A new Directive on use of digital tools and processes in company law

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I

Introduction

The procedure of the new Directive on use of digital tools and processes in company law has been completed on 20 of June 2019 and is waiting for the publication. The amendment of the Directive (EU) 2017/1132 facilitates the use of online tools and processes throughout every phase of the company process. The new Directive will enter into force on the twentieth day following that of its publication in the Official Journal.

II

The Amendment

The new Directive seeks for remedy in several problems faced in the European Union area. It is enforcing the obligation of the Member States to ensure certain processes, such as company registration, completely available online. The former models can still be available. A person setting up a company will be able to register the company in online services with no necessity of appearance by any parties before competent authorities responsible of the application for the registration.

The main objective of the implementation is the harmonization of the online procedures in the Member States and carry out a better cooperation between authorities in order to achieve a more systematic information of all filings and registrations. The lack of essential tools for the registry is not an encumbrance only for the entrepreneurs but also for the authorities themselves.

Regarding the background of the Directive, there have been several recent improvements in the development such as the Digital Single Market and e-Government Action Plan. These two arrangements have helped to develop the online access to information, administrative procedures, and assistance services together with improving the use of digital tools when complying with the company law related requirements.

The most important online procedures considered is certainly the registration of the company. Freedom of establishment strengthens the international element in the EU area. It is worth of emphasizing the need of harmonization and more equivalent tools for the online use in all Member States. Admittedly, the differences of online services are varying substantially among the Member States. Without the new Directive, the online procedures could be possible only in the Member States where it is provided so. This increases the differences between barriers to entry, and affects the freedom of establishment. The Directive helps to prevent these barriers from impeding the internationalization of the company and it is an optimal way to allow the same services in every Member State.

III

Impact

​Speeding up the registration of the company with less expense is particularly important subject of development. Furthermore, providing the same service in any Member State is crucial for the establishment of the companies. The new online procedure is a redeeming feature for those who, for instance, are interested in registering a branch office in a country different from the one where the company has its seat. The reform contributes the actual expenses of setting up or expanding the company and its barriers to entry. This is an important matter especially from the aspect of the micro, small and medium enterprises.

The enhanced cooperation between authorities in Member States facilitates the responsibilities of the companies. The Directive concludes the “once-only” –principle, which seeks to facilitate the bureaucratic phases of filing and registering. In other words, there will be no longer a requirement to register or file the same components more than once, regardless of the country. The authorities have an obligation to transmit certain information of the registration of the branch of the company when there is a cross-border feature. The required information also includes any changes carried out in the register, such as the company’s name, registered office, registration number, legal form the company, and any documents related so. In addition, a person considered as disqualified from being a director of a company shall be informed to the authorities of other Member States. This is a great protection from the abuse and fraud in these situations.

Furthermore, the cooperation for the transmission of information allows the circulation of certain matters between the registry and the affected parties of the company. This information will be available in the registry by an application. However, the available information can vary according to the rules of each Member State.

IV

Conclusion

The new Directive is a great improvement in the movement to the enhanced digitalized world. It allows having a more efficient system from the establishment of the company to the expansion of it and further. The online procedure creates a system that is more transparent and the transmission of the information will secure its certainty. This is an advance especially in cross-border procedures, which might usually occur to be a concern due to the differences in countries.

In Lleytons we are able to help with undertaking and completing the internationalization process of the company. Supporting the implementation of the business strategy chosen by the client, we ensure the legal protection for the process. We provide the necessary legal security for the proper development of the business to achieve the desired goals.