Commission proposes more transparency and less red tape for companies to improve business environment in the EU

This article is brought to you in association with the European Commission.

Today, the European Commission adopted a proposal for a Directive making it easier for companies to expand the use of digital tools and processes in EU company law. The proposal aims to facilitate cross-border companies’ operations and to increase business transparency and trust by making more information about companies publicly available at EU level. It will also cut red tape for cross-border businesses, saving around €‎437 million of administrative burden per year, thanks to an EU Company Certificate or the application of the “once-only principle”. The proposal will contribute to further digitalisation of the single market and help companies, in particular, small and medium-sized ones to do business in the EU.

Cutting red tape and administrative burden

To cut red tape and alleviate the administrative burden for cross-border business, the proposed rules include:

• Application of the “once-only principle” so that companies do not need to re-submit information when setting up a branch or a company in another Member State. The relevant information can be exchanged through the Business Registers Interconnection System (BRIS);
• An EU Company Certificate, containing a basic set of information about companies, which will be available free of charge in all EU languages;
• A multilingual standard model for a digital EU power of attorney which will authorise a person to represent the company in another Member State;
• Removing formalities such as the need for an apostille or certified translations for company documents.

Improving transparency and trust in cross-border business

The proposal is updating the existing EU rules for companies (Directive (EU) 2017/1132) to adapt them further to the digital developments and new challenges, and to stimulate growth and competitiveness in the single market.

To ensure greater transparency and trust in companies the proposed rules are intended to:

• Make sure that important information about companies (e.g. about partnerships and groups of companies) is publicly available in particular at EU level through the BRIS;
• Make searches for information about companies in the EU easier by allowing a search through BRIS and, at the same time, through two other EU systems interconnecting national beneficial ownership registers and insolvency registers;
• Ensure that company data in business registers is accurate, reliable and up-to-date, for example by providing for checks of company information before it is entered in business registers in all Member States.

Next steps

The proposal will now be discussed by the European Parliament and the Council. It is proposed that once adopted, Member States will have two years to transpose the Directive into national law.

Background

Companies are at the heart of the single market. Thanks to their business activities and investments, including on a cross-border basis, they play a leading role in contributing to the EU’s economic prosperity, competitiveness and in carrying through the EU’s twin transition to a sustainable and digital economy. To this end, companies need a predictable legal framework that is conducive to growth and adapted to face the new economic and social challenges in an increasingly digital world. The proposed measures will apply to around 16 million limited liability companies and 2 million partnerships in the EU.

The proposal provides for the second step of the digitalisation of EU company law. The 2019 Digitalisation Directive (EU) 2019/1151 ensured that company law procedures can be carried out online, and in particular that companies can be set up online. This proposal is complementary and aims to increase the availability of company information, in particular, at EU level and to remove administrative barriers when companies and authorities use such information in cross-border situations. Overall, the proposal promotes “digital by default” solutions when accessing or using company information in interactions between companies and business registers or authorities. The proposal will further rely on the use of trust services and will ensure that solutions such as the EU Company Certificate are compatible with the forthcoming European Digital Identity Wallet. 

It will contribute to the digitalisation objectives set out in the Communications 2030 Digital Compass: the European way for the Digital Decade and Digitalisation of Justice in the European Union – A toolbox of opportunities, and will facilitate cross-border expansion by SMEs in line with Communications Updating the 2020 New Industrial Strategy and SME Strategy for a sustainable and digital Europe.

As announced in the 2023 Commission Work Programme this proposal is one of the key actions under the political priority of “Europe fit for the digital age”.

For More Information

Questions and Answers: Commission proposes to expand digital tools in EU company law

Webpage – Company law and corporate governance 

Proposal for a Directive to further expand and upgrade the use of digital tools and processes in company law 

Annex – Proposal for a Directive to further expand and upgrade the use of digital tools and processes in company law