Commission proposes new rules for EU Company Law 

This week, the European Commission proposed a Directive allowing companies to use a wider range of digital tools and processes under EU company law. This proposal is part of a broader scheme to digitize EU company law in order to increase the availability of company information. This proposal is a key action under the EU’s “European fit for the Digital Age” strategy. In theory, this proposed directive would remove barriers for companies and authorities that need to access certain information across EU borders. This also fits into the European Digital Identity Wallet scheme, as it would be used by companies to digitize documents like the EU Company Certificates and therefore, have an easier time spreading operations around different member states. 

The Commission’s proposal for a Directive “to further expand and upgrade the use of digital tools and processes in company law”, complements the 2019 Digital Tools and Processes in Company Law Directive. This directive and one other make up the EU Company Law Package, which is said to be the most significant EU initiative in European Company law in over a decade. The idea behind the directive is to provide digital solutions for companies and firms to allow for simpler, faster, and more efficient company development. It also allows unbridled and objective access to information while simultaneously combating misleading business tactics and information.

The proposed Directive aims to “cut red tape and administrative burdens.” For cross-border businesses. This will lead to a total of €437 million in savings by eliminating administrative burdens. The Directive introduces the application of the “once-only principle,” which means that companies do not need to re-apply every time they want to expand into a new member state. They also propose the EU Company Certificate, which will contain all basic information about a company in any language needed, with no fee for companies wishing to use the certification. Furthermore, the Directive will remove unnecessary formalities, such as the need for a certified translation of a professional document. Ultimately, the directive will most impact small to medium-sized enterprises. 

The Directive also aims to increase transparency and trust in cross-border expansion and movement for companies. This will be primarily achieved through the use of the BRIS or business registers. The BRIS allows crucial information about companies to be made public. This information will also be checked before publication in the BRIS to ensure it is accurate and up-to-date.

Next, the proposal will be debated by the European Parliament and Council before inter-institutional negotiations can begin. The current proposal suggests that, if adopted, Member States will have to incorporate it into national law within 24 months.