Council and Parliament strike a deal to expand the use of digital tools in EU company law

The Council and the European Parliament reached today a provisional deal 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.

The digital transformation should reach all areas of economic activity. In company law, digital solutions will dramatically cut red-tape and help companies to focus more on their core business and less in their paperwork.

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

Commission proposal

The Commission’s proposal is intended to ensure that company data in business registers is accurate, reliable, and up-to-date by making publicly available more information about companies at EU level through the Business Registers Interconnection System (BRIS). The proposal also aims 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 through a common digital template (the Digital EU Power of Attorney) 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.

Main elements of the agreement

The provisional agreement reached today between the two co-legislators shares the main objectives of the proposal but introduces some improvements to simplify certain procedures and reduce the administrative burden for companies and national authorities.

Co-legislators have agreed that the EU Company Certificate should also include the object of the company, with the use of NACE codes, where national law allow the use of these codes and where the object of the company is recorded in the national register (NACE code is a 6 digit code that records the Statistical Classification of Economic Activities in the European Community (in French: Nomenclature statistique des activités économiques dans la Communauté européenne).

The provisional agreement clarifies the elements that should be included in the Digital EU Power of Attorney, a multilingual standard model based on a common European template, that will reduce formalities like apostille or translation, in cross-border procedures.

The agreement reached today makes possible the disclosure of the particulars of limited partners through the system of interconnection of registers (BRIS), where this information is publicly available in the national registers.
Co-legislators have agreed that certain types of companies, such as partnerships or limited liability companies, can obtain their EU Company Certificate in electronic form free of charge, unless this causes serious prejudice to the financing of the national register, in which case the price cannot exceed the administrative costs.

The agreement introduces a revision clause to consider the possibility to include cooperatives in the Company Law Directive in the future.

Next steps

The provisional agreement reached with the European Parliament now needs to be endorsed and formally adopted by both institutions.

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. The Council adopted its negotiating mandate on 14th February 2024.

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.