helping to cut costs, while reducing the administrative burden and the length of time taken by formalities relating to cross-border expansion.
(33)
When registering a branch of a company registered in another Member State, Member States should also be able to verify certain information about the company through the system of interconnection of registers. Furthermore, where a branch is closed in one Member State, the register of that Member State should inform the Member State where the company is registered of such closure through the system of interconnection of registers and both registers should record this information.
(34)
To ensure consistency with Union and national law, it is necessary to delete the provision relating to the Contact Committee which has ceased to exist, and to update the types of companies set out in Annexes I and II to Directive (EU) 2017/1132.
(35)
In order to accommodate future changes in the laws of Member States and to Union legislation concerning company types, the power to adopt acts in accordance with Article 290 of the Treaty on the Functioning of the European Union should be delegated to the Commission to update the list of the types of companies contained in Annexes I, II and IIA to Directive (EU) 2017/1132. It is of particular importance that the Commission carry out appropriate consultations during its preparatory work, including at expert level, and that those consultations be conducted in accordance with the principles laid down in the Interinstitutional Agreement of 13 April 2016 on Better Law-Making (7). In particular, to ensure equal participation in the preparation of delegated acts, the European Parliament and the Council receive all documents at the same time as Member States’ experts, and their experts systematically have access to meetings of Commission expert groups dealing with the preparation of delegated acts.
(36)
The provisions of this Directive, including the obligations for registration of companies, do not affect national law relating to tax measures of Member States, or their territorial and administrative subdivisions.
(37)
The power of Member States to reject applications for the formation of companies and registration of branches in the event of fraud or abuse, and Member States’ investigation and enforcement actions, including by the police or other competent authorities, should not be affected by this Directive. Other obligations under Union and national law, including those arising from anti-money laundering, counter terrorist financing and beneficial ownership rules, should also remain unaffected. This Directive does not affect the provisions of Directive (EU) 2015/849 of the European Parliament and of the Council (8) addressing risks of money laundering and terrorist financing, in particular the obligations related to carrying out the appropriate customer due diligence measures on a risk-sensitive basis and to identifying and registering the beneficial owner of any newly created entity in the Member State of its incorporation.
(38)
This Directive should be applied in compliance with Union data protection law and the protection of privacy and personal data as enshrined in Articles 7 and 8 of the Charter of Fundamental Rights of the European Union. Any processing of the personal data of natural persons under this Directive is to be undertaken in accordance with Regulation (EU) 2016/679 of the European Parliament and of the Council (9).
(39)
The European Data Protection Supervisor was consulted in accordance with Article 28(2) of Regulation (EC) No 45/2001 of the European Parliament and of the Council (10) and delivered an opinion on 26 July 2018.
(40)
Since the objective of this Directive, namely, to provide more digital solutions for companies in the internal market, cannot be sufficiently achieved by the Member States, but can rather, by reason of their scale and effects, be better achieved at Union level, 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 that objective.
(41)
In accordance with the Joint Political Declaration of 28 September 2011 of Member States and the Commission on explanatory documents (11), 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.
(42)
Given the complexity of the changes required to be made to national systems in order to comply with the provisions of this Directive, and the substantial differences currently existing among Member States with regard to the use of digital tools and processes in the area of company law, it is appropriate to provide that Member States that encounter particular difficulties in transposing certain provisions of this Directive can notify the Commission of their need to benefit from an extension of up to one year of the relevant implementation period. Member States should state their objective reasons for applying for such an extension.
(43)
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. Member States should help to carry out that evaluation by providing to the Commission the data that are available to them on how online formation of companies is working in practice, for example data on the number of online formations, the number of cases in which templates were used, or where physical presence was required and the average duration and costs of online formations.
(44)
Information should be collected in order to assess the performance of this Directive against the objective it pursues and in order to carry out an evaluation in accordance with paragraph 22 of the Interinstitutional Agreement of 13 April 2016 on Better Law-Making.
(45)
Directive (EU) 2017/1132 should therefore be amended accordingly,
