EU co-legislators agreed on Monday on new rules to facilitate establishing a business electronically and promote online operations throughout a company’s lifecycle.
The new rules aim to save businesses time and money, while increasing safeguards against fraud and abusive behaviour through online identity checks.
-improved online procedures, from setting up companies to registering their branches and filing documents;
-user-friendly information is provided on registration portals, free of charge and in a language broadly understood by a majority of cross-border users;
-“once-only principle”, meaning a company needs to submit information only once during its lifecycle;
-transparent rules on fees, applied in a non-discriminatory manner, without exceeding the costs of providing such services.
Negotiators agreed that while all steps to set up a business can be completed online, it is also possible to request face-to-face interaction on a case-by-case basis. They also insisted on including the possibility to verify if persons applying for director positions are currently disqualified from such a position in another member state.
The rapporteur Tadeusz Zwiefka (EPP, PL) said: “Both institutions stayed committed to the common goal - to give European entrepreneurs a modern, safe and transparent environment to operate. However, we need to remember that this is just a first step. It is high time European entrepreneurs benefited from new technologies, especially in their cross-border activities. We must continue to cut red tape for SMEs and dismantle the obstacles that European businesses face in the common market”.
The provisional agreement still needs to be confirmed by member states’ ambassadors (Coreper) and by the Legal Affairs Committee. The directive will then need to receive a green light from the full House and the Council of the EU.
According to the figures provided by the European Commission, currently only 17 member states provide the full set of online registration procedures for businesses, while e-governance services and access to information is patchy across the EU.
There are around 24 million companies in the EU, out of which approximately 80% are limited liability companies. Around 98-99% of limited liability companies are SMEs. The European Commission points out that online registration takes on average half the time and can be up to three times cheaper than traditional paper-based formats. The new rules on digital registration will generate savings of between €42 and €84 million per year.
In its 2017 resolution on EU e-Government action plan, Parliament called on the Commission to consider further ways to promote digital solutions for formalities throughout a company’s lifecycle and underlined the importance of interconnecting business registers. Last April, the Commission proposed to revise and update Company Law rules and introduced a package of proposals on digital tools and processes in company law and on cross-border conversions, mergers and divisions.