“Europe fit for the digital age”- European Commission proposal for new directive on company law digitalisation

Valando Kavazi

Senior Associate Lawyer – Corporate Department

The European Commission took a step forward towards further expanding and upgrading the use of digital tools and processes in EU company law pursuant to the proposal for a new directive issued on 29^th of March 2023.

In order to further adapt to the fast-paced developments in digitalisation and technology and with the vision of creating a more integrated and digitalised single market, the proposal was put forward by the European Commission with the intention to build on the existing rules on EU company law and in particular amend Directive 2009/102/EC on single-member private limited liability companies and Directive (EU) 2017/1132 relating to certain aspects of company law.

The proposal aims to increase trust and transparency in the business environment in the single market including companies, consumers and other private stakeholders as well as public authorities. To meet this goal, it is proposed the increase of company data available in the national registers and/or Business Registers Interconnection System (“BRIS”) while at the same time the improvement of its reliability and accuracy through the introduction of additional safeguards on company information before this is entered in the registers in all Members States. The proposal further intends to reduce administrative formalities for companies carrying out cross-border activities, while also achieving more digitalised and connected cross-border public services for companies.

To achieve these objectives, the proposal formulates:

1. The introduction of a “once-only principle” so that companies would not be required to submit the same information to the national registers when setting up a company or a branch in another Member State. All information will be exchanged through the Business Registers Interconnection System (BRIS).
2. The creation of EU Company Certificate, available to be issued in all EU languages, which will include basic information about EU limited liability companies and partnerships.
3. The creation of the digital EU power of attorney, a multilingual standard model based on a common European template, which companies may choose to use in cross-border situations for representation purposes within the EU.
4. The elimination of formalities such as the need for apostille legalisation or certified translations of corporate documents.
5. The interconnection of BRIS to the national beneficial owner registers and insolvency register.

It is worth also noting that on 17^th of May 2023 and further to the publication of the proposal, the European Data Protection Supervisor (“EDPS”) issued an opinion (19/2023) with the aim of flagging on relevant concerns from a data protection perspective.

The EDPS expressed the opinion that “while recognizing the need for enhancing transparency on companies in the single market in order to protect the interests of third parties and to strengthen trust in business transactions, the EDPS recalls that the objective of transparency does not automatically prevail over the right to protection of personal data”. Thus, the EDPS considered that there is a need of articulating the objectives of public interest which justify the public disclosure. Among other recommendations made, the EDPS concluded on the need for the proposal to exhaustively specify all categories of personal data that are to be made publicly available.

It is expected that the new directive will be adopted during 2024.

Author

Valando Kavazi
Senior Associate Lawyer – Corporate Department
CorporateLegal1@kinanis.com 

Source:

https://commission.europa.eu/publications/proposal-directive-further-expand-and-upgrade-use-digital-tools-and-processes-company-law-all_en 

https://edps.europa.eu/data-protection/our-work/publications/opinions/2023-05-17-edps-opinion-192023-directive-amending-directives-2009102ec-and-eu-20171132-regards-further-expanding-and-upgrading-use-digital-tools-and_en