In March 2024, the European Commission, the Council of the European Union, and the European Parliament reached a preliminary agreement as a result of trilateral discussions on amending the directive that will further extend and update the use of digital tools and processes in company law. The proposal was voted on in the European Parliament on April 24, 2024.
The proposal submitted a year ago (no. 2023/0089 COD) proposed changing two directives:
- DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL (EU) 2017/1132 of June 14, 2017 on certain aspects of company law
- DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 2009/102/EC of September 16, 2009 on company law concerning single-member private limited liability companies
The general aim of this proposal is to increase transparency and trust in the business environment, achieve more digital and connected cross-border public services for businesses, and facilitate easier cross-border expansion for SMEs, which in turn leads to a more integrated and digital single market.
According to the European Commission, to achieve this, it is necessary to:
- increase the amount of data about companies available in business registers and/or BRIS and improve their reliability;
- enable direct use of company data available in business registers when creating cross-border branches and subsidiaries, as well as in other cross-border activities and situations.
The proposal focuses on electronic copies and extracts of documents or information about companies and emphasizes the importance of their certification in accordance with the eIDAS regulation. It has been included in the Commission’s work program as one of the key actions under the main goal of the Commission “Europe fit for the digital age.”
The document introduces a series of improvements aimed at simplifying procedures and reducing administrative burdens for businesses and national authorities in the context of company law and cross-border activities in the European Union:
- Digital procedures for creating companies and registering branches
- The “once-only” principle
- European Company Certificate
- Digital EU Power of Attorney
- Exemption from legalization and other formalities
- Reduction of translation requirements for certain documents
- Interoperability of business registers systems
These improvements are intended to create a more favorable environment for businesses in the EU, promoting economic growth and competitiveness, and supporting the single market by simplifying and digitizing business and administrative processes.
Particular attention deserves the idea of introducing the Digital Company Certificate and the Digital EU Power of Attorney.
EU COMPANY CERTIFICATE
The proposed (Article 16, paragraph 1) European certificate for companies (EU Company Certificate), also called the EU company certificate or company certificate, is a document issued by company registers in individual Member States to facilitate companies conducting cross-border activities within the European Union. This certificate will be mandatorily accepted in all Member States as sufficient proof at the time of its issuance of the incorporation (registration) of the company and the information contained there in, which are stored by the register in which the company is registered.
In the single market, companies should be able to prove that their company is legally registered in a member state using simple and reliable means that are recognized cross-border by other Member States. Enterprises will be able to apply for such an EU company certificate to use it for various purposes, including administrative procedures before national authorities and legal proceedings in other Member States or before EU institutions and bodies. The certificate will also be available to third parties, including bodies that need reliable basic information about companies.
The certificate will be issued and certified by national business registers and will contain basic information about the company used by companies in cross-border situations, including the company’s name, its headquarters, and legal representatives, and will be available in all official languages of the Union and adapted to new digital measures, such as the European Digital Identity Wallet introduced in the revised eIDAS regulation, and will be authenticated using trust services (Article 16b, paragraph 6).
Member States will have the option to charge a fee for obtaining the EU company certificate; however, the relevant registers will be required to provide each registered company with its own EU company certificate free of charge upon request at least once a year. The certificate will be available in both electronic and paper form. In any case, the price for obtaining the EU company certificate cannot exceed the administrative costs, including the costs of developing and operating registers.
DIGITAL EU POWER OF ATTORNEY
The Digital EU Power of Attorney will enable companies to authorize a person to represent the company in specific procedures with a cross-border dimension within the framework of EU law. It is a tool designed to facilitate international operations by minimizing the need for physical presence and associated formalities.
The power of attorney will be drawn up, changed, and revoked in accordance with the legal and formal requirements of the member state, including at least the verification of the identity, legal capacity, and authorization to represent the company of the person granting, changing, or revoking the power of attorney, conducted by courts, notaries, or other appropriate bodies.
As a result of the agreement between the signatories of the trilateral discussions, the provision regarding the power of attorney that allowed the competent authorities, as well as any other third party who could demonstrate a legitimate interest, to access the Digital EU Power of Attorney in the company register, was removed from the content of the directive.
The Digital EU Power of Attorney will be accepted as proof of the authorization of the person to represent the company. Similar to the Company Certificate described above, it will also be authenticated using trust services and compatible with the European Digital Identity Wallet.
According to Article 16c, paragraph 3, Member States may require that the EU digital power of attorney, any changes to it, and any cancellations be reported to the register. In such cases, the fees charged for accessing information about the power of attorney may not exceed the administrative costs, including the costs of developing and operating the register.
Both newly designed documents apply to several categories of companies operating in EU countries (specified in the relevant annexes). In the case of Poland, these are:
- limited liability company
- limited joint-stock partnership
- joint-stock company
- registered partnership
- limited partnership
The directive does not introduce any new systems but relies on the use of the existing integrated registers system and the eIDAS regulation.
According to Article 24, paragraph 2, point h), the Commission will establish connections between the integrated registers system, the integration of beneficial owners registers (according to Article 30, paragraph 10, and Article 31, paragraph 9 of the Directive of the European Parliament and of the Council (EU) 2015/849), and the integration of bankruptcy registers (according to Article 25, paragraph 1 of the Regulation of the European Parliament and of the Council (EU) 2015/848). Information about a given company in these systems will be used with the so-called EUID (European Unique Identification Number) – described in p9 in the COMMISSION IMPLEMENTING REGULATION (EU) 2021/1042 of June 18, 2021.
The directive changed Article 13g to include the once-only principle, according to which a company does not have to resubmit information located in its own registers when creating a company in another member state. Instead, the registers exchange this information, with the register in which an entry regarding the establishment of a company is to be made retrieving this information from the company’s register.
After being voted on in the European Parliament, the amended directive must still be officially accepted by the Council of the European Union and then published in the Official Journal.
Date of publication: 4/26/2024