Further digitalisation and harmonisation of company law in the EU

Key features of the Directive

1. EU Company Certificate (EUCC): A cornerstone of the Directive is the EUCC, which is a standardised document available in all EU languages providing essential company information, such as legal existence, form and representation powers. It replaces the need for businesses to acquire multiple national register extracts, which often require additional formalities like apostilles and certified translations. The EUCC aims to be accessible online and free of charge, at least once per year, for companies registered in EU Member States.
2. Once-only principle: To reduce the repetitive submission of information, the Directive introduces the "once-only principle", meaning companies will only need to provide specific data once, even when expanding into other EU Member States. This data will then be shared electronically between national registers.
3. Enhanced interconnection of registers: The Directive aims to improve the reliability and accessibility of company information by linking several existing EU systems, including the Business Registers Interconnection System (BRIS), which already provides access to company data across the EU, the Beneficial Ownership Registers Interconnection System (BORIS) and the Insolvency Registers Interconnection (IRI). The enhanced interconnection of these systems will allow for greater transparency and reduce discrepancies between national registers.
4. Digital EU power of attorney: Another significant feature is the introduction of a multilingual digital EU power of attorney. This tool will allow companies to authorise individuals to represent them across EU Member States by using a standardised format.
5. Administrative and cost savings: By removing legalisation and translation requirements, the Directive aims to reduce administrative costs for companies.
6. Data verification and sanctions: To ensure that the information provided is reliable, the Directive sets minimum standards for the verification of company data. Member States must ensure that company information is accurate and up to date. Companies will be required to update their information regularly, and Member States must impose penalties for non-compliance.
7. Simplified cross-border company operations: The Directive simplifies the process for companies to operate across borders, especially regarding the establishment of subsidiaries and branches in other EU countries.

Current implementation status

The European Parliament adopted its position in the first reading in April 2024, following a trilogue agreement with the European Council. The Directive is now undergoing final procedural steps before formal adoption by the Council. Once adopted, Member States will have a two-year window to implement the Directive into national law.

Implications for businesses

For businesses, this means reduced administrative burdens and costs due to modernization of company law and the registers across the EU. The enhanced interconnection of various EU systems will improve the reliability and accessibility of company information, fostering greater transparency and reducing discrepancies between national registers. Overall, the cross-border operations of businesses will be simplified and more cost-efficient.

Conclusion

In summary, the Directive represents a significant step toward digitalising company law in the EU. While the final details of its implementation remain subject to national discretion in certain areas, the Directive is poised to enhance the efficiency and cost-effectiveness of the business environment across the EU.

authors: Gabor Kulcsar, Nikolaus Stepan