(BRUSSELS) – EU co-legislators agreed Monday on new rules to make it easier to establish a business electronically and promote online operations throughout a company’s lifecycle through the use of digital tools.
The new rules aim to save businesses time and money, while increasing safeguards against fraud and abusive behaviour through online identity checks.
Specifically, the rules ensure that:
- companies are able to register limited liability companies, set up new branches and file documents for companies and their branches, to the business register fully online;
- national model templates and information on national requirements are made available online and in a language broadly understood by the majority of cross-border users;
- rules on fees for online formalities are transparent and applied in a non-discriminatory manner;
- fees charged for the online registration of companies do not exceed the overall costs incurred by the member state concerned;
- the ‘once-only’ principle, whereby a company would only need to submit the same information to public authorities once;
- documents submitted by companies are stored and exchanged by national registers in machine-readable and searchable formats;
- more information about companies is made available to all interested parties free of charge in the business registers.
At the same time, the directive sets out the necessary safeguards against fraud and abuse in online procedures, including control of the identity and legal capacity of persons setting up the company and the possibility of requiring physical presence before a competent authority.
It maintains the involvement of notaries or lawyers in company law procedures as long as these procedures can be completed fully online.
It also foresees an exchange of information between member states on disqualified directors in order to prevent fraudulent behaviour.
The directive does not harmonise substantive requirements for setting up companies or doing business across the EU.
Parliament’s rapporteur Tadeusz Zwiefka MEP said that both institutions had stayed committed to the common goal: “to give European entrepreneurs a modern, safe and transparent environment to operate.” However, he added that it was important to remember “this is just a first step. It is high time European entrepreneurs benefited from new technologies, especially in their cross-border activities.”
The provisionally agreed text will now have to be approved by the relevant bodies of the two institutions. It will then be formally adopted after the usual legal/linguistic scrutiny.
According to the figures provided by the European Commission, currently only 17 member states provide the full set of online registration procedures for businesses, while e-governance services and access to information is patchy across the EU.
There are around 24 million companies in the EU, out of which approximately 80% are limited liability companies. Around 98-99% of limited liability companies are SMEs. The European Commission points out that online registration takes on average half the time and can be up to three times cheaper than traditional paper-based formats. The new rules on digital registration will generate savings of between €42 and €84 million per year.