Proposal EU Commission on the digitalisation of company law

On 25 April 2018, the European Commission published a proposal for the amendment of Directive (EU) 2017/1132 as regards the use of digital tools and processes in company law.

The European Commission aims to create a more efficient means for establishing companies and completing the various filings that arise throughout their life-cycle. The proposal requires all EU Member States to enable the registration of companies, establishment of new branches and filing of documents to the business register to be completed entirely online. Currently, there are only 17 Member States that provide for a fully online registration procedure of companies.

The overall objective of the proposal is to ensure the smooth functioning of the EU Single Market for the whole duration of a company’s life-cycle when in contact with authorities concerning company and branch registration and filing of information.

The rules introduced by the proposal are considered proportionate to its objective of providing digital solutions for companies in the EU Single Market throughout their complete life-cycle. Consequently, they require Member States to ensure the possibility to use online methods when registering companies or filing changes, but provide full flexibility to Member States to achieve this in line with their national laws.  

The measures set out in the proposal include, among others, the following:

  • the proposal provides for safeguards against fraud and abuse such as mandatory identification control, rules on disqualified directors and a possibility for Member States to require the involvement of a person or body in the process, such as notaries or lawyers;
  • to improve the accessibility of company information, more information should be available free of charge in all Member States. Such information should include the website of the company, the legal status of the company, its branches in other Member States, the names of the persons authorised to represent the relevant company and the number of employees where this information is available;
  • in order to cut costs and reduce administrative burden for companies, Member States should apply the 'once-only' principle in the area of company law which entails that companies are not asked to submit the same information to public authorities more than once.

The proposal will be submitted to the Council of the European Union and the European Parliament for their consideration and final adoption.