Council adopts position on upgrading digital company law tools

The Council has adopted its position (negotiating mandate) on the amending directive to further expand and upgrade the use of digital tools and processes in company law.

The new rules will make company’s data more easily available, enhance trust and transparency in companies across Member States, create more connected public administrations and reduce red tape for companies and other stakeholders in cross-border situations. It will thereby contribute to a more integrated and digitalised single market for companies.

A way to increase the competitiveness in our companies is to accelerate the digital transition in the application of company law. Digitalisation will make administrative processes cheaper, faster and less burdensome.

Paul Van Tigchelt, Belgian deputy prime minister and minister of Justice and the North Sea

Company information simpler and more digital

The Commission’s proposal will make publicly available more information about companies at EU level through the Business Registers Interconnection System (BRIS). The directive is intended to ensure that company data in business registers is accurate, reliable, and up-to-date.

The new rules also aim to cut red tape when companies use company information from business registers in cross-border situations. For instance, the proposal removes formalities such as the need for an apostille on company documents and encourages the use of the “once-only principle” when companies set up subsidiaries and branches in another member state. It also introduces a multilingual EU company certificate to be used in cross-border situations.

The Council’s mandate

The Council negotiating mandate shares the main objectives of the proposed directive but introduces some improvements to simplify certain procedures and reduce the administrative burden for companies and national authorities.

For instance, it specifies the ‘once-only’ principle for a company’s exchange of and access to information when it sets up cross-border subsidiaries or branches. To reduce the administrative burden for both business’ registers and companies, the information on groups of companies will be no longer required. The Council mandate also protects the different national traditions with regard to registration of personal data in the EU Company Certificate.

On the digital EU power of attorney, the Council’s position introduces some technical alignments which increase its user-friendliness, by lowering the risk of developing parallel systems that are not interoperable across the Union.

Lastly, the compromise text provides for six additional months in the transposition period to help businesses adapt to the new requirements.

Next steps

The mandate agreed today gives the Council presidency a framework for starting negotiations with the European Parliament.

Background

On 29 March 2023, the Commission (Commissioner for Justice, Didier Reynders) published a proposal for a Directive to further expand and upgrade the use of digital tools and processes in company law.

This proposal will contribute to the objectives set out in the following communications: ‘2030 Digital Compass and Digitalisation of Justice in the European Union’, ‘Updating the 2020 New Industrial Strategy’ and ‘SME Strategy for a sustainable and digital Europe’.

The directive also updates and supplements the 2019 Directive on the use of digital tools and processes in company law.